Posts Tagged ‘iowabiz.com’

Tax Roundup, 10/14/14: Iowa tax credits expected to pay out $361 million this year. And: Fix FBAR!

Tuesday, October 14th, 2014 by Joe Kristan

Extended 1040s are due tomorrow!

 

20120906-1$521 million for the well-connected and well lobbied. The Des Moines Register reports on a new set of estimates from the Iowa Department of Revenue:

Iowa would have to pay about a half-billion dollars for tax credits during a 12-month period should every recipient come to the table asking for their awards.

The state has a tax credit liability of $462 million for the 2015 fiscal year, which started July 1 and runs until June 30, 2015, according to an Iowa Department of Revenue report.

For the 2016 fiscal year, the state’s tax credit liability is expected to hit $521.2 million.

But it’s not so bad as all that:

The Revenue Department said it only expects $361.4 million worth of tax credits to be claimed in fiscal 2015 and $402.8 million to be claimed in fiscal 2016.

Compare the $361 million in expected tax credit giveaways to expected receipts, net of refunds, from the entire Iowa corporation income tax in fiscal 2015 of $413.5 million. A good chunk of this is actually in the form of cash grants via the Iowa research credit. Iowa persists in giving these away even though a commission tasked with finding out whether they do any good was unable to say they were worth anything.

Iowa couples its regime of special favors for special political friends with high individual rates, and the highest corporation tax rate in the U.S., for those of us lacking lobbyists or state house connections.  Far better to slash individual rates, get rid of the near-worthless corporation income tax, strip out loopholes and deductions, and make everybody’s tax life easier.  It’s time for The Tax Update’s Quick and Dirty Iowa Tax Reform Plan.

 

passportAllison ChristiansPaperwork and Punishment: It’s Time to Fix FBAR (Tax Analysts, Via the TaxProf). A righteous takedown of one of the worst features of an awful tax law:

The FBAR penalty structure is harsh at best and tremendouosly unfair at worst. An FBAR failure or mistake attracts a one-size-fits-all punishment, which rapidly escalates according to a formula that is known only to the IRS. The instructions claim that a taxpayer can avoid penalties by showing a “reasonable cause,” but they also state that a “non-willful” mistake or failure carries a $10,000 penalty, regardless of the amount of money actually at stake…

It cannot be noted without irony that for a regime created to catch hard-core financial criminals, FBAR now criminalizes something we would hardly consider a serious crime — namely a paperwork mistake.

It’s IRS policy to shoot the jaywalkers so they can slap the real international financial criminals on the wrists.  Read the whole thing.

 

Paul Neiffer reminds us that you have Less Than Two Full Days to Get Your Return Filed

It’s a quiet Buzz day at Robert D. Flach’s place. 

Kay Bell, Federal holiday effects on federal taxes,

Stephen Olson has the Summary Opinions for 10/03/14, rounding up developments in tax procedure at Procedurally Taxing.

 

20121022-1TaxProf, The IRS Scandal, Day 523

Me, The C corporation dilemma and how not to solve it. My latest at IowaBiz.com, the Des Moines Business Record’s Business Professionals’ Blog. I discuss the C corporation double-tax, and a failed effort to solve the problem with a “midco transaction” in advance of a sale of the business.

 

How is that even possible? District Court Sets The Bar Lower For Accountants Than Attorneys (Peter Reilly)

News from the Profession. Center for Audit Quality Managed to Find Some People Confident in Audits (Adrienne Gonzalez, Going Concern)

 

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Tax Roundup, 8/27/14: Inversions! Fire! Flee! FIRPTA! Edition. And: state credits and the race for Governor.

Wednesday, August 27th, 2014 by Joe Kristan

20140815-2DOOM! PANIC!  Corporate inversions!  DO SOMETHING!  This isn’t the first time politicians have gotten their dresses over their heads in a pseudo-patriotic panic over legal transactions, as Ajay Gupta explains for Tax Analysts ($link):

FIRPTA is a statute conceived in xenophobia and dedicated to the proposition that not all investors are created equal. It is nothing more or less than the embodiment of a congressional desire to limit the grasp of foreign investors on domestic real estate.

“FIRPTA” is the Foreign Investment in Real Property Tax Act, and it requires buyers of U.S. real estate to withhold 10% of the gross purchase price paid to non-U.S. sellers.  In practice, it functions as a trap for unwary U.S. buyers who fail to withhold, leaving them liable for the withholding liability on top of their purchase price.  It arose out of the panic over a wave of Japanese purchases of U.S. real estate — a panic that we can now see clearly as madness.  Yet FIRPTA lives on, long after the Japanese moved on to other things.

Things like this tell us that the best way to deal with the current panics, like corporate inversions, is to not “do something” that will surely be half-baked and haunt the tax law forever.

 

Megan McArdle, Burger King and the Whopper About Taxes (my emphasis):

As my colleague Matt points out, most Americans — including a lot of journalists who write about this — seem to be under the misimpression that companies that invert, or people who renounce their citizenship, are doing so to get a lower tax rate on income they earn here. And in a few intellectual-property-based businesses, which can make aggressive use of transfer pricing strategies to declare most of their income in low- or no-tax countries, these complaints have some basis. In most cases, however, including Burger King, they’re doing it because the U.S. inexplicably insists on taking a big chunk off the top of all their foreign income, and making their lives miserable in the process.

But, but, deserters!  Traitors!

 

canada flagIf you are wondering why Burger King might be attracted to Canada,  read How Much Lower are Canada’s Business Taxes? (William McBride, Tax Policy Blog):

First, Canada has a much lower corporate tax rate: 15 percent at the federal level plus another 11 percent on average from provincial corporate taxes. Compare that to the U.S. federal corporate tax rate of 35 percent plus an average state corporate tax rate of about 4 percent.

Second, Canada has a territorial tax system, meaning there is no additional repatriation tax on foreign profits. The U.S. has a worldwide tax system, which applies a repatriation tax to foreign profits when those profits are brought back to the U.S. The repatriation tax is basically the difference between the foreign corporate tax rate and the U.S. corporate tax rate, which is typically more than 10 percent. The average foreign corporate tax rate in the developed world is 25 percent.

Third, the U.S. is not particularly competitive in terms of taxing shareholders. Canada integrates its corporate tax with shareholder taxes to avoid double-taxation. In the U.S. it just piles up, so the integrated corporate tax rate on equity financed investment is over 50 percent.

A corporation pays 35% federal tax on its net income, leaving 65% for the shareholders.  If it gets distributed to a top-bracket taxpayer, it gets hit at 20%, plus the 3.8% Obamacare surtax. That is a combined effective rate of 50.47% — and that’s low, as it doesn’t count phase-outs or state taxes. Yet congresscritters profess astonishment that anybody would find that a problem worth solving.

 

Howard Gleckman, Could The U.S. Fix Taxation of Multinational Corporations With A Sales-Based Formula? (TaxVox) “Instead of focusing on the real disease—an increasingly dysfunctional corporate income tax—we are obsessing over a symptom—firms such as Burger King engaging in self-help reform by relocating their legal residences overseas.”

Joseph Thorndike, Warren Buffett Is a Tax Avoider. Good for Him. (Tax Analysts Blog). Now Mr. communitarian billionaire who wants high taxes for other people is a deserter too.  Is nothing sacred?

 

20140729-2Paul Neiffer,  $563 Cost a Taxpayer $6,320:

If the taxpayers had simply paid the $563 of additional tax owed on the original assessment, that is all they would have been out-of-pocket.  However, when they went to court, the IRS determined that they had made a math error in their original calculation of AMT and reassessed the tax owed from $563 to $6,883 or an increase of $6,320.  Since this calculation was now correct, the Tax Court honored the IRS calculation and suddenly the taxpayers suddenly owed another $6,320 just for going to court.

Oops.

 

TaxProf, The IRS Scandal, Day 475.  It links to this from George Will: “The IRS is the most intrusive and potentially punitive institution of the federal government and it is a law enforcement institution and it is off the rails and it is now thoroughly corrupted.”

And the IRS Commissioner thinks all his agency needs is more money.

 

Kay Bell, IRS, betting that expired state and local sales tax deduction will be renewed, hires firm to calculate Schedule A tables

TaxGrrrl, IRS Still Struggling With Tax Treatment Of Immigrants, Changes Rules Again   

Jack Townsend, BASR Briefs On Issue of Unlimited Statute of Limitations for NonTaxpayer Fraud

David Brunori, Repealing the Bad Franchise Tax is a Good Idea (Tax Analysts Blog).  “Eighteen states still impose a franchise tax; they shouldn’t.”

 

MP branstadBy all means, lets make state tax credits an issue.  The Branstad re-election campaign is making a big deal about how his campaign opponent, Jack Hatch, bottled up a GOP bill that would have reduced developer fees in tax credit deals — fees that Mr. Hatch makes a good living collecting.

Senator Hatch could truthfully explain that his committee snuffed every GOP tax bill last session, so that bill didn’t receive special treatment.  Still, it doesn’t look good.

Yet this ignores the real scandal with state incentive credits: they are inherently corrupt.

For starters, the credits for low-income housing and historic rehabilitation go disproportionately to well-connected insiders who know people and know how to pull strings — at the expense of real estate owners without the connections — and arguably at the expense of renters who might benefit more from housing aid not run through developers.

But also that’s true of the other credits.  Special deals go to Microsoft, Google and Facebook because they are big and they know how to play the system.  Tax credits go to big fertilizer companies for doing what they would do anyway, while other poor schmucks without lobbyists and fixers pay full-freight on their income and property taxes.  NASCAR and the Field of Dreams played on glamour and celebrities to keep sales taxes they collect, while other sellers of amusements have to collect the same sales taxes and turn them over to the state.  And Governor Branstad has handed out these tax credits generously.

I’m fine with the Governor’s criticism of Senator Hatch for tax credit deals; I don’t care for them either.  Still, the Governor should keep his old MP helmet handy, because he is calling down fire near his own position.

 

Claire Celsi, PR is like pork scraps and pickle juice (IowaBiz.com).  Sounds yummy.

 

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Tax Roundup, 8/7/14: Imitation and Flattery edition. And: How to get California to want your $800.

Thursday, August 7th, 2014 by Joe Kristan

20130819-1You might be surprised just how easy it can be to get sucked into tax in another state.  Cara Griffith explains how easy it is to get California to come after you for their $800 minimum return fee in Doing Business in California (Tax Analysts Blog):

The California Franchise Tax Board recently issued Legal Ruling 2014-01, which addresses when a business entity with a membership interest in a limited liability company is required to file a California return and pay applicable taxes. The ruling comes while a case is pending on that very issue.

The case is Swart Enterprises Inc. v. California Franchise Tax Bd. (Fresno County Superior Court, Case No. 13 CE CG 02171 (July 9, 2013)). Swart operates a farm in Kansas and provides farm labor contractors. The company is incorporated in Iowa, has estimated annual revenues of $280,000, and has three employees.

Swart has no physical presence in California. It doesn’t have employees in California and it doesn’t own real or personal property there. Swart did, however, own a 0.02 percent interest in a California limited liability company that invested and traded in capital equipment. Swart was not the manager of the fund and was not involved in the management or operation of the fund. Yet its status as a member is enough for the FTB to allege that Swart is doing business in California. 

The post explains that California would have let Swart off the hook if they owned in interest in a limited partnership, rather than an LLC.  So if your business sneezes in the general direction of California, make sure you stick an old-fashioned limited partnership in the ownership chain somewhere, or California will shake you down for $800, or maybe a lot more.

This should especially make businesses wary about buying interests in publicly-traded or broker marketed LLCs.  Most of these have at least a little bit of California income, and they might just make a California filer out of your LLC or corporation.  And it’s not just California — wherever the LLC might be, so might you be also.  It can mean increased state taxes, not to mention increased tax return prep fees.

 

TaxGrrrl, Son Of Powerful Congressman Charged With Bank & Tax Fraud.

Howard Gleckman, Does Congress Really Care About the Deficit? Not When It Comes to Vets and Highways (TaxVox).  The answer would have been correct if it stopped after the first two letters.

Annette Nellen, Push for state film credits from Congress.  They don’t care about state solvency either.

 

Peter Reilly, FAIR Tax Abolishes IRS – Then What?

Paul Neiffer, Another Conservation Easement Tax Court Case – Mostly in Taxpayer’s Favor:

When valuing a conservation easement, you must determine the value of the property before the easement and the value after the easement.  The difference in value becomes the charitable deduction amount.  In the case of the Schmidt’s, their apprisal determined the before easement value was $1.6 million and the after easement value was $400,000 for a net contribution deduction of $1.2 million…

The IRS appraiser valued the property at $750,000 for the before easement value and $270,000 for the after easement value for a net deduction of $480,000. 

The deduction came down a little, but the IRS lost its bid for penalties.

Me, Obamacare mandates: What’s a taxpayer to do? (IowaBiz.com, where I discuss what the Halbig decision on tax credits for policies purchased on federal exchanges means now for taxpayers subject to the individual and employer mandates.

TaxProf, The IRS Scandal, Day 455

 

There’s a new Cavalcade of Risk.  This edition of the venerable roundup of insurance and risk-management posts is up at The Population Health Blog. Among the worthy posts is Hank Stern’s Rideshare Tricks – An Update, on the insurance implications of participating in ride-share services like Uber.

 

nra-blue-eagleBut Mr. President, imitation is the sincerest form of flattery!  Accounting Today reports on yesterday’s presidential press conference in Obama Blames Accountants for Inversion Trend:

During a press conference Wednesday following a summit with African leaders, Obama said, “You have accountants going to some big corporations—multinational corporations but that are clearly U.S.-based and have the bulk of their operations in the United States—and these accountants are saying, you know what, we found a great loophole—if you just flip your citizenship to another country, even though it’s just a paper transaction, we think we can get you out of paying a whole bunch of taxes.”

Wherever would anyone get the idea to do such a thing?  Well, Accounting Today points to a suspect: Obama Aides Let Delphi Avoid Taxes with Tactic President Assails:

 President Barack Obama says U.S. corporations that adopt foreign addresses to avoid taxes are unpatriotic. His own administration helped one $20 billion American company do just that.

As part of the bailout of the auto industry in 2009, Obama’s Treasury Department authorized spending $1.7 billion of government funds to get a bankrupt Michigan parts-maker back on its feet—as a British company. While executives continue to run Delphi Automotive Plc from a Detroit suburb, the paper headquarters in England potentially reduces the company’s U.S. tax bill by as much as $110 million a year.

One might almost get the impression that this whole inversion panic isn’t really a serious policy effort, but instead a desperate diversion by a foundering politician and his partisans.

Kay Bell, Walgreens decides to keep U.S. tax residency

 

The problem might be the tax system, not wobbly patriotism.  Record Numbers of Americans Are Renouncing Their U.S. Citizenship (TaxProf).  Paul Caron links to Andrew Mitchel’s report on the latest quarterly numbers of published expatriates, which includes this chart:

20140807-1

 

Our worldwide tax system makes it difficult, dangerous and expensive to be a U.S. taxpayer abroad.  Rather than impugning their patriotism, the President ought to try to make it affordable.

 

Bob McIntyre of the Tax Justice Blog makes perhaps the worst appeal to authority ever seen in the tax literature: Woody Guthrie on Corporate Tax Inversions.  Woody Guthrie’s economic gurus weren’t exactly cutting-edge .

 

The Iowa State Fair Starts today!  

20120829-1

If you show up on Saturday, look for me at the Sertoma booth at the Varied Industries Building from 1-5; I will be distributing educational hearing safety info and ear plugs, and you may even be able to get a free hearing screening from a trained audiologist.  And you might want some music to fire you up for a really big show!

 

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Tax Roundup, 1/31/14: Earned Income Tax Credit Awareness Day party edition! And: e-filing begins.

Friday, January 31st, 2014 by Joe Kristan


EITC error chart
Yes, for those of you not already taking the day off to observe it, today is Earned Income Tax Credit Awareness Day!  Let’s celebrate with a true story of EITC awareness.

Cedar Rapids tax preparer Demetries Johnson displayed her awareness of the credit in a big way:

Defendant DEMETRIES JOHNSON notified some taxpayers seeking her services that she could obtain larger tax refunds than they would otherwise receive.  To obtain refunds, defendant DEMETRIES JOHNSON would knowingly report false information on taxpayers returns. The claims made in the tax returns were false, fictitious, and fraudulent in that the claims for refunds, for example: 1) falsely reported income when little or no income was earned, thereby substantially and materially overstating taxpayers’ income in a manner that made the taxpayer appear eligible for a refund by virtue of the EITC; and 2) falsely included a child or children on taxpayers’ returns who did not in fact qualify under the EITC.  Through submission of these false claims, defendant DEMETRIES JOHNSON increased payments made by the Internal Revenue Service to the taxpayers or to bank accounts controlled by the defendant.

Her awareness ended up earning a two-year prison sentence after she pleaded guilty to tax charges.  Her keen level of awareness isn’t uncommon; a recent Treasury Inspector General analysis showed that 21-25% of the $13 billion of the credit issued annually is claimed “in error.”  No small amount of those errors are deliberate.

Those who scam the system are especially aware that the credit is “refundable.”  If you claim more credit than you owe in taxes, the IRS will send you a check for the excess.  Like all refundable credits, it attracts fraudsters.

Come to think of it, maybe “awareness” isn’t the real problem with the Earned Income Credit.

 

Flickr image courtesy Shock264 under Creative Commons license

Flickr image courtesy Shock264 under Creative Commons license

When you buy a round, it’s always popular Wind industry fears slowdown as Congress considers future of popular tax credit  (Des Moines Register).  The recipients of wind subsidies delivered through the tax law are annoyed that there is a delay in getting their free stuff.

The headline says the wind turbine subsidy is “popular,” but nothing in the article backs that up, or even repeats the claim.  I suppose it’s as popular with the Warren Buffet-controlled utility that is a big recipient of the credit as the Earned Income Tax Credit was with Demetries Johnson’s clients.

 

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

TaxProf, The IRS Scandal, Day 267.  He highlights today’s Peggy Noonan piece:

 Meanwhile, back in America, conservatives targeted and harassed by the Internal Revenue Service still await answers on their years-long requests for tax exempt status. When news of the IRS targeting broke last spring, agency officials lied about it, and one took the Fifth. The president said he was outraged, had no idea, read about it in the papers, boy was he going to get to the bottom of it. An investigation was announced but somehow never quite materialized. Victims of the targeting waited to be contacted by the FBI to be asked about their experience. Now the Justice Department has made clear its investigation won’t be spearheaded by the FBI but by a department lawyer who is a campaign contributor to the president and the Democratic Party. Sometimes you feel they are just laughing at you, and going too far.

For a case where a key figure promptly hid behind the Fifth Amendment, the FBI was sure quick to conclude there was no crime.

 

William Gale, Benjamin Harris, David John, State of the Union Speech Promotes New Retirement Savings Vehicles (TaxVox):

 Similar to the R-Bond discussed in a recent AARP Public Policy Institute paper written by William Gale, David John and Spencer Smith, MyRA would allow individuals to save in a government bond account similar to the one offered as an option to federal employees through the Thrift Savings Plan. The details are unclear (there’s a WhiteHouse fact sheet here), but MyRA would allow new savers and those with small balances to accumulate retirement savings without either having to pay administrative charges or face market risk.

Just inflation and government policy risk.

 

20130916-1TaxGrrrl, IRS Officially Opens Tax Season Today, Begins Processing Returns and Refunds

William Perez, IRS’s Electronic Filing Systems Opens January 31

Kay Bell, Are you ready to e-file your federal tax return? Here’s how.

Trish McIntire, IRS Notice Prevention

 

Fear the Family (and other related parties).  My new post at IowaBiz.com, the Des Moines Business Record Business Professionals Blog.

 

Kyle Pomerleau notes A Few Contradictions in President Obama’s State of the Union Address (Tax Policy Blog)

Keith Fogg, Does Treasury’s Policy Restraining Referrals to Low Income Tax Clinics Harm Individuals and the Tax System? (Procedurally Taxing)

Robert D. Flach serves up his last Buzz for awhile as he begins his tax season hiatus.  It’s his 43rd tax season.  If I hit my 43d tax season, it will be in my 68th year.  I admire Robert’s endurance, but I have no plans to match it.

 

haroldDirector of Chartered firm among 13 charged over £2.5m film tax fraud (ifaonline.co.uk).  I think film tax credits are the bait car of tax incentives.

Useless tool.   Treasury Nominee Dynan Calls Home Buyer Tax Credit ‘Useful Tool’ (Tax Analysts, $link).  Not only should her nomination be rejected on the basis of her approval of the failed and fraud-ridden credit, she should be presumed self-disqualified from any public position ever.

While I think the court decision ending tax-free treatment for cash parsonage allowances is likely to stand, not everyone agrees.  Zelinsky: The First Amendment and the § 107 Parsonage Allowance (TaxProf)

 

Tax Trials continues its “Famous Fridays” series with Pete Rose, Gambling Winnings Are Income Too.

News from the Profession: PwC Doing Its Part to Keep Dog Tails Wagging in Northeast Ohio (Going Concern)

 

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Tax Roundup, 9/24/2013: Departures edition – with and without benefits. And: Career Corner!

Tuesday, September 24th, 2013 by Joe Kristan

 

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

The IRS official at the center of the Tea Party scandal is retiring.  Iowa Public Radio reports that Lois Lerner is retiring:

The IRS announced Monday that Lerner would step down after being placed on paid leave in May. She refused that month to answer questions at a congressional hearing, citing the Fifth Amendment right not to incriminate herself.

The scandal involved groups applying for 501(c)(4) status in the period 2010-2012. Organizations with the words “Tea Party” or “patriot” in their names faced more questions and bureaucratic delays, although some progressive groups also encountered bureaucratic hassles, according to an inspector general’s report.

In a statement emailed to NPR, the IRS said the problems identified with screening tax-exempt status requests were the result of “mismanagement and poor judgment.” 

In a change of procedure, the IRS announced the retirement via a press release, rather than by planting a question at a continuing education event.

Tax Analysts ($link) reminds us of the compliance hassles that Ms. Lerner piled on all sorts of exempt organizations:

One of the more notable developments during Lerner’s tenure as exempt organizations director was the comprehensive redesign of Form 990, “Return of Organization Exempt From Income Tax.” The new version requires EOs to provide much more information about their activities than previously. 

Anyone who works with exempt organizations, or who serves on an EO board, knows how much additional useless busywork costs the new 990 imposes.

Lerner also oversaw a massive IRS outreach to get EOs that had not filed information returns for three straight years to come into compliance to avoid automatic revocation of exemption.

By “outreach” they mean “revoked their tax-exempt status.”  Thanks for leaving, Ms. Lerner, you’ve done quite enough.

Related: TaxGrrrl, Lesson Lerner-ed? Disgraced IRS Official Tenders Resignation  

 

 

20130717-1

Rashia Wilson in happier days.

While we say good-bye to Ms. Lerner, let’s spare a moment to note a different sort of departure, one involving somebody who may have had more influence on tax administration than Ms. Lerner.  TBO.com reports (my emphasis):

Three years after Tampa police stumbled on the first active tax-refund fraud operation they had seen, one of the suspects was sentenced Monday to eight years and five months in federal prison.

Maurice “Thirst” Larry faces even more prison time when he is sentenced today in another case in which his girlfriend, Rashia Wilson, is serving 21 years of federal time. Larry is expected to face a longer term in the second case because it involves the theft of millions of dollars, while the other case involved hundreds of thousands of dollars.

Larry and Wilson, along with Marterrance “Qat” Holloway, are viewed as pioneers in the wave of stolen identity tax-refund fraud that has flooded the streets of Tampa, dubbed the epicenter of a national epidemic that has cost U.S. taxpayers billions and left countless identity theft victims to pick up the pieces.

This sort of fraud costs the Treasury around $5 billion annually, while creating financial nightmares for taxpayers whose identities are stolen.  The flat-footed IRS response is one of the greatest failures of tax administration since the tax law was enacted.

What sort of devious criminal geniuses could crack open the Treasury like a pinata?

Authorities said Larry, a high school dropout with five young children fathered out of wedlock, has been a jet-setter, flying between Miami, New York and Las Vegas. He and Holloway also drove expensive cars and wore pricey clothes.

Just like James Bond, then.

 

Jana Luttenegger,  Deducting Clothing as a Business Expense:

Practically speaking, not many individuals can use the un-reimbursed clothing expense deduction. If your clothing expenses do qualify, in addition to providing receipts, be prepared to prove the apparel is not suitable for everyday wear.

Me,  Dress for success, but don’t look to the IRS for any fashion help.  My latest post at IowaBiz.com, the Des Moines Business Record blog for business professionals.

 

Brian Mahany,  Have A Government Security Clearance? Watch Out for IRS Tax Liens!

Paul Neiffer,  How Zero Equals $380.  How gambling losers can lose again at tax time under the new Obamacare Net Investment Income Tax.

Jim Maule, Deductions Require Evidence and a Bit of Care:

The first aspect of the case that caught my eye was the attempt of a tax return preparer to deduct a vacation as a business expense. She explained that she operated her tax return business from her home, and explained that “living in her neighborhood was stressful and that she felt harassed by her clients who would call her home at any hour.” Accordingly, she concluded that she needed to travel “just to get rest so that . . . [she] could function.” The Court, not surprisingly, denied the deduction, characterizing the cost of the vacation as a personal expense.

Peter Reilly, Musician Wins Hobby Loss Case   Peter covers the Gullion case that I covered last month, but he went further by contacting the victorious taxpayer, getting a perspective that you can’t get from reading the Tax Court opinion.

 

Linda Beale,  Beanie Baby creator to pay more than $50 million for offshore accounts

TaxProf,  The IRS Scandal, Day 138

Kay Bell, Dolce & Gabbana use their tax troubles as fashion inspiration

Jack Townsend,  Schedule UTP and Criminal Penalties. “Moreover, in almost all cases in which such behavior would be material, a knowingly incomplete or missing Schedule UTP could be used in support of the various penalties that might apply to the related underreported taxes — the 75 % civil fraud penalty and the accuracy related penalties.”

Jeremy Scott, Sun Capital Might Be Bigger Than You Think (Tax Analysts Blog)

Tax Justice Blog, When Congress Turns to Tax Reform, It Should Set These Goals.  Not necessarily my goals.

Andrew Lundeen, Elimination of State and Local Tax Deduction Possible (Tax Policy Blog)

Clint Stretch, Shopping for Tax Reform (Tax Analysts Blog)

 

It’s Tuesday, so it’s a Buzz-day for Robert D. Flach!

 

Quotable:

Perhaps if people with low incomes made really good decisions about how to spend their money, then poverty would be near zero. However, over the course of their lifetimes, many people make many bad decisions, and as a result they will spend a lot of time dealing with financial adversity. The moral and practical implications of this view of poverty are not as clearcut as either a progressive or a conservative would like.

Arnold Kling.

 

Career Corner: If You Can’t Admit You’ve Committed CPE Fraud, Then You Need to Take Another Ethics Course (Going Concern)

 

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Tax Roundup, 8/6/2013: Iowa preparer gets prison for reporting too much income. And an ID theft nightmare ends.

Tuesday, August 6th, 2013 by Joe Kristan

bureauofprisonsSometimes a big refund isn’t a good thing.  A Shellsburg, Iowa man went too far to get his clients big refunds.  The AP reports that Keith Rath was sentenced last week to 21 months after pleading guilty one count of an 8-count indictment.  He was charged with fabricating business income on 1040s.

While it may seem odd that the IRS would have a problem with taxpayers reporting too much income, the Earned Income Tax Credit is the motivation.  If you have around $10,000 of businss or wage income, you can maximize this refundable credit, generating a nice check from the IRS.

The report says the clients were anaware of the fraud.  It seems like you would notice a business on your return that doesn’t exist, but many taxpayers don’t even look, especially if they like the refund being reported.  The taxpayer problably isn’t pleased to have to give that money back.

It is estimated that about 25% of earned income tax credit claims are improper.  That apparently is just fine with the Governor and the Iowa General Assembly, who doubled Iowa’s EITC last year — with a predictible effect of sending around $8 million to Iowa thieves annually, with and without the aid of shady preparers.

 

TaxProf, The IRS Scandal, Day 89.

 

Jason Dinesen, Taxpayer Identity Theft — Part 18:

I’ve been telling the story of Wendy Boka and the identity theft nightmare she’s going through with the IRS. Her husband Brian died at age 31 in 2010. Someone stole his identity and filed a fraudulent tax return in his name.

On August 1, 2013, the refund check from the IRS for that 2010 tax return finally arrived in Wendy’s mailbox.

Jason’s series on his client’s identity theft nightmare shows the huge cost of this out-of-control scam.  While the $5 billion mailed annually to thieves is bad enough, it pales compared to the human cost to the taxpayers whose IDs are stolen — the months of frustration, the near-useless bureaucracy, and the financial losses.  The IRS failure to address this, while spending resources on a useless preparer regulation scheme, are what made Douglas Shulman the Worst Commissioner Ever.

Kay Bell, Tax-related identity theft: Its growth and IRS efforts to stop it

 

Me, When you buy business assets, no do-overs. (IowaBiz.com):

The Moral?  No do-overs. You only get one shot at the purchase price allocation when you buy a business. The purchase price allocation needs to be addressed early in your negotiations. If you want to have experts come in for a cost segregation study, you should do it as part of your due diligence before the deal closes, or under agreement after the close with the seller. You can’t unilaterally change the allocation. 

 

Russ Fox, Kansas Joins Bad States for Gamblers in 2014

Robert D. Flach has his Buzz on!

TaxGrrrl profiles fellow tax blogger Peter J. Reilly.

Peter Reilly, Rhode Island Not Giving Historic Credit For Journal Entries.   But journal entries are history, right?

Jack Townsend, IRS Has No Authority To Settle Cases Referred to DOJ Tax Even After They Are Returned

William Perez, IRS Update for August 2, 2013

 

Yes.  Is the Exclusion for Employer-Provided Healthcare Outdated? (Jeremy Scott, Tax Analysts Blog)

Martin Sullivan, Tax Reform: Will the Chairmen Offer Real Plans or Gimmicks?  (Tax Analysts Blog) Bet on gimmicks.

Kyle Pomerleau, More Trouble for Small Businesses in Tax Reform Talks (Tax Policy Blog)

Today, it seems like there is more trouble for pass-through businesses coming from the Democratic Party.

According to Tax Analysts (subscription required), Charles Schumer (D-NY) is quoted as saying “I don’t think we should lower individual tax rates. I think the overwhelming majority of our caucus agrees. We think 39.6 percent is about the right rate.”

Any “reform” that doesn’t lower rates is no reform at all.

 

Tax Justice Blog, Sales Tax Holidays Are Silly Policy:

While one commonly cited rationale for such holidays is that they increase local consumer spending, boosting sales for local businesses, available research concludes this “boost” in sales is primarily the result of consumers shifting the timing of their already planned purchases.

Jana Luttenegger, Sales Tax Holidays in Iowa and around the US

Howard Gleckman, We Make More Than We Think (TaxVox)

Boulevard of Broken Dreams. The AICPA Has Created A Place For Young CPAs To Share Their Woes (and Dreams) (Going Concern)

Answering The Critical Question: Why we all need Dolce & Gabbana to survive the tax evasion drama (Handbag.com)

 

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Tax Roundup, 7/12/13: We get scam email. And flappers!

Friday, July 12th, 2013 by Joe Kristan

Don’t be stupid.  Yes, you hardly need to consult your CPA for that advice, but I think of it every time I get spam email like this:

20130712-1

Somewhere I read that email scammers make their pitches stupid on purpose to identify the dumbest marks, as they are easiest to fleece.  This one certainly does so.  Some signs of stupid:

  • The email address: smoggiest@HELP.STATE.TX.US.GOV.    Come on.
  • The salutation:  “Dear Accountant Officer.”  It sounds like it’s addressing somebody who issues parking tickets to CPAs.
  • The English of someone not brought up speaking English: “Hereby you are notified…”
  • The use of “please” by a revenue agency.  Please…

Folks, the IRS and state taxing agencies don’t send notices like this via email.  When you get one, delete it — and never click the links.

 

TaxProf, The IRS Scandal, Day 64

Janet Novack, 4 Steps To Take Now That Stretch IRAs Are Endangered:

But the new stretch IRA limits, which Finance Committee Chairman Max Baucus (D-Mont.)  first floated in the Senate last year, would require most retirement accounts inherited by anyone other than a spouse to be distributed (and in the case of non-Roth accounts taxed) within five years of the owner’s death…

The limit on stretch IRAs, which also appeared in President Obama’s most recent budget proposals, would raise $4.6 billion over 10 years, Congress’ Joint Committee on Taxation estimates.  

Janet explains how this possibility can affect your thinking about beneficiary designations and Roth conversions, among other things.

 

Christopher Bergin, Jaws (Tax Analysts Blog):

Clearly, the IRS did some inappropriate things in handling the applications for exemption for tea-party groups and others. But I would prefer to have congressional committees working on making sure our tax agency operates fairly and efficiently rather than going on witch-hunts.

Christopher is right, and as a practitioner I don’t want to see tax adminstration get any worse.   Still, you can’t ignore the long-term benefit for punishing bureaucratic misbehavior.  It would require a suicidal level of tolerance for GOP legislators to let bygones be bygones after the outrageous behavior of the IRS in the Tea Party scandal.  Maybe some budget haircut is needed to make the IRS less eager to take sides next election.

 

Howard Gleckman,  How Not to Fix the IRS:
Forgive me, but let’s try to apply a dash of common sense to the agency’s problems. After months of looking, the IRS’ most vocal critics have found no evidence that its poor processing of requests by political organizations seeking tax-exempt status was politically-motivated.
It was, however, real. And its cause seems to be a staff that suffered from low skills, poor training, low morale, a shortage of resources, and bad management. It is hard to see how cutting an organization’s budget by one-third will fix any of these problems.

Saying that it wasn’t politically-motivated over and over doesn’t make it so.  As the Treasury Inspector General has reaffirmed, the IRS treated right-side outfits far worse than left-side outfits.  That doesn’t just happen — the thing speaks for itself.   And considering Lois Lerner’s partisan past with the Federal Election Commission, the circumstantial evidence of bias is overwhelming.  The “overworked and underfunded” defense of IRS behavior doesn’t fit these facts.

Still, it would be nice if Congress would use its funding power carefully to punish bad behavior, rather than as a meataxe that will harm innocent taxpayers as much as guilty bureaucrats.

 

Kay Bell, States could get more money by modernizing sales tax laws

Brian Mahany, TICs and REITS – “Accidents Waiting To Happen”  Many REITs are perfectly good investments.  I like them myself.  But illiquid ones can lock up your money while generating big liquid fees to a broker.

Tax Justice Blog, Undocumented Immigrants Pay Taxes, and Will Pay More Under Immigration

TaxGrrrl, Parents Sue School For Art Auction Gone Bad.  Some parents apparently shouldn’t be allowed to run around loose.

 

There’s a new Cavalcade of Risk up at Workerscompensation.com! Don’t miss Hank Stern’s Hunger Games and the MVNHS©, about ingenious health care cost savings innovations across the pond.

Via Wikipedia

Via Wikipedia

Robert D. Flach has your Friday Buzz ready!

Great Grandpa knew this.  Not all flappers are created equal (Rob Smith, IowaBiz.com)

The Critical Question: Is Diet Soda Worse than Regular Soda? (Scott Drenkard, Tax Policy Blog)

 

 

Friday workplace fun.  Let’s Discuss: Big 4 Bullies (Going Concern):

Probably the most irritating thing, according to this study, is that these people get ahead. We’ve all seen it.

That’s about how I remember it.  They rarely get the comeuppance they deserve, but when they do, it’s awesome.

 

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Tax Roundup, 7/10/13: No tax on foreign losers. And rounding up the tax criminals!

Wednesday, July 10th, 2013 by Joe Kristan

slots.jpgEveryone who is good at math knows that if you play the slots a lot, you will lose.  Sure, you will occasionally get a payoff, but over time the house wins.  That’s why they let you play.

Yet the IRS didn’t let that get in the way of taxing non-resident gamblers.  It says that non-residents have to pay a 30% tax on every winning play, regardliess of the losers.  The Tax Court upheld that position in the case of a Korean gambler, but now the D.C. Circuit Court of Appeals has ruled in the gambler’s favor, allowing him to compute the tax on a “per session” basis, rather than per bet, so that the day’s losses and winnings can be offset.  The court threw the logic of a IRS 2008 technical memo back at the agency:

     The IRS has persuasively interpreted the term “gains” in Section 165(d) to allow U.S. citizens to measure gains on a per-session basis. The IRS stated that “gain or loss may be calculated over a series of separate plays or wagers.” Memorandum AM2008-11, Office of Chief Counsel, Internal Revenue Service 4 (2008) (emphasis added). In the IRS’s words: “We think that the fluctuating wins and losses left in play are not accessions to wealth until the taxpayer redeems her tokens and can definitively calculate” her net gains. Id. Because gain or loss may be calculated over a series of wagers, a “taxpayer who plays the slot machines[] recognizes a wagering gain or loss at the time she redeems her tokens.” Id. Therefore, U.S. citizens do not “treat every play or wager as a taxable event.” Id. The result is that U.S. citizens can measure their gambling winnings and losses on a per-session basis…

     Nothing in the IRS’s Section 165(d) ruling on “gains” turned on the fact that the gamblers were U.S. citizens.

TaxDood has more in Nonresident Gamblers Take a Step Closer to Equality

Cite: Park v. Commissioner, No. 12-1058 (D.C. Ct. App. 2013).

Update: The TaxProf has a roundup.

 

Russ Fox, A Gambler Gambles to Tax Court…and Loses

Trish McIntire, Gambling Rumor.  No, they aren’t disalllowing gambling losses.

 

Lots of tax crime news today.  From New Jersey, we learn that skimming business receipts is not sexy.  A Justice Department press release reports:

A Middlesex County, N.J., man who co-owns  and operates a wholesale merchandise business in New York selling adult  paraphernalia was sentenced today to 19 months in prison for concealing more  than $1.2 million in income in various domestic and foreign bank accounts, New  Jersey U.S. Attorney Paul J. Fishman and Assistant Attorney General Kathryn  Keneally of the Justice Department’s Tax Division announced.

From 2006 through 2009, Gupta diverted $822,916 of the business’  receipts into 17 different personal bank accounts held in the names of various  individuals, including himself and family members. He directed more than  $250,000 of those diverted funds into six different accounts held offshore at a  branch of HSBC in India. From 2007 through 2009, Gupta caused 22 J.S. Marketers  corporate checks to be made payable to
himself and family members in amounts  identical to invoices from the
business’ suppliers. Gupta endorsed those  checks, which totaled $375,138, and deposited them into bank accounts that he  controlled.

17 accounts?  That’s a lot of work that didn’t work out well.

Meanwhile in Oregon, things go badly for a tax protester:  Former Gladstone business owner jailed 97 months for tax evasion, reports the Portland Tribune:

Chester Evans Davis, a 56-year-old Oregon City corporate tax defier, got sentenced to more than eight years in federal prison starting Monday for not filing a corporate tax return five times for his Gladstone business and then trying to obstruct Internal Revenue Service laws.

Davis transferred money from his company to various shell corporations and a warehouse bank, and then used the money to purchase more than $5 million in gold bars and coins. IRS special agents seized over $1 million of that gold, as well as approximately $115,000 in cash, while executing search warrants at Davis’ residence and business.

Again, a lot more effort than filing and paying taxes, and a lot worse result.

Meanwhile in Illinois, the Rockford Register Star reports Tax evading Rockford chiropractor sentenced to prison:

Todd R. Cevene, 42, of Caledonia, was sentenced Tuesday to 10 months in prison by U.S. District Judge Frederick J. Kapala for federal income tax evasion.

Cevene admitted in his plea agreement that during a four-year period between 2004 and 2007, he intentionally evaded payment of his federal income taxes by transferring substantial amounts of Cevene Care Clinic’s income to Cevene Management Group, Todd Cevene Alaska Preservation Trust, and Cevene Enterprises.

There is no magical formula using trusts that makes your taxes go away.

The reeducation of Lauryn Hill.  The singer reported to a federal prison this week to begin serving a three-month sentence on tax charges.

 

Health care taxes: what’s delayed, what isn’t.  My new post at IowaBiz.com, the Des Moines Business Record group blog for entrepreneurs.

Susan Freed, Play or Pay Rules Delayed (Davis Brown Health Care Reform Blog)

 

Joseph Thorndike, House Republicans Would Rather Pander than Fix the IRS (Tax Analsysts Blog):

At the end of the day, they would rather score a few cheap political points than do something to actually fix the IRS.

Yes, the IRS should be adequaately funded.  Yet when the agency proves itself your electoral enemy, you aren’t exactly motivated to fund it.

 

TaxProf, The IRS Scandal, Day 62

William Perez,  Researcher Finds Social Securty Numbers Posted on IRS Public Database

TaxGrrrl, As Second IRS Official Pleads The Fifth, Congress Pushes For ‘Lerner Rule’

 

Jeremy Scott, Summers Pushes for Tax Break on Foreign Profits (Tax Analysts Blog)

Kay Bell, Hurricane season costs tax collectors as well as homeowners

Jason Dinesen, The Oddities of State Taxes — Wisconsin Student Loan Deduction and Nonresident Tax Returns

David Brunori, Taxing Teen Texts and Other Terrible Tax Things (Tax Analysts Blog):

 In addition to fat kids, skinny kids, and kids that climb on rocks, rich kids and poor kids use wireless devices. If everyone is using them, a flat tax is regressive. It is strange that liberal New York and Washington, states purportedly looking out for the little guy, are so enamored with a regressive tax. 

Of course they aren’t looking out for the little guy.  That’s just for the rubes.

Andrew Lundeen, Links: Lap Dance Taxes and Tax Reform Options (Tax Policy Blog).  Lap Dances, marijuana taxes and Warren Buffet, all in one place!

Howard Gleckman, Not All Curbs on Tax Preferences Are Created Equal (TaxVox)

Robert D. Flach,  MY CORRESPONDENCE WITH THE WHITE HOUSE ON TAX REFORM

Brian Maharry, Cell Captive Insurance – Legit Insurance Tool or Abusive Tax Shelter:

The scam promotions typically offer to shelter a large sum of money by calling it an insurance premium. The premium is usually the same dollar amount as the deduction you seek. The promoter offers “insurance” on a highly improbable risk. Hurricane insurance in Nebraska, anyone? Magically, you get a big deduction and in a few years you are promised the ability to get back your money in the form of a “premium refund” or dividend.

It gets windy in Nebraska, especially during football season, but not like that.

 

Oh Noes!  Horror Stories From the CPA Exam: The Prometric Nose Bleed (Going Concern)

 

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Tax Roundup, 5/23/2013: Iowa property taxes improve, income tax gets worse. Plus: more Apple bites.

Thursday, May 23rd, 2013 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.

The Iowa General Assembly nears the end of its annual rampage.  While it finally did something to improve a bad commercial property tax system, it managed to make an already awful income tax a little worse.

The Iowa Senate cleared a property tax plan (SF 295) yesterday to reduce commercial property assessments by 10%, with additional property tax credits for smaller businesses.  Unfortunately, the price was to more than double Iowa’s version of the fraud-plagued Earned Income Tax Credit and, it appears, to clutter up the 1040 with additional petty tax credits — those these provisions are apparently part of a separate bill.

As if that weren’t enough abuse to the income tax, the Senate also increased Iowa’s tax credit corporate welfare budget by $50 million  (HF 620) by increasing the amount of tax credits that the economic development bureacracy can hand out.  They sweetened the corporate welfare pot by enabling the diversion of employee withholding to local crony capitalist slush funds economic development funds.

Another bill, HF 625, increased the popular school tuition credit, a poor substitute for true school choice.

While the politicians will pat themselves vigorously on the back, the net result isn’t very exciting.  Yes, lower rates for commercial property are needed.  But now Iowa’s dysfunctional income tax is larded with even more corrupt special interest favors, which will make it that much harder to ever enact a system that makes sense for taxpayers without lobbyists and connections.

Related:

David Brunori, Soviets Run Mississippi, Planned Economies and All (Tax Analysts Bl0g)

The Quick and Dirty Iowa Tax Reform Plan.

 

TaxProf, The IRS Scandal, Day 14

Going Concern, Lois Lerner Knows What You People Are Thinking

 

Andrew Lundeen, Apple’s Appearance before the Senate Clarifies the Need for Comprehensive Tax Reform (Tax Policy Blog):

Our average combined rate of 39.1 percent is the highest in the industrialized world. In an increasingly globalized world, this matters more today than it did the last time we reformed the code in 1986. Today the U.S. has to compete with countries around the globe who are constantly improving their tax codes. When the U.S. fails to do so itself, American consumers, workers, and shareholders lose out.

Kyle Pomerleau, Another Perspective on the Apple Hearing (Tax Policy Blog):

Politicians created the current corporate tax system and the current system is broken. If you are going to set out a menu of options for corporations to reduce their tax burden, don’t be surprised or upset that corporations take advantage of them.

Indeed.

 

Linda Beale, Citizen for Tax Justice’s Bob McIntyre on Apple’s offshore profit-hoarding.

 

Robert D. Flach, A KIND OF CATCH-22  On the compliance burden of the fraud-ridden Earned Income Tax Credit.

Tax Trials, See You on Tuesday: IRS Furloughs Impact Certain Filing Deadlines & Services

Kay Bell, IRS offices will be closed Friday, May 24. Plan accordingly

Jack Townsend, Tax Perjury and FBAR Charges Related to Illegal Income Fake Art Case

 

Cara Griffith, A Missed Opportunity in Texas (Tax Analysts Blog)  An attempt to enact an independent tax court in Texas fails:

“The importance of an independent tax tribunal is well documented in the pages of tax journals and even mainstream media outlets.” 

Iowa has nothing like an independent tax appeals process.

Me, Playing with fire: Using an IRA to finance your business.  My new post at IowaBiz.com, the Des Moines Business Record blog for entrepreneurs.

 

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Tax Roundup, April 3, 2013: Six days to Iowa Tax Freedom Day.

Wednesday, April 3rd, 2013 by Joe Kristan

Tax Freedom Day for Iowans will arrive April 9, according to the Tax Foundation.  That’s nine days sooner than for the whole country.  From the Tax Policy Blog:

Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. A vivid, calendar-based illustration of the cost of government, Tax Freedom Day divides all federal, state, and local taxes by the nation’s income.

 In 2013, Americans will pay $2.76 trillion in federal taxes and $1.45 trillion in state taxes, for a total tax bill of $4.22 trillion, or 29.4 percent of income. April 18 is 108 days, or 29.4 percent, into the year. Americans will spend more in taxes in 2013 than they will on food,  housing, and clothing combined.

You can find Tax Freedom Day for your state from this Tax Foundation Map:

 20130403-1

The national Tax Freedom Day is five days later than last year:

Tax Freedom Day is five days later than last year, due mainly to the fiscal cliff deal that raised federal taxes on individual income and payroll. Additionally, the Affordable Care Act’s investment tax and excise tax went into effect.

But cheer up!  If taxes were high enough to pay for all government spending without borrowing, it wouldn’t be until May 9.

 

TaxProf, ESPN: Athletes’ Charities Fall Short of IRS, Nonprofit Standards.  Chis Zorich might agree.  Actually, the arguments against athletes setting up their own charitable foundations are the same as those for anybody else.  They take more work and expertise to run than most people realize.  Compliance with federal tax laws and state laws can be costly.  It’s easy to get into trouble with them, like Mr. Zorich did.  It’s much wiser for athletes with a charitable interest to work with an established charity that knows what it’s doing.

 

So you owe the IRS on your 2012 return and cash is tight. What now?My new post at IowaBiz.com, The Des Moines Business Record blog for entrepreneurs.

Jason Dinesen,  Taxpayer Identity Theft — Part 14 .  The latest adventures in trying to get the IRS to pay the refund of his client, an identity theft victim, for 2010.  She may have it in “another 6-8 weeks.”  We’ll see.

 

Kaye Thomas,  Last Call for Refundable AMT Credit.  Congress didn’t extend the refundability of long-term alternative minimum tax credits, making the exercise of incentive stock options once again potetially ruinous.

TaxGrrrl,  Taxes From A To Z (2013): R Is For Recapture

 

Kay Bell, What do you plan to do with your tax refund?

Jack Townsend,  FBAR Penalty Collection — Beyond the Collection Suit, Administrative Offsets Loom Large and Long

Tax Trials:  4th Circuit: District Court Abused Discretion by Allowing Evidence of CPA’s Personal Tax Situation in Tax Shelter Promoter Case

Peter Reilly:  Lawyers Unite To Keep Dark Money Dark

Howard Gleckman,  The Economics of Corporate Rate Cuts are More Complicated than Politicians Think

 

Joseph Thorndike: Hate Filing Your Tax Return? Good.  (Tax.com).  Good for those of us who charge money to prepare returns, anyway.

 

Russ Fox,  Bozo Tax Tip #8: 300 Million Witnesses Can’t Be Right:

For a tax blogger, people like Richard Hatch are wonderful. Hatch, for those who don’t remember, was the winner of the first Survivor and won $1 million. About 300 million individuals worldwide saw Hatch take down the $1 million.

Hatch received a Form 1099-MISC for his winnings. In the United States, winnings from contests are taxable. Hatch claims that CBS and/or the producers of Survivor promised him that they would pay his taxes. (Both CBS and the producers of Survivor deny this charge.)

Of course Mr. Hatch failed to pay the taxes on income he earned in front of millions, serving a prison sentence as a result.  Sometimes watching somebody else get into real trouble can be instructive.

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Tax Roundup, 3/7/2013: Consultant says Iowa should do more of what he consults about. Also: how not to file a lawyer’s tax return.

Thursday, March 7th, 2013 by Joe Kristan

http://www.rothcpa.com/misc/20090604-1.JPGAnswering the wrong questions.  The Iowa Chamber Alliance asked a consulting firm that makes money playing the corporate location incentives game whether Iowa should sweeten its corporate location incentives.  Guess how they answered it.

From an Iowa Chamber Alliance press release:

“Iowa has a solid base of state – level economic development incentives tools upon which to build. However, to become more competitive, Iowa may wish to increase the funding level and flexibility of some of the State’s key incentive programs” states Darin Buelow, a Principal with Deloitte Consulting LLP.

It’s hard to imagine the study coming to a different conclusion considering what they were looking for:

At the request of the Iowa Chamber Alliance (ICA), Deloitte Consulting (Deloitte) benchmarked incentives programs in Iowa and in five alternate states, focusing on a high-level analysis of state-level incentive programs, their value, and overall effectiveness in attracting investors.

In other words, they were to look at whether Iowa has more and better giveaways than its neighbors.

I looked for the study in vain for any analysis of the value of Iowa’s tax credits to the economy vs. alternative uses for the funds — like lowering the tax rates of the rest of us who pay for them.  There is no mention of opportunity cost.”  In looking at the “value” of the programs, it makes unsupported conclusions like this one about the “High Quality Jobs Program:”

Considered effective and competitive in providing benefits to mitigate corporate income tax, refunding sales tax for construction and providing a supplemental refundable research credit.

Considered effective by whom?  On what basis?  It doesn’t say.

The study says Iowa should enrich its data center corporate welfare — where the rest of us subsidize the infrastructure of Microsoft and Apple.  They also recomment Iowa “consider allowing sale, refund or transfer” of tax credits.

A few years ago, after the film tax credit disaster, Governor Culver tasked a panel with reviewing the effectiveness of Iowa’s dozens of tax credits.  Their report failed to come up with a clear benefit for any of Iowa’s tax credits.  The panel also had this to say about transferable tax credits: (my emphasis)

Transferability of tax credits complicates the projection of revenues and the tracking of credits, creates uncertainty about when credits will be claimed because the purchasing entity may utilize a different fiscal year than the entity awarded the credit, and siphons resources from awarded entities through brokerage fees… Once tax credits are transferred, it creates limited recourse for the State to recover funds claimed in instances where the business awarded the original credit does not fulfill the contracted obligations or if the credit was awarded in error.  Additionally, transferability has also resulted in abuses in some tax credit programs.

It would be better Iowa to not “compete” in taxing its current taxpayers to lure and subsidize their competitors.  Instead Iowa should enact a tax system good enough that we don’t have to pay people to be our friends.   The Quick and Dirty Iowa Tax Reform Plan would be better for Iowa businesses than any number of pocket-picking tax credits.

 

Poor legal move.  From Bloomberglaw.com:

Former Kirkland & Ellis LP senior partner Theodore Freedman pleaded guilty to fraud in connection with the filing of false tax forms.

Freedman changed his plea yesterday from not guilty to guilty of four counts of tax fraud. U.S. District Judge Deborah Batts in Manhattan accepted the plea and set sentencing for Sept. 17. Freedman’s lawyers reached a plea agreement with U.S. attorneys.

Indicted in July 2011, Freedman misrepresented his income as a partner at the law firm by about $2 million, the U.S. said. He also claimed more than $500,000 in expenses for a sole proprietorship that didn’t exist, the government said.

It’s hard to imagine how he thought this would work.  K-1s get matched against tax returns, at least occasionally.  The IRS matching system is cumbersome and inefficient, but it works well enough that you can’t habitually ignore K-1s with six-figure income.  Furthermore, claiming big bogus Schedule C losses like that is practically an engraved invitation for the IRS to visit your return.

Related:  Former Kirkland & Ellis Partner Pleads to Tax Crimes (Jack Townsend)

 

The Colonel knows why your business might have to file returns in other states.  My new post at IowaBiz.com, The Des Moines Business Record blog for entrepreneurs.

William McBride, The Carried Interest Debate: Funding Government for 3.1 Hours (Tax Policy Blog).

Patrick Temple-West,  Cadbury gets tax bill in India, and more (Tax Break).

Daniel Shaviro,  Skepticism about “fundamental tax reform”

Angie Picardo,  Grads – Filing for First the Time (Missouri Tax Guy guest-post)

Brian Strahle,  D.C. Combined Reporting – Transition Rules for 3/15 and 4/15!

Janet Novack,  New IRS Data: Rich Got Richer, But Paid Lower Tax Rate As Stocks Gained

William Perez,  Child Tax Credit for 2012

 

There’s a new Cavalcade of Risk up at Health Business BlogIt’s always worth the ride at the blog world’s roundup of insurance and risk management!

 

Is that an argument for or against intelligent design?  The Sequester: ‘Designed to be Stupid’ (Cara Griffith, Tax.com).

Because they aren’t in a position to speak for themselves: Ellen DeGeneres Speaks Out For Spanish-American War Widowers (Peter Reilly). 

The Critical Question: Why Is Amy Poehler Going To Hell? And What Does Taylor Swift Have To Do With It? (TaxGrrrl)

 

 

Programming note: This site was pretty much shut down part of yesterday afternoon.  Our valiant hosting service says it was a comment spam attack on the pre-2012 archived posts.  Sorry about that.

 

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Tax Roundup, 2/26/2013: A map of state tax futility. And why bankers don’t like OREOs.

Tuesday, February 26th, 2013 by Joe Kristan

Close enough to zero. Monday Map: Corporate Income Tax Revenue as a Percentage of All State/Local Tax Revenue (Nick Kasprak, Tax Policy Blog):

20130226-2

 

 

IRS Field Attorney Advice: Bank must capitalize indirect costs of holding “OREO” property under inventory capitalizetion rules.  From FAA  20123201F (my emphasis)

Section 263A applies to property that is acquired for resale. If § 263A applies, the taxpayer must capitalize both the direct costs of acquiring the property and the property’s allocable share of indirect costs.

In this case, X clearly acquires OREO in foreclosure (or in lieu of foreclosure) with an intent to resell the property. Bank regulators restrict the holding period for OREO and expect banks to exercise good faith efforts to sell the property. As required by applicable state and federal policies and regulations, it is our understanding that X advertises its OREO properties for sale, including those properties which it rents out. X’s Year6 Annual Report confirms that assets acquired through (or in lieu of) foreclosure are held for sale. In addition, OREO is acquired and held in the ordinary course of X’s trade or business. X’s Year6 Annual Report acknowledges as much when it states that X may foreclose on and take title to properties securing loans “during the ordinary course of business.” X engages in OREO transactions with frequency, regularity, and according to an “OREO disposition strategy.” (Year6 Annual Report, p.17). Thus, the OREO held by X constitutes property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.

“OREO” is “other real estate owned,” for you non-bankers.  Bankers don’t care to hold much of that.

 

Joseph Henchman,  Nebraska Governor Withdraws Tax Reform Proposal; Legislature Look to Commission to Develop Alternatives (Tax Policy Blog).  But they aren’t giving up on tax reform.  So should Iowa.  The Quick and Dirty Iowa Tax Reform Plan is tanned, rested and ready!

Paul Neiffer,  Must Have W2 Wages to Deduct DPAD.  A hidden tax trap for the Schedule F farmer.

 

Great minds think alike:

TaxGrrrl,  How Will Your State Be Impacted By Sequestration?

Kay Bell,  How would your state fare under sequestration?

 

TaxProf,  3d Circuit Denies CARDS Tax Shelter.  Another turn-of-the-century tax shelter fails.

Elaine Maag, Education Tax Credits Rival Pell Grant Program in Size: Reforms Proposed (TaxVox).  The more you subsidize it, the more it costs.

Jeremy Scott, Taxing the Rich, Thenardier-Style (Tax.com):

But the influence of Les Miserables doesn’t just extend to the silver screen and stage. President Obama seems to be taking tax policy advice from the musical’s comical antagonist, Thenardier.

Well, that would explain many things.

Trish McIntire,  Referrals – A Double Edged Sword.

Peter Reilly,  What Were They Thinking ?   Another example of the unwisdom of failing to remit payroll taxes.

Linda Beale,  Private equity and real estate managers get a “costly and unjust [tax] perk”.  Not really, but some people really hate carried interests.

Me: Identity theft tax fraud: women’s work?

 

Put the champaign back on ice.  The Income Tax is NOT Turning 100 – Yet. (Joseph Thorndike, Tax.com).

One less metal home in town.  Demise of Another Lustron House.  (IowaBiz.com) These are funky steel houses, not mobile homes.  They don’t build ‘em like that anymore.

 

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Tax Roundup, 2/6/2013: 4.5% Iowa tax? Flat chance. And hidden dangers of an IRS exam.

Wednesday, February 6th, 2013 by Joe Kristan

20130206-1Shock!  David Osterberg doesn’t like the 4.5% flat Iowa Income tax proposal!  State Tax Notes tracked down former Senate Candidate and Cornell College Econ Prof* David Osterberg for his views on the proposal to create a flat 4.5% income tax in Iowa alongside the current income tax.  Not surprisingly, he doesn’t like it ($link):

     The founder and executive director of the Iowa Policy Project said a Republican-sponsored House bill to create a flat personal income tax option would shift more of the tax burden to low-income residents.

     But David Osterberg said he is not too concerned because he doesn’t think the proposal has a shot at passing the Senate, where Democrats hold a majority…The proposal is “part of this ideology that says we somehow have to take  care of the top 1 percent and things will be good,” Osterberg said. “I don’t think low-income people believe that — we sure don’t.”

State Tax Notes also tracked down Tax Foundation Economist Elizabeth Malm:

     “Iowa’s current income tax system has nine brackets, with rates ranging from 0.36 percent of income to 8.98 percent of income,” Malm said in an e-mail to Tax Analysts. “In 2012, this made Iowa the fifth highest top income tax rate in the country, among those states that levy PITs.”

     Without additional information, Malm declined to say whether the plan is regressive. She did say, however, that the proposal would fail to simplify the tax code because it keeps the current system intact.

     “I’m guessing the rationale behind allowing taxpayers to choose between the two systems is to ease concerns that the flat 4.5 rate would hit low-income individuals harder,” Malm said.

Wrong guess.  The rationale is almost surely to avoid provoking the powerful lobby group Iowans for Tax Relief, which holds sacred the current Iowa individual deduction for federal taxes paid.  Proposing the flat tax as an alternative, rather than a replacement, finesses that problem — but at the cost of adding more complexity.  In this form, the flat tax is what I call an “Alternative Maximum Tax.”

*Disclosure: I once borrowed his shotgun at Cornell.  It had dust bunnies in the tubes.

 

David Brunori, Who Pays? Who Cares? You Should (Tax.com):

No matter your views on government, there is no justification for asking the poor to pay more than the rich. I do not favor dramatically increasing the tax burdens on the wealthy, particularly income tax burdens. But there are a lot of policies that can be enacted that could even the playing field. Broader base consumption taxes, less reliance on excise taxes, and larger income exemptions for low wage taxpayers would go a long way.

None of these are incompatible with lower top tax rates.

Tracy Gordon,  The Downside of States as Laboratories for Tax Reform (TaxVox)

 

Needed, but impossible.  Tax Notes has a sad-but-true headline that brilliantly summarizes the state of our national tax policy: Urban Institute Panelists Agree Tax Reform Necessary but Unlikely. ($link)

Linda Beale, More on PTINs for previously unregulated tax return preparers:

We have seen considerable evidence of tax return preparers who do not understand the tax laws or who intentionally misapply them (in the home office deduction, etc.).  It is imperative that those who assist others in preparing tax returns demonstrate minimal competency in the tax law as demonstrated by the qualifying exam.

The “qualifying exam” is open book — really more of a literacy test.  The IRS can make preparers show they can read.  They can’t make them competent.  When you consider the Big 4 tax shelter scandals, and the hopeless complexity of the tax law, it’s funny to say that the problem is really “people who do not understand the tax laws.”

 

Peter Reilly, Future Baseball Commissioner Tackles Tax Laws As Complex As Infield Fly Rule

Tough tax return choice for 2012: Pay more now to save later?  My new post at IowaBiz.com, the Des Moines Business Record Blog for Entrepreneurs, discussing whether maximizing 2012 deductions is really a good idea.

Jason Dinesen, Taxpayer Identity Theft — Part 12 .  More Kafkaesque obstacles to resolving an identity theft for his client.

William Perez, IRS Provides Further Disaster Relief for Hurricane Sandy

Kay Bell, Tax Carnival #112: Super Bowl of Taxes

Jim Maule, Tax Ignorance As Persistent as Death and Taxes

Missouri Tax Guy:  Missouri does not mail  Form 1099-G.  You have to get it online.  One more little blow to tax compliance for small taxpayers.

Trish McIntire, Low Cost Tax Preparation Options

TaxGrrrl,  U.S. Postal Service To Eliminate Saturday Delivery: Will It Save Tax Dollars?  Next they’ll shut down the Pony Express.

Patrick Temple-West, Waiting on the phone for the IRS, and more (Tax Break)

Ellen Kant, William McBride, Super Bowl Tax Bill (Tax Policy Blog)

Russ Fox,  Will the Third Time be the Charm for Appeals?  A case where the “independent” IRS appeals function failed twice.

Howard Gleckman, Can the Income Tax Fund the Government We Want?  (TaxVox).  I can’t speak for “we,” but it could easily cover all of the government I want.

 

The Critical Question: Et Tu, Sarkozy? (David Goulder, Tax.com)

If they can spell their address, tax cheating should be easy for them: Massapequa Restaurant Owners Sentenced for Tax Fraud (Massapequa Patch).

Isn’t that conspiracy?  Tax fraud: We have a plan, authorities say (Myfoxtampabay.com)

Screwed either way.  Taxpayer Sues IRS, Claims Agent Coerced Him Into Having Sex to Avoid Adverse Audit  (TaxProf).

 

But not hotirsagent.com?  I guess there really are stupid easy ways to earn internet money.  A Kansan found one, but then got in trouble by not paying his taxes.  KFDI.com reports:

Dallen Harris, 39, pleaded guilty to one count of tax evasion. He reported a taxable income of a little more than $164,000 in 2010, when it was actually more than $1 million. 

Harris’ income came from Internet domain names, according to court ecords from a related civil forfeiture case in federal court. The government is seeking to forfeit Harris’ houses, cars and bank accounts in that case. The domain names included celebritysextape.tv, adultkingdom.net, Porntesters.com, hardcorefilms.tv, celebritynakedpic.com and sextape.com. 

No, I won’t link to any of those.  It doesn’t sound like they need any help generating traffic anyway.

 

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Tax Roundup, 1/16/2013: Iowa legislators to push Alternative Maximum Tax? Also: new home office deduction option.

Wednesday, January 16th, 2013 by Joe Kristan
20130116-1

Kraig Paulsen

It looks like the Republican leadership in the Iowa House of Representatives will be pushing income tax changes this year.  Unfortunately, it looks like they are pushing the plan I call an “alternative maximum tax” like the one floated by Governor Branstad last year and quietly dropped after the election.  O. Kay Henderson reports:

House Republicans are calling for a “flat” state income tax. If their idea becomes law, Iowans would have the option of filing their personal income taxes under the current system — which has a top rate of nearly nine percent — or opting to pay a four-and-a-half percent rate, with no deductions.

 The governor has made it clear property tax reform is his top priority,
but House Speaker Kraig Paulsen of Hiawatha, the top Republican in the
legislature, says Branstad hasn’t said no to cutting income taxes.

20130116-2Any tax practitioner will point out that this will in practice just be one more complication in computing Iowa taxes.  Taxpayers will compute their taxes under both the current system and the flat system and choose the one that results in the lower tax.  I assume the legislative leaders are resorting to this awkward plan to get around the implacable opposition of the powerful Muscatine-based Iowans for Tax Relief to any tax reform that would repeal the deduction for federal taxes on Iowa returns.  Their plan is likely based on that proposed by Iowans for Discounted Taxes.

Far better to just clean up Iowa’s tax law.  Repeal the special interest loopholes and corporate welfare tax credits, get rid of all non-federal deductions, get rid of the deduction for federal taxes, tie the tax law to the federal code, drastically lower the rates, and eliminate the corporation income tax entirely.  In short, enact The Quick and Dirty Iowa Tax Reform Plan.

 

Flickr image courtesy e53 under Creative Commons license

Flickr image courtesy e53 under Creative Commons license

Whether or not Governor Branstad wants to deal with income taxes, he may have to.  His neighbor in Nebraska may be forcing his hand.  1011Now.com reports:

Gov. Dave Heineman is calling for an overhaul of Nebraska’s tax system, saying the state needs to get rid of its individual and corporate income taxes and make up the lost revenue by shutting off as much as $2.4 billion in tax breaks for businesses.

The Republican governor unveiled his tax plan Tuesday during his annual State of the State address to lawmakers.

Heineman says his plan would keep the state competitive with two neighboring states, Wyoming and South Dakota. Both have no individual income tax.

It sounds much like the plan proposed by Louisiana Governor Jindal this week.   If the other states massively improve their income tax systems and Iowa doesn’t, all of the fertilizer tax credits in the world won’t help Iowa’s business climate.

 

 

IRS unveils simplified home office deduction for 2013.  The IRS yesterday unveiled a new optional way to compute home office deductions.  From IR-2013-5:

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

This will be handy.  When you depreciate part of your home for a home office deduction, you lose the ability to exclude that much gain on a later home sale.  Home office deductions are also complicated and a magnet for IRS examiners.  This looks like it will be useful for the growing ranks of people who run businesses out of their home.  Taxpayers will still be allowed to opt out of this new method and compute their home office deductions the old way.  Full details are found in Revenue Procedure 2013-13.

Other coverage:

TaxProf,  IRS Announces Optional $1,500 Home Office Deduction in Lieu of Depreciation

Russ Fox, Is A Simplified Home Office Deduction Better?  “The reality is that $5 per square foot understates the cost of most home offices, especially when factoring in depreciation.”

 

Paul Neiffer,  Senator Grassley Wants Extension of March 1 Filing Deadline:

Due to the passage of the new tax law, the ability of the IRS to accept most farmers tax returns by March 1 is very uncertain.  Senator Grassley’s letter indicates that the IRS has granted an extension in the  past, most recently last year when the MF Global mess occurred.  In that case, the IRS did not actually extend the filing date, but granted  waivers of the penalty for any estimated tax penalty caused by MF Global  untimely mailing of form 1099.

Farmers don’t have to make estimated tax payments if they file by March 1.  If they can’t do that, the IRS can impose estimated tax penalties on the whole balance due.  The late enactment of new tax laws for 2012 may make it impossible for the IRS to process returns by then.

 

January: the month to start your 2013 year-end tax planning!  My new post at IowaBiz.com, the Des Moines Business Record’s blog for entrepreneurs.

Jason Dinesen, Rental Properties and Basis Allocation

TaxGrrrl,  IRS Announces 2013 Tax Rates, Standard Deduction Amounts and More

Mary Ellen Goode,  A Stark Reminder of the Excessive Cost of Complying with the Tax Code

Rush Nigut,  Iowa Business Specialty Court Pilot Project.  I hope it leads to a specialized Iowa Court for tax cases.  Taxpayers are at a huge disadvantage arguing before District Court judges with no tax expertise.

Kay Bell, The 1040 is ready! The 1040 is ready!

Anthony Nitti,  Dear America: Your Higher Payroll Taxes Are Not The Result Of A Tax Increase.  Only if the multi-year payroll tax break didn’t count as a tax cut.

Janet Novack,  11 Ways To Tap Retirement Cash Early, Without A 10% Penalty

David Brunori, Virginia’s Gas Tax Reform (Tax.com)

Howard Gleckman,  A Budget Deal is Staring Them in the Face, But Here’s Why Lawmakers Won’t Compromise in 2013 (TaxVox)

Robert D. Flach has a new Buzz!  He responds to my take on his take on CPAs.

Jim Maule,  Still More Joys of IRC Section 86.

 

Kyle Pomerleau, New Paper on Estate Tax Misses the Mark.  (Tax Policy Bl0g). It’s about…

Caron & Repetti: Occupy the Tax Code: Using the Estate Tax to Reduce Inequality (TaxProf)

My experience in tax practice convinces me that the estate tax is unnecessary to break up and dissipate large estates.  Beneficiaries take care of that just fine.

 

Hey!  I said I was sorry!  Defendant Screws Up His Acceptance of Responsibility (Jack Townsend):

Although the defendant claimed remorse, his actions after the time of the guilty plea continued the obstructive conduct.  Hence, this defendant got no benefit from pleading guilty, and saving the Government and the court the time and expense of trial.  Not only that, his obstructive conduct convinced the judge to sentence him at the top of the unreduced Guideline range.

If you want the judge on your side, it might be a good idea to stop committing the crime for awhile.

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Tax Roundup, 12/20/2012: Blizzard! And meeting interesting people via social media.

Thursday, December 20th, 2012 by Joe Kristan

20121220-3Yes, the blizzard came.  It’s still snowing at 6 a.m., with up to 14 inches.  Here’s what happens next:

* WINDS/VISIBILITY…NORTHWEST WINDS WILL BECOME VERY STRONG AND CONTINUE THROUGH THIS AFTERNOON. SUSTAINED WINDS OF 30 TO 40 MPH WITH GUSTS OVER 50 MPH ARE LIKELY. BLIZZARD CONDITIONS WILL BE WIDESPREAD BY 6 AM WITH BLOWING AND DRIFTING SNOW LEADING TO WHITEOUT CONDITIONS AT TIMES THROUGH THE DAY.

* IMPACTS…LIFE-THREATENING BLIZZARD CONDITIONS ARE EXPECTED INTO THURSDAY MORNING. TRAVEL WILL BECOME DIFFICULT…IF NOT IMPOSSIBLE DUE TO BLOWING AND DRIFTING SNOW. THE IOWA DEPARTMENT OF TRANSPORTATION ADVISES NO TRAVEL! POWER OUTAGES MAY BECOME MORE PREVALENT BY MORNING AS HEAVY SNOW IS WEIGHING DOWN TREES AND STRONG WINDS BY MORNING AND AFTERNOON MAY FELL TREES ON POWER LINES…RESULTING IN POWER OUTAGES.

So, telecommuting.

Still dancing on the edge of the cliff.  The President has threatened to veto House Speaker “Plan B” tax bill (see yesterday’s Tax Roundup).  The House is planning to vote on the bill today.  The Wall Street Journal reports ($link):

The talks remained frozen Wednesday as both sides awaited the outcome of Thursday’s vote. Messrs. Obama and Boehner (R., Ohio) have not negotiated since Monday and continued to take shots at each other in public.

“There are a lot of gyrations, tensions and difficulties, and this could still go awry,” said Rep. Tom Cole (R., Okla.). “But we are closer on Wednesday than we were on Friday. All the other major budget deals were all last-minute deals.”

Peter Suderman has tweeted:

20121220-1

Maybe so.  Forgive me if I’m not reassured.  Not when the acting IRS Commissioner has this to say (my emphasis):

As I stated in my letter dated November 13, 2012, the IRS has maintained the programming of its systems assuming that the AMT will be patched as it has been in previous years. I also indicated that if an AMT patch is not enacted by the end of this year, the IRS would need to make significant programming changes to conform our systems to reflect the expiration of the patch. In that event, given the magnitude and complexity of the changes needed, I want to reiterate that most taxpayers may not be able to file their 2012 tax returns until late in March of 2013, or even later.

As we consider the impact of the current policy uncertainty on the upcoming tax filing season, it is becoming apparent that an even larger number of taxpayers — 80 to 100 million of the 150 million total returns expected to be filed — may be unable to file.

That would make tax season even more fun!

Fiscal Cliff Notes:

Nick Kasprak, How do Personal Income Tax Increases Affect Small Business?  (Tax Policy Blog).  The post shows how much income that will be taxed under the President’s proposals and “Plan B” will be business income.  In Iowa, 25.1% of the adjusted gross income on returns with AGI over $200,000 is business income; the percentage is 37.24% on returns with AGI over $1 million.  In other words, increases in taxes on “the rich” punish Iowa employers.

Elaine Maag, Toppling Over the Fiscal Cliff Could Cost low-Income Families $1,000 in Reduced Tax Credits (TaxVox)

Patrick Temple-West, Boehner’s backup tax plan shakes up ‘fiscal cliff’ negotiations, and more (Tax Break)

Year-end techniques from the edge of the Fiscal Cliff.  My new post at IowaBiz.com, The Des Moines Business Record’s blog for entrepreneurs.

 

Cara Smith, Just Do It. A bad idea when a big company comes to the state looking for a special tax break.

Russ Fox, “Tax Guys” Get Taxing Result.   It seems that two Michigan preparers specialized in inventing earned income for clients to commit earned income tax credit fraud.

Paul Neiffer,  Annual Exclusion Update  Paul explains the annual gift tax exclusion.

TaxProf, Ninth Circuit: NOL ‘Carryover’ Does Not Include NOL ‘Carryback’

Jack Townsend,  More Swiss Bank Enablers Indicted

Peter Reilly,  No Bankruptcy Escape From Bad Tax Shelter And Compound Interest

William Perez,  Tax Software for Planning Out Your Year-End Tax Moves.

Kay Bell, Donder says harvest investment losses; Reindeer Year-end Tax Games Tip #7

 

Oversharing.  Social media experts caution us to be discreet in what we share on our Facebook pages.  A Florida woman failed to follow that advice, reports Tampa Bay Times:

TAMPA — Rashia Wilson all but dared investigators to catch her, court records show.

“I’m Rashia, the queen of IRS tax fraud,” Wilson said May 22 on her Facebook page, according to investigators. “I’m a millionaire for the record. So if you think that indicting me will be easy, it won’t. I promise you. I won’t do no time, dumb b——.”

It’s also bad form to make promises you may not be able to keep:

Grand jurors apparently got the message and responded with a 57-count indictment charging Wilson, 27, of Wimauma and her boyfriend, Maurice Larry, 26, of Tampa with mail fraud, filing false tax returns, conspiracy, aggravated identity theft and theft of government property.

She is charged with stealing over $1 million.  If the case is like many others coming out of the Tampa area, it involves identity theft.  It shows that the IRS is just sharp enough to go after you if you go out of your way to tell the world that you are tax fraud royalty.

 

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Tax Roundup, 10/26/2012: Central Iowa ESOP flunks out in Tax Court. And lots more!

Friday, October 26th, 2012 by Joe Kristan

What is it about Iowa and ESOPs?  Iowa seems to have more than its fair share of tax litigation involving Employee Stock Ownership Plans. (See here, here, and here for examples)  Iowa’s unusual prominence in this obscure area of the tax law is due in part to a group of Iowa accountants who pushed the plans heavily in the 1970s and 1980s, touting “The Miracle of ESOP.”

An Iowa ESOP will need a miracle on appeal after being revoked retroactively yesterday by the Tax Court.  Judge Gerber upheld the 2010 revocation of the plan back to 1995 for several reasons, including failure to timely amend plan documents for tax law changes and failure to get a properly-documented appraisal of the ESOP stock.

Judge Gerber discussed the appraisal problem:

     Thielking was the person selected to appraise common stock of a company’s employee stock ownership plan (ESOP) in another case before this Court. In that case, involving similar taxable years, this Court addressed Thielking’s failure to set forth his qualifications as follows:

Petitioner asserts that Thielking was a permissible appraiser of the ESOT’s stock in petitioner. We hold otherwise. Section 401(a)(28)(C) provides that all employer securities which are not readily tradable on an established securities market must be valued by an “independent appraiser”. Since petitioner’s stock is not traded on an established securities market, an independent appraiser had to value the ESOT’s holdings of that stock. As relevant here, an “independent appraiser” means a “qualified appraiser” as defined by section 1.170A-13(c)(5)(i), Income Tax Regs.

The ESOP fails at least two requirements of that section. First, section 1.170A-13(c)(5)(i), Income Tax Regs., requires that the appraisal summary contain a declaration that the individual holds himself out to the public as an appraiser. The appraisal letters covering the 2001 through 2003 plan years state that “The undersigned holds himself out to be an appraiser”. However, there is no signature below that statement on any of the letters (there is an unsigned line for a signature with the word “appraiser” typed below). Second, section 1.170A-13(c)(3)(ii)(F) and (5)(i)(B), Income Tax Regs., requires that the qualified appraiser who signs the appraisal must list his or her background, experience, education, and membership, if any, in professional appraisal associations. The appraisal here is not signed, and the appraisal summary does not list the referenced information.

Hollen v. Commissioner, T.C. Memo. 2011-2, slip op. at 9-10, aff’d, 437 Fed. Appx. 525 (8th Cir. 2011). Thielking’s failure to set forth his qualifications was part of the basis for this Court’s holding that the common stock in that case was not appraised by a “qualified appraiser”.

     The circumstances in Hollen were substantially similar to the circumstances in this case.

The appraiser in this case once was associated with a man who told a client I worked with in the 1980s that (I paraphrase) “Sure, you can use a fancy-pants appraiser and spend a lot of money.  You can also use an expensive lawyer for a divorce or you can file your own papers.  You’ll be just as divorced, and you’ll save the legal fees.”  That apparently works about as well in ESOPs as in contested divorces.

ESOPs can be great tools, but they are not easy to use.  15 years of plan disqualification is likely to be pricey.

Cite: CHURCHILL, LTD. EMPLOYEE STOCK OWNERSHIP PLAN & TRUST.

 

Wonder what wind energy credits are really all about?   Investors Worth $800 Billion Lobby for Wind Energy Tax Credit (Environment News Service)

Unintended but entirely predictable consequences of refundable credits. Investigators: Child tax credit allows fraudsters a chance to cheat (WRAL.com)

TaxGrrrl,   IRS Announces Increase In Annual Exclusion For Gifts, Rest Remains a Mystery

Anthony Nitti,  The Top Ten Tax Cases of 2012: #10 -The IRS Wages War With The Medicinal Marijuana Industry

Trish McIntire,  Playing Chicken With a Career

Patrick Temple-West,  Essential reading: CEOs call for deficit action, and more (TaxBreak)

Martin Sullivan,  A Watershed Moment: CEOs Say Raise Taxes.  (Tax.com).  They are free to write their own checks any old time.

 

Brutal Assault on Reason Watch: 

Howard Gleckman,  What Is Barack Obama’s Tax Plan?

Kay Bell,  What happens if the electoral vote is tied?

Linda Beale,  Romney, Family Business, Carried Interest, and potential conflicts of interest

 

It’s five o’clock somewhere, so catch tomorrow’s Buzz today at Robert D. Flach’s place!

I have lots of ideas.   How Not to Spend Tax Revenues (Jim Maule)

News you can use. Toilets Are a Funny Thing (IowaBiz.com)

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Tax Roundup, 10/25/2012: Extra services at the post office. And there’s no such thing as a free sandwich.

Thursday, October 25th, 2012 by Joe Kristan

Opportunities with the postal service.  A mail carrier in Alabama has been accused of picking up more than letters on his route.  A Department of Justice press release says Mr. Harrison, a postman, served as a courier for a tax refund ID-theft ring:

Members of the conspiracy filed false tax returns using stolen identities from various locations including the Northern District of Alabama. The fraudulent tax refunds were directed to debit cards that were mailed to addresses on Harrison’s postal route in Montgomery, Ala. Harrison retrieved the debit cards from the mail and, for a fee, provided them to a co-conspirator.

The moral?  When it absolutely, positively needs to get there, be the top bidder for your mailman.

 

Richard Morrison,  Chart of the Day: The Demographics of Income Inequality (Tax Policy Blog):

Russ Fox,  Nevada Business Tax Initiative Ruled Invalid

My new post at IowaBiz.com:   Payroll taxes: Once is enough

Keep firing.  Hollywood tax incentives come under fire (NBCnews.com)

Patrick Temple-West, Essential reading: For some of the wealthy, a 0 percent tax on capital gains, and more (Tax Break)

Trish McIntire,  Basics of Retirement Tax Planning

 

Brutal Assault on Reason Watch: 

Anthony Nitti,  President Obama Releases Agenda For A Potential Second Term: Dissecting the Tax Aspects

Kay Bell,  We think Congress is doing a better job.  Since they went home, coincidentally.

Daniel Shaviro,  Paul Krugman on the worst case scenario if Romney wins

Linda Beale,  Tax Questions about the Romney-Ryan Ticket–from Romney’s Tax Returns to Ryan’s Vouchercare

 

Attention is great, but links are better.  Amy Hamilton at Tax Analysts quotes my post from yesterday extensively ($link)

 The governor is suggesting “a new tax plan that would exist side-by-side with Iowa’s current complex and loophole-ridden mess,” Kristan said, adding that the plan would require taxpayers to compute their taxes under each system and file whichever return produced the lowest tax.

Thanks!  But two quibbles.  First — no link?  I link to you, you link to me — manners!  Second, you didn’t even mention The Quick and Dirty Iowa Tax Reform plan in a discussion of Iowa Tax Reform.   Isn’t that like talking about the World Series without mentioning the Giants?

 

Expensive free sandwiches.  From Going Concern:

A St. Louis accountant has allegedly been taking the cheap thing just a little too far by scamming unsuspecting restaurateurs in the area for free sandwiches. Yup, you read that right: free sandwiches.

They call him the Scamwich Artist and it seems he’s been making the rounds, complaining about getting bad food in exchange for gift cards and, well, more food.

The story quotes restaurant personnel as saying the accountant was caught red-handed, and the guy’s picture, taken by a restaurant manager with a smart phone, is now all over St. Louis and the Internet.  It will make for interesting conversation at his next client meeting.

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Tax Roundup, 10/2/2012: Des Moines has to repay $40 million in illegally-collected taxes. Also: Kansas City tax shelter figure arrested.

Tuesday, October 2nd, 2012 by Joe Kristan

The City of Des Moines will finally do the right thing, having exhausted all venues to do otherwise.  The Supreme Court yesterday ruled that the city must repay $40 million of an illegally-imposed franchise fee on utility bills.  The Des Moines Register reports:

The high court’s ruling centers on franchise fees that are added to customers’ gas and electricity bills. A lower court ruled that the city charged excessive fees for a period of years, in essence an illegal tax. The high court declined to review the lower court’s order requiring the city to repay roughly $40 million to residents who paid the illegal tax.

Mayor Cownie predicts disaster and famine:

City lawyers have fought the case for years by arguing, in part, that any refunds would lead inevitably to higher property taxes — in essence taking money out of one pocket of city residents to place cash in another.

Cownie said the city would pursue options fairest to citizens while balancing the long-term realities of a beleaguered city budget. Any franchise fee repayment from the city would likely come from a mixture of property tax increases and cuts to city services, he said.

“We’re not just cutting away fat. We’re cutting away muscle and bone and tendons,” he said.

It’s useful to imagine how much sympathy the city would offer a taxpayer who had illegally collected money from the city.  “I’m not just cutting away fat.  I’m cutting away essential services for myself and my family, like my house and my car.”  Of course, the city has compounded its own problems by litigating all the way to the U.S. Supreme Court, piling up legal fees and interest on top of the refunds.

The city now has to pay up, though the Register story makes it look like the city isn’t exactly racing to cut the refund checks.

The Moral?  Next time, don’t collect an illegal tax, and if you do, repay it. 

 

Supreme Court declines to review West Des Moines S corporation compensation case.  In addition to denying Des Moines’ franchise tax appeal, the Supreme Court yesterday denied a hearing in an important case involving the so-called “John Edwards Shelter,” named after the former vice-presidential nominee and model husband who ran his law practice in an S corporation.

A U.S. district court held that an area CPA who reported $24,000 of wage income and around $200,000 of K-1 income from his S corporation had to report as compensation around $90,000 of the income; the Eighth Circuit upheld the ruling in February (David E. Watson, P.C. v. U.S).   The tax law imposes payroll taxes on compensation, but not S corporation K-1 income, so the taxpayer must pay payroll taxes on the additional compensation.    The denial is reported on page 50 here.

 

Being enjoined is bad.  Being indicted is worse.  An attorney who was enjoined from promoting some extremely aggressive tax shelters in the Kansas City area now has worse problems, as outlined in a press release from the California Franchise Tax Board:  Los Angeles Tax Professionals Arrested for Illegal Tax Schemes Costing State $7.6 Million:

A Cerritos CPA and Los Angeles attorney were  arrested today on felony charges of conspiracy and tax evasion, the Franchise  Tax Board announced.

Victor George Kawana, 53, and Blair Stover,  51, each own one-third of Kruse Mennillo, LLP. According to FTB special agents,  Kawana and Stover allegedly promoted an abusive tax avoidance transaction  (ATAT) to more than 100 clients during the years 2002-2005. The fraudulent  activity cost the state more than $7.6 million in tax liability.

They each face three felony counts of aiding  in the preparation of false state income tax returns and one felony count of conspiracy.  Each tax count carries a maximum sentence of three years in state prison.

The charges appear to arise from the same sorts of shelters Mr. Stover was enjoined from promoting:

They instructed their clients to utilize an  ATAT involving the creation of Nevada corporations and Roth IRA or Employee  Stock Option Plans (ESOP) as the sole shareholders. The ATAT was formed with a  series of related transactions with no valid business purpose other than tax  evasion.

Kawana and Stover were recently arrested and  both pleaded not guilty at their arraignments.

Mr. Stover got his start at national firm Coopers and Lybrand in St. Louis, later moving to their Kansas City office.  He joined the Grant Thornton office there before going to Kruse Menillo, LLP.

While a number of the tax shelters involved did poorly in court, that doesn’t make it a crime to promote them; the defendants are innocent until proven guilty.  Whatever the outcome of the trial, we can safely assume that the shelters relied on taxpayers’ eternal pursuit of the tax fairy, that mythical creature who can magically make income taxes go away without pain and without risk.  There is no tax fairy. 

Thanks to an alert reader for the tip.

 
Martin Sullivan,  Romney Advisor Advocates Tax Hikes (Tax.com): “He proposes putting a cap on everyone’s tax benefits from deductions and credits equal to some percentage (perhaps 2 or 3 percent) of adjusted gross income and using the revenue gained for both rate cuts and deficit reduction”

Richard Morrison,  Chart of the Day: The Average Tax Rate for the Rich (Tax Policy Blog):

 

Patrick Temple-West,  Essential reading: Payroll tax cut is unlikely to survive into next year, and more

TaxGrrrl,  Comment for the Cure: Cancer, Comments, Cures and Yeah, Taxes

Trish McIntire,  Chicken or Egg Tax Cut

Jack Townsend has two more posts on the affirmation of sentences for figures in the “Aegis” tax shelter case:  Aegis Convictions Affirmed Installment #4 – the Conspiracy Conviction and  Aegis Convictions Affirmed Installment #5 – IRS Notices and Harmless Error

Kay Bell,  Tax moves to make in October 2012

William Perez,  Consider Accelerating Salary Income into 2012

Howard Gleckman,  If Congress Goes Over the Fiscal Cliff Your Taxes Will Likely Go Up (TaxVox):

If Congressional gridlock sends the U.S. government tumbling over the fiscal cliff later this year, Americans could face an average tax hike of almost $3,500 in 2013. Nearly 9 of every 10 households would pay higher taxes. Every income group would see their taxes rise by at least 3.5 percent, but high-income households would suffer the biggest hit by far, according to a new Tax Policy Center analysis.

TPC found that if the tax hikes last the entire year—a big ”if”–those in the top 0.1 percent would pay an average $633,000 more than if today’s tax rules were extended. However, even middle income households would take a hit: they’d pay an average of almost $2,000 more, and see their after-tax income fall by more than 4 percent. Such tax hikes would be “unprecedented,” said the paper’s authors, Bob Williams, Eric Toder, Donald Marron, and Hang Nguyen.

So, have a nice day!

 

Kaye A. Thomas, Roth Conversions Ahead of 2013 Tax Increases.

The Critical Question: What is this “Fiscal Cliff,” and why are we in this handbasket?  My new post at IowaBiz.com, the Des Moines Business Record blog for entrepreneurs.

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Tax Roundup, September 18, 2012: 47% frenzy! And New Jersey tries to rival Iowa.

Tuesday, September 18th, 2012 by Joe Kristan

Do 47% of taxpayers really pay no federal taxes? Close enough for government work.

Mitt Romney’s “Secret Tape” has stirred up talk about the “47%.”   Let’s look at a newly-issued table from the center-left Tax Policy Center for 2012 figures:

 

The lowest 20% would be at zero without counting their share of the corporate tax burden, borne in the form of lost investment income and wages.  The next 20% get to positive territory on the basis of payroll taxes, but I think Robert D. Flach gets this right:

In my opinion, the FICA tax is not a tax.  It is a contribution to a retirement plan (Social Security) and a payment for future health insurance (Medicare). 
Payments of Social Security “tax” allow the individual to collect a pension at retirement, and payments of Medicare “tax” allow the individual to receive extensive health care coverage at a very cheap rate (less than $100 per month) at age 65.

Of course, both Medicare and Social Security are actuarially insolvent, so these taxes don’t even cover their own costs.  The shortfall falls on those who actually pay a positive income tax.  So while this table doesn’t tell us exactly where the cut-off is, 47% can’t be too far off, with the only debate being over counting the payroll taxes that are already inadequate for their purposes.

Focusing only on income taxes also ignores benefits.  When welfare benefits and subsidies are taken into account, the 47% number Mitt Romney used seems low.   2004 figures from The Heritage Foundation showed that the bottom 60% of households receive more in benefis than they pay in taxes.   I will post more current figures if I find them, but I suspect that this “dependency ratio” has only worsened since 2004.

So while Mitt Romney’s “secret tape” statements might be politically awkward, it’s only because they are pretty much true.  The cost of government has shifted more and more to “the rich.”

This can’t continue forever because the math doesn’t work.  The rich guy isn’t buying because he can’t.

Related coverage:

Janet Novack, Memo To Mitt Romney: The 47% Pay Taxes Too

Kay Bell,  47 percent don’t pay federal income taxes, but do hand over payroll, other taxes

Tax Policy Center, Who doesn’t pay federal taxes

Robert D. Flach,  THE AMERICAN TAX NON-PAYER

Ramesh Ponnuri, Makers and Takers

Reason.com:  Will Americans Think They’re Romney’s “47 Percent”? Or One of the “53 Percent”?Romney’s 47 Percent Line Is a Common GOP Trope, and it’s Wrong*Secret Romney Tape Means We Can Finally Stop Talking About Obama’s Failed Foreign & Domestic Policy!Forget Romney: Should We Be Concerned That 49 Percent of Households Get Government Money?

Update: the TaxProf rounds up the frenzy.


CRS: Nothing Affects Economic Growth (William McBride):

A study by the Congressional Research Service (CRS) is getting a lot of attention, because it finds that tax cuts are not associated with economic growth.   Although less reported, the study also finds nothing is associated with economic growth, including all the standard factors such as education, population growth, and government spending. 

So close the schools, stop spending money, and raise taxes to 100%!

 

He probably wants to get his sentence out of the way so he can get on with his life.  When he’s 109.  Wasendorf kept in jail after court appearance  (Des Moines Register).  The 64 year-old, who has pleaded guilty to looting the Peregrine Financial Group, can expect to serve at least 90 percent of his expected 50-year sentence.

 

David Brunori,  Cowardly New Jersey Cronyism:

The not so courageous New Jersey’s Economic Development Authority approved a $40 million tax credit for Honeywell International to keep it from moving its headquarters to Pennsylvania.  Then the authority not so courageously approved a $40 million Grow New Jersey tax credit for Dotcom Distribution, an e-commerce warehousing and fulfillment company, so that it can build a facility and not move to Pennsylvania. Then the authority not so courageously approved a $50 million tax credit for developers to build a supermarket in Camden!  Where is the outrage? Where are the political leaders who have the courage to say that this is the worst kind of economic policy?

Not in Iowa, for sure.

 

TaxProf,  CRS: Corporate Tax Rate Could Drop to 29.4% in Revenue-Neutral Tax Reform.   I think the current  35% rate could go significantly lower than 29.5% if they really tried, without lowering revenues.  Of course, they won’t really try.

 

Russ Fox,  Is the IRS Time-Barred From Imposing a Penalty on a Frivolous Amended Return?  Short answer: no.

Jack Townsend,  Credit Suisse Continues Ratting on It Own and Expects Deposit Outflow.  Yes, that will do it.

Paul Neiffer,  Mistakes to Avoid in Lifetime Giving – Final

Timing is everything: capital investments for the last quarter of 2012. My new post at IowaBiz.com, the Des Moines Business Record blog for entrepreneurs.

News you can use:  The Tax Court Doesn’t Believe That You’re Not a Person (Anthony Nitti)

 

 

 

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Tax Update, 9/11/2012. Did you ask about that $107 million? Look, Blago! Also: wind and hot air; never forget.

Tuesday, September 11th, 2012 by Joe Kristan

Look, there’s Rod Blagojevich!  Governor Branstad defended the big smokestack-chasing tax credit package awarded to the Orascom Lee County fertilizer plant.  From QCTimes.com:

Branstad criticized President Barack Obama for “picking winners and losers in the marketplace” in an opinion piece distributed last week. It was the same week he announced the richest incentive package in state history that would be used to land the biggest single capital investment in state history.

As far as picking winners and losers, the governor cracked, “Illinois is the loser, Iowa is the winner.”

Branstad then took some more shots at the Land of Lincoln, describing it as “dysfunctional” and “willing to promise you the moon, then pulling the rug out from under your feet.” The state, he said, has “a reputation for corruption.”

Yes, corruption is unknown in Iowa.  Oh, wait…

Ramona Cunningham, currently serving time in federal prison for looting the Central Iowa (“no corruption here!”) Employment and Training Consortium, at the dedication of the CIETC Tom Harkin Learning Center.

This is fascinating:

Asked during his weekly news conference about how his column jibes with what he approved for the fertilizer plant, Branstad said the incentive package will be a catalyst for reforming the state’s tax system.

“A catalyst for reforming the state’s tax system?”  What does that mean?  That the award is so outrageous that it will finally spur legislators to replace Iowa’s futile, loophole-ridden system of high rates and complexity, sweetened with special deals for insiders?  “Stop me before I spend again?”  If it shocks legislators into adopting the Tax Update’s Quick and Dirty Iowa Tax Reform plan, it might almost be worth it.

More from the Des Moines Register.

 

Grounded.  Former Us Airways Pilot Sentenced in North Carolina to 10 Years in Prison for Tax Fraud (Dept. of Justice Press Release):

Charles A. Davis, 63, formerly of Mooresville, N.C. was sentenced today in U.S. District Court to 120 months in prison for committing tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. Judge Richard L. Voorhees in the Western District of North Carolina also ordered Davis to serve twelve months of supervised release after his prison term and pay $538,569 as restitution to the IRS.  

Trial evidence established that in April 2006, Davis filed five fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income in each of those years. And from April 2008 to February 2009, Davis filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. The evidence also established that during the time he failed to pay his taxes, the defendant drove a Ferrari and a Mercedes, and lived in a lakefront home on Lake Norman, N.C.

Well, he lived high for awhile.  Ten years imprisonment will bring down the average on his lifestyle.

 

Russ Fox,  A Modest Proposal on Tax-Related Identity Theft:

The IRS should check the address of every filed return versus the address on file for the taxpayer.  If the Jetsons’ return is filed with the same address as used last year, it’s likely the return is legitimate.  If not, then the IRS should put a hold on processing the return, and send a letter to the taxpayers at the address used in the prior year (with forwarding requested).

With this Russ has already done more to solve the $5 billion annual theft problem than Doug Shulman has done in over four years as IRS Commissioner.

 

Rob Smith, Residential wind energy a lot of hot air? (IowaBiz.com):

I can buy electricity from MidAmerican Energy at about 9 cents a KWH. My electric bill last month was $100.  At that rate, which is during the summer peak load, the investment would take 20-25 years to pay for itself.  My suggestion instead is to conserve energy or do other measures like insulation or new windows.

Indeed.

 

Robert D. Flach, NEVER FORGET.

TaxGrrrl,  The Post I Swore I Wouldn’t Write (Redux)

TaxProf,  6th Circuit: Severance Pay Is Not Subject to Employment Taxes

Jason Dinesen  On Mike Holmes and Going Cheap.  I like the quote he uses.

Peter Reilly,  Are Divorce Attorneys Trying To Whipsaw IRS ?

Patrick Temple-West,  Essential news: Travelers to Chicago pay steep taxes, and more.  I visited Chicago over Labor Day; he’s right.

Brian Strahle,  District of Columbia Extends Deadline for Combined Report!!

Politicians?  Describe the White House candidates in one (printable please!) word (Kay Bell)

You do?   You Have To Admire the Persistence of E&Y’s Partners (Anthony Nitti)

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