Posts Tagged ‘Jim Maule’

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

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

Lois Lerner, ex-IRS, ex-FEC

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

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

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

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

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

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

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

Via the TaxProf.

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

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

Max Baucus

Max Baucus

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

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

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



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

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

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

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


Paul Neiffer, Section 179 Update (or Not):

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

By Memorial Day 10 Billion to 1

By Labor Day 10 Million to 1

By the November Mid-Term elections 500 to 1

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

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

After December 31, 2014 5 to 1

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


HelmsleyTaxTrials, Leona Helmsley, Angry Employees Strike Back:

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

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

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


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


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

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

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


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

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

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

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


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

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



Tax Roundup, 10/2/2013: essential government function edition. And… commas!

Wednesday, October 2nd, 2013 by Joe Kristan
Wikipedia image courtesy Tallent Show under Creative Commons license

Wikipedia image courtesy Tallent Show under Creative Commons license

A bunch of federal government workers stayed home yesterday, but enough showed up to try to keep some 90-year olds off the grounds of the World War II memorial in Washington.  They will try to stand up to the guys in wheelchairs again today.  That must be one of those essential government functions.


Today’s shutdown roundup:

Kay Bell, Government shuts down. Who, besides citizens, will pay?

Janet Novack,  Federal Government Begins First Shutdown In 17 Years 

TaxGrrrl, Congress Marches Towards Shutdown, Spares Military   

Tax Trials, Tax Court Filing Deadlines during Government Shutdown

Joseph Thorndike, The GOP Is Right About One Thing: Ditch the Medical Device Tax (Tax Analysts Blog):

Narrow excise taxes — even when somehow correlated with special benefits — are not a good way to fund major social programs. Broad programs deserve broad taxes.

True.  But the political magic behind ACA was the idea of a “free” mass welfare benefit  — free to you, anyway, because some rich guy gets the tab.  But as Joseph has pointed out, the rich guy isn’t buying.

Len Burman, Would the Government be Shuttered if Obamacare were Romneycare?

Russ Fox,  The Government Shutdown and Taxes


Jason Dinesen,  Life After DOMA: Audits of Prior-Year Returns.  Jason explains how audits work for amended returns of same-sex married couples.

William Perez, How Social Security Benefits are Taxed by State

Jim Maule, Failing to Keep Those Records Can Increase Taxes

It is not implausible that the taxpayers paid more than $2,052 for the support of the wife’s mother. Certainly during the time when she was living with them, a portion of the costs of maintaining the taxpayers’ residence constituted support of the wife’s mother. But apparently the taxpayers did not offer any evidence of those costs.

It’s up to the taxpayer to keep the records needed to support your tax return.


TaxProf, Supreme Court Grants Cert. to Decide Whether Severance Pay Is Subject to Payroll Tax.  Is being paid to go away taxed the same way as being paid to work?

Peter Reilly, Court Rules Against Slots Playing As A Business 

Tony Nitti, The Real Winner In The Breaking Bad Finale: The IRS   


tax fairyPhil Hodgen, Sooner or later, secrecy fails as a tax planning strategy:

Americans: secrecy is a weak tax planning strategy; stop using it.

What seemed like a good idea 10 years ago has now compounded itself into a seemingly intractable dilemma. I know this because people tell me so every day.

Start looking for what is true, not what you want to be true. When you hear the answer, accept it. Swallow and digest the big chunks of truth.

In other words, there is no Tax Fairy



Jack Townsend,  Article on DOJ’s Swiss Bank Initiative

Keith Fogg, Representing Clients in Tax Court (Procedurally Taxing)



News from the profession.  BREAKING: Commas To Be Added to the CPA Exam (Going Concern).  “We are adding a comma to the calculator on the CPA Exam. The comma is meant for large numbers such as 1,000 and above to make them easier to read.”  Calculators.  With commas. In my day when we took the exam, we had “fingers.”



Tax Roundup, 5/15/2013: Those exempt organization returns are due today.

Wednesday, May 15th, 2013 by Joe Kristan

20130515With all the excitement over tax-exempt entities, it’s worth remembering that their returns — the 990 series — are due today for calendar-year filers.  And if an organization fails to file 990s for three years, its exempt status lapses.  Extensions are available, but they have to be filed today.

Late filing can be expensive.  For small organizations, the penalty is $20 per day of late filing; for those with receipts over $1 million, its $100 per day.  That adds up fast.

More information is available at the IRS page Form 990 Resources and Tools for Exempt Organizations.

Related: Trish McIntire, Important Tax Exempt Information


So let’s get started with this morning’s IRS Scandal news.  The TIGTA report whose imminent release triggered the IRS announcement of the scandal last Friday came out yesterday.  I covered it in a post last night.  Other coverage:

Tax Prof links:

Aprill: The TIGTA Report on the IRS Scandal: Questions About the IRS and About the Report

Hackney: The TIGTA Report on the IRS Scandal: Be on the Lookout for False Partisan Witchunts.  Yes, insist on only true partisan witchhunts.

And his roundup, The IRS Scandal, Day 6

Other coverage:

Russ Fox,  The Cynics Were Right (The IRS Scandal Gets Official Confirmation)

Patrick Temple-West,  Uneven IRS scrutiny, and more


Other Tax things:

David Brunori, Balderdash Masquerading as Tax Policy Arguments (Tax Analysts Blog)

It is no secret. This may hurt my libertarian credentials, but I believe the U.S. Congress should pass the Marketplace Fairness Act.  The tax system is sound when built on a broad base and low rates. Broad  base means you tax everything without regard to who is lobbying the legislature. It follows – and it really does follow – that the sales tax  should be imposed on all personal consumption. 

I can see a need for something like this, but I think it should be done by having a single point of compliance for sellers under a uniform set of rules, rather than subjecting internet sellers to the thousands of local tax systems.  David minimizes the compliance burden.  As somebody who makes a living off of the compliance burden, I can say with confidence that he is mistaken.

Joseph Henchman, Indiana Approves Income Tax Reduction (Tax Policy Blog)


Peter Reilly, Doctor Joyce Brothers Cameo In Tax Court And Women’s History

Jason Dinesen, Same-Sex Marriage, Community Property, And Multi-State Income — Part 2

Fiduciary Income Tax Blog, WSJ on Reducing a Trust’s Income Taxes

Jim Maule,  Tax Ignorance Gone Viral.  It really bugs him when people say the Internal Revenue Code is 24 feet high.



Tax Roundup, 4/9/2013: We assume it is so, and that makes it so.

Tuesday, April 9th, 2013 by Joe Kristan

Radio Iowa runs with this headline “$8.7 million from “Development Fund” creates 600+ jobs.”  This headline arises out a “study” paid for by the economic development bureaucracy (meaning: taxpayers) to demonstrate the tremendous job-creating skills of people who give your money to other people.  How did this study demonstrate this job creation?

By assuming it.

From the “study”:

A survey of past recipients of Demonstration Fund investments was conducted by the Iowa Innovation Corporation to determine, among other things, how large these companies are now as compared to their pre-investment levels. This growth in size – in annual revenues and in head count – can be attributed in part to the involvement of and investment by the Demonstration Fund.

Furthermore, the resulting economic impact is greater than the direct increase in expenditures and head count, since those increases lead to a series of spillover effects, whereby the impact of new company spending and employee earnings ripples through local economies and supports additional economic activity and job creation. Job impact estimates are determined by using standard input-output methodologies and multipliers, as provided by the US Department of Commerce.

In other words, they assumed:

– that multipliers work – a shaky assumption.

– that the businesses and jobs wouldn’t happen without the wonderful effects of your money being directed by politicians to those businesses.

– that the money wouldn’t have also generated jobs if it had been spent elsewhere.

That’s the same kind of thinking behind the 2009 stimulus spending spree.  The results were less than assumed.  The dark line is what government projected that spending would do to unemployment, using “standard multipliers.”  The lighter blue line was the grim fate awaiting us absent a government binge.  The red dots are the actual post-binge unemployment rates.


The study does not have the two words that could have given it credibility:opportunity cost.”  They assume that the money left in the hands of taxpayers would have done nothing.  But it would have been spent elsewhere, undirected by politicians; it would have bought things, creating profits and jobs.  But as they would have gone unclaimed by economic development officials, no press conference could have been called, so they don’t count.


Jeremy Scott, What Should Be in the Obama Budget (

Obama consistently ignores the statutory timeline for releasing his budget, and this year is the latest he has ever put forward a fiscal proposal.  On all things administrative, the president is frequently dilatory.  But those waiting with bated breath for Obama’s proposals will be disappointed — the budget will be more of the same and has little chance of actually being passed or even taken up by Congress.

Good news.

Does President Obama Want To Tax Your Retirement?  His budget proposes a cap on the size of retirement accounts, but see the item above.


TaxProf,  WSJ: Taxing Lunch at Google and Facebook?.  Will the IRS start putting free meals for techies on their W-2s?  Just don’t tax my busy season office donuts.

Tax Trials, New York’s Highest Court Affirms Constitutionality of Click-Through Nexus

Nostalgia.  Today in History: Income Tax Ruled Unconstitutional in Pollock v. Farmers Loan Trust Co. (Joseph Henchman, Tax Policy Blog)

William Gale, Tax Policy Should Consider New Business, Not Small Business (TaxVox)

Martin Sullivan, How Should the U.S. Stop Profit Shifting? (


Trish McIntire, One Week Warning

Kay Bell,  Taxes are due in a week! Don’t panic. Use 7-day filing plan

William Perez,  What to Do if You Owe Taxes for 2012

Russ Fox, Bozo Tax Tip #4: Procrastinate!


Jim Maule,  How Not to Litigate a Tax Case

Peter Reilly, Wesley Snipes Raises Creationist Hopes For Kent Hovind

Definitely not a problem for me this year:  Bragging About Winning Your NCAA Pool On Facebook May Cost You Come Tax Time (Tony Nitti)


News you can use: The Definitive ‘I’m Quitting Public Accounting’ Checklist (Going Concern)



Tax Roundup, 12/21/2012: Plan B breaks, Tiger tamed.

Friday, December 21st, 2012 by Joe Kristan

20121221-1Plan C through Z?  House Speaker Boehner’s effort to pressure the White House into compromise with “Plan B,” a proposal to retain 2001 tax rates on incomes below $1 million, died last night.  The Speaker cancelled a vote on the plan when it was clear that it lacked enough support to pass.  The Wall Street Journal reports:

After pulling his bill without taking a formal vote, Mr. Boehner  unexpectedly disbanded the House until after Christmas, leaving behind
uncertainty about whether Congress and President  Barack Obama would be able to avoid $500 billion in spending cuts and tax increases that begin in January.

So what now?

“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Mr. Boehner said in a written statement after a brief meeting with House Republicans. “Now it is up to the president to work with Senator Reid on legislation to avert  the fiscal cliff.”

Is it time to panic?  Will we see a filing season delayed until the end of March, a big 2012 AMT hit, and tax increases all around?  Joe Weisenthal at Business Insider says we aren’t over the cliff yet:

Indeed. If Boehner couldn’t even get the GOP to support a law that would let taxes revert on millionaires, how is he going to get GOP support on a deal that would let taxes revert on those making $250K or $400K, as the President would like to sign?

Here’s the thing with that. Boehner doesn’t need to get all of his caucus, because in the end, if Obama supports the ultimate compromise, then it’s safe to say that the Democrats will bring about 100+ votes in the house to support the bill. And this was always true. It was always the case that the eventual compromise would see Boehner lose 70 or more Republicans, to be made up with Democrat support. So nothing changes on that front.

There’s 10 days left before 2012 expires.  Even then it’s possible that they will make a retroactive deal next year with the new Congress.  The legislative and leadership malpractice continues.

Fiscal Cliff Notes:

TaxProf,  The Competing Obama and Boehner Tax Plans

Kay Bell, Republicans reject Boehner’s fiscal cliff Plan B, House breaks for Christmas

TaxGrrrl, Boehner Fails To Push Through Plan B Before House Walks

Christopher Bergin,  Fiscal Surrender (

So, I would suggest that while General Boehner wants things to look like  he is negotiating a budget deal, he is actually seeking the best surrender terms that he can get. And if the President is a good enough general to understand his position, he will not try to over-exploit it.

Paul Neiffer,  Farmers Might Delay Higher Tax Rates for Three Years?  Thanks to income averaging, a trick available only for farmers,  “…you might be able to earn $1 million from farming and have most of it still subject to the old lower tax rates” if rates go up next year.

Nanette Byrnes,  Blue states lose: how avoiding the U.S. fiscal cliff hits some states harder than others (Tax Break)

Tax Policy Blog, Tax Cut Expiration Would Impact States Unevenly

Janet Novack,  A Closer Look At Boehner’s Plan B: Tax Hikes For Parents And Workers

Howard Gleckman,  Should Working Class Families Pay Higher Tax so High Income People Can Pay Less? (TaxVox)

Jim Maule, The Postponed Pain of Foolish Tax and Spending Decisions


St. Louis area preparer “Tiger” Zerjav pleads guilty to tax crimes.  A St. Louis-area CPA who survived an IRS effort to shut down his practice through a civil suit lost a much bigger fight yesterday.  Frank “Tiger” Zerjav pleaded guilty to four tax crime counts in Federal District Court. Courthouse News Service reports:

Frank L. “Tiger” Zerjav Jr., 39, of Wildwood, Mo., pleaded guilty to  four counts of tax evasion from 2001 to 2004, prosecutors said.
     He  and his father, Frank L. Zerjav Sr., were principals in two entities:  Zerjav & Company, a full service accounting firm, and the Advisory  Group USA, which offered tax planning and asset protection strategies.      Zerjav admitted that he funneled his income into several S-corporations and failed to include that income on his tax returns.

The IRS attempted to enjoin the Zerjavs from tax practice in 2008, alleging that they set up S corporations for their clients and then deducted personal expenses on corporation tax returns — including a “Precious Moments” figurine collection.   The Zerjavs settled under what appeared to be favorable terms in 2010.

The plea agreement is not yet public.  Sentencing is set for March 26RelatedCopy of indictment.


Jason Dinesen, New Preparer Requirements on Earned Income Credit = Higher Fees for Clients.  That’s on top of the increase in fees that will result from the massive contraction of the preparer industry that we may be in for thanks to the IRS preparer regulation regime.

News you can use:  Pot Business May Be Legal In Washington State But There Are Still Rules (Peter Reilly)


The Critical Question:  Are Holiday Weddings a Form of Tax Planning? (Jana Luttenegger, Davis Brown Tax Law Blog):

Your  marital status for tax purposes is determined as of December 31. That means if you get married on New Year’s Eve, you are considered married for the entire year and can file as a married couple. Likewise, if a divorce is finalized by the end of the year, you will be considered unmarried for the entire year. Trust me, I am not the  only one that has wondered if certain people getting married on New Year’s Eve did it for tax purposes.

It’s a special Friday Buzz at Robert D. Flach’s place!

Madoff’s brother sentenced on tax charges (Wall Street Journal, via Going Concern)


Not so Fat Joe not so good at taxes.  A rapper who performs as “Fat Joe” is in tax trouble, reports AP.  The story says Joseph Cartagena pleaded guilty yesterday to not reporting nearly $3 million in income over two years.

Oddly, he’s not so fat, according to the story:

Wearing a navy suit, Cartagena looked fit and considerably slimmer than the former size that had earned him his rapper nickname. He has been very public about his efforts to shed weight after fellow rap stars died from obesity-related issues and was recently in Newark to speak to schoolchildren about health and fitness.

It’s nice that the schools find such good role models for the kids.



Tax Roundup, 12/5/2012: Happy Repeal Day! Too bad it’s not the tax code.

Wednesday, December 5th, 2012 by Joe Kristan

Happy National Repeal Day!


Either we cut spending or everyone will pay more taxes.  This post by Veronique de Rugy puts together in one handy package some points I have been trying to drive home about budget and tax policy.  It’s all worth reading, but some key items include:

 In my opinion, the problem with the fiscal-cliff debate has been that no one is acknowledging the fact that there is no way out of raising taxes on everyone eventually unless Congress gets serious about addressing our long-term fiscal problem, by restraining spending.

“The Rich” simply don’t have enough income to foot the bill.  But borrowing temporarily hides the problem:

This, by the way, is why I thought the Bush years were so toxic. Cutting taxes while increasing spending dramatically — Bush increased real spending by 60 percent, as opposed to Clinton’s increase of 12.5 percent — is a recipe for large deficits leading more taxes later or certainly intense pressure to raise taxes.

What will taxes look like when the bill comes due?

This weekend, Mark Steyn gave us an idea of what that tax bill would look like. He writes:

A couple of years back, Andrew Biggs of the American Enterprise Institute calculated that, if Washington were to increase every single tax by 30 percent, it would be enough to balance the books — in 25 years. If you were to raise taxes by 50 percent, it would be enough to fund our entitlement liabilities — just our current ones, not our future liabilities, which would require further increases.

Finland shows how high taxes have to be to adequately fund a lavish welfare state, as I have noted:

Finland has an extensive welfare state and most years pays for it without budget deficits.  It does so with income taxes that reach a 2012 top rate of 29.75% at €70,301, which is about $57,021 at current exchange rates.  For a US taxpayer filing single, the 28% rate doesn’t start until taxable income reaches $85,651, and not up to $142,701 on joint returns.  On top of that, Finns pay a 23% Value-added tax on most purchases — a tax that is not tied to income.  But there’s more!  There is a mandatory 4.7% payroll tax on employee gross wages, plus another 18.3% “paid” by the employer — but that necessarily reduces what they can pay the employee after-tax.

I’m not sure all that would go over well here, but that’s what we’re headed for.  Anybody who says rich people can pay for all of the free government stuff is either clueless or lying.  The rich guy isn’t buying.


Megan McArdle,  Who Gets More Damaged If We Go Over the Fiscal Cliff?  At least there’s a drink at the bottom.

At least the weather’s nice.  Oh, maybe not…  Top Federal Marginal Tax Rate Will Exceed 50% in California, New York, and Hawaii in 2013 (TaxProf)

Amy Feldman,  Getting ready for the Medicare tax on investment income   (Reuters)

Don’t think he actually plans to pay the higher taxes he supports.  Warren Buffett Makes Money On Tax Breaks He Discredits (Steve Stanek, IBD)

Joseph Thorndike, Moral Abdication Dressed Up Like Hard-Nosed Realism (


But think of the intangible benefits of the Iowa film tax credit program! Film financier sues state over unpaid film credits (AP)  The producer of one of the films involved in the suit pleaded guilty to felony chargesarising from tax credits for the film.

Joseph Henchman,New York Times Tells the Tale of Michigan’s Bankrupt State-Backed Film Studio (Tax Policy Blog Oh, and Happy 75th Birthday to the Tax Foundation! 


Kay Bell, Tax Carnival #109: Tax Stocking Stuffers

TaxGrrrl,  12 Days of Charitable Giving 2012: Be An Elf

Russ Fox,Nominations Due for 2012 Tax Offender of the Year.  ‘Tis the Season!

Must be a Cubs fan. Hapless Mr. Williams Loses Again (Jack Townsend)

Nor do I.  No, I Don’t Plan to Take the RTRP Exam (Jason Dinesen). 

Jim Maule, The Hidden Government Spending Game.  Spending doesn’t become something else just because you run it through a tax return.

Trish McIntire, Do You Have a Spare $2,350?  You do?  Good, you may need to send it to the IRS in April if Congress doesn’t “patch” the Alternative Minimum Tax for this year.

Peter Reilly, Hobby Losses – Need To Convince Tax Court You Love Money More Than The Game

Robert D. Flach has his Wednesday Buzz roundup of tax posts up!



Holistic auto healing?  Cadillac chiropractor sent to prison for tax fraud  (

The Critical Question:  Bartlett: The Fiscal Cliff and the Debt Limit — What Would Lincoln Do? (TaxProf)

Judge Holmes Quote of the day. 

Allison T. O’Neil, the ex-wife of Michael J. O’Neil, does not want to pay a penny of their joint 2005 federal tax liability because, she says, it [*2] would be inequitable to make her do so.

2 Michael recalls providing Allison with $6,000 to $10,000 per month. Allison recalls getting only $6,000 per month.

Cite: O’Neil, T.C. Memo 2012-339


Tax Roundup, 11/23/2012: Black Friday edition!

Friday, November 23rd, 2012 by Joe Kristan

Most people aren’t working today, as they are too busy spending like there’s no tomorrow.  But the Tax Update, between the first round of turkey and today’s round two, has much to be thankful for.

I am thankful I don’t have 50 employees. From Jillian Kay Melchior at The Corner we get this great graphic that shows how Obamacare penalties may make you regret that 5oth hire:


I am thankful to the TaxProf for highlighting David Bernstien’s Buffet Tax Resolution:

(1) Whereas, the U.S. government is in desperate need of revenue.

(2) Whereas, Warren Buffet is worth tens of billions of dollars, almost all of which is destined for private foundations and thus will completely escape federal tax.

(3) Whereas, Warren Buffet has publicly proclaimed that he is undertaxed.

(4) Resolved, the U.S. government should pass legislation that gifts to foundations in excess of a $20 billion lifetime exemption will hereinafter be taxed at 55%, the normal inheritance tax rate.

Fairness, Warren, fairness!


I am thankful that Megan McArdle, who (deservedly) has a much bigger audience than the Tax Update, has posted some excellent tax policy posts: 

Should People Who Make $250,000 a Year Worry About Obama’s Tax Proposals?

Kevin Drum and Dave Weigel take off after rich people who don’t understand that they only pay marginal tax rates on the extra dollars they earn above taxation thresholds.  “This isn’t true, of course. Obama is only proposing to raise tax rates on income over $250,000, so if your income goes up to $251,000, you only pay the higher rate on the extra $1,000. The tax bill on your first $250,000 stays exactly the same.”

Their analysis is basically sound, except for the fact that it is not quite true.  They have forgotten to look at deduction phaseouts, surtaxes, and the AMT, which are not taxes on marginal income.*

Followed up by:

More On That Wrinkly Tax Code, which addresses the disincentives to improving your income when you receive an earned income tax credit.

And then by Still More Tax Wrinkles on the way the tax law has surprising and painful definitions of “highly-compensated” employees.

I am thankful the IRS has decided to defer until 2014 the regulations for capitalizing expenditures for tangible property.  (Notice 2012-73) Now I don’t feel so bad for not having read them yet.

I am thankful I never thought it was a good idea to evade taxes by having money due to me paid to my spouse instead.  Criminal mastermind, that guy.


I am thankful for all of the other tax bloggers who give me much to link to and think about, link, and agree or disagree with:

Kay Bell,  Be thankful for — and claim! — the American Opportunity education tax credit while it’s still here

Anthony Nitti,   The Top Ten Tax Cases Of 2012, #6: No Good Deed Goes Unpunished – Failure To Follow Appraisal Rules Costs Taxpayer $19 Million Charitable Contribution Deduction

Jim Maule,   When the IRC Defines a Term, It Trumps Other Definitions

Jana Luttenegger,   Giving Back After Hurricane Sandy (Davis Brown Tax Law Blog)

Trish McIntire,  Bye Bye NOLs – Kansas

Patrick Temple-West,  Congress seeking ways to raise taxes but leave tax rate as is, and more

TaxGrrrl,   Will Online Sales Taxes Push Shoppers Towards Black Friday Or Cyber Monday?

Joseph Henchman,   South Carolina Tax Collector Leaves After Cyberattack Accesses Taxpayer Records.  He should be leaving on a rail with a tar-and-feathers ensemble.


Linda Beale, Globalization, winners and losers, inequality, and the right tax policy (Part I of “Just What Tax Reform?”)

Going Concern,  Alleged CPA Creep in Columbus Is Out on Bail, Still Really (Allegedly) Creepy


Most of all, I am thankful for great clients and readers that make the Tax Update possible and fun.  Thanks!


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

Monday, October 22nd, 2012 by Joe Kristan

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

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

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

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

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


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

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

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

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

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


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


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


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

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

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

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

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

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

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

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

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

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

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


Tax Roundup, 9/24/2012: Mitt files! And USA bucks trend of lower corporate rates.

Monday, September 24th, 2012 by Joe Kristan

Mitt Romney filed his extended return on Friday. In addition to remininding us laggards that the extension season will end three weeks from today, it shows us that the Republican nominee has a lot of money.  Who knew?

The strangest item may the candidate’s voluntary walking away from a charitable contribution deduction.   He did that to ensure the “effective rate” on his adjusted gross income  was at least 13%.  Of course, he has three years to change his mind and amend his return.

The return has one thing in common with the Obama 1040s: self-employment income.   While the Obamas began taking retirement plan contributions based on that income, perhaps because they secretly read the Tax Update, the Romneys do not.  They could still set up a SEP plan, amend their returns, and take a 2011 deduction against his director fee income.  They may be too busy for that right now,  but if you have an extended return with self-employment income, it’s not too late for you!

The campaign also issued a letter from PWC summarizing his taxes over the past 20 years, debunking the foolish innuendo that Harry Reid peddled that Romney had zero-tax years.

The TaxProf has a Romney return roundup.  More coverage:

Going Concern:  Mitt Romney’s 2011 Tax Returns Reveal He’s the Richest Unemployed Dude You’ve Ever Seen and Footnotes: Romney Tax Returns, Romney Tax Returns and Romney Tax Returns.

Kay Bell,  Romney will file an amended 2011 tax return on Nov. 7 … if he loses

Anthony Nitti,  Reactions to Romney’s 2011 Tax Return and Romney Forgoes Full Charity Tax Break for 13% 2011 Rate

Janet Novack,  On 2011 Federal Income Tax Return, The Romneys Decide Horse Losses Are Personal and Romney Paid At 14% Federal Tax Rate In 2011, Pegs 20 Year Average At 20%

Peter Reilly,  Romney Accountant’s Letter – Exercise In Obfuscation ? and Mitt Romney Passing On Nearly Two Million In Charity – Stupidest Thing I Ever Heard


Related: TaxGrrrl, Ryan’s Amended Returns Offer More Questions Than Answers



Meanwhile, in news that matters:  Sweden to Lower their Corporate Rate to 22 Percent, 18 Points below Ours (William McBride, Tax Policy Blog).


More coverage of the Iowa guy who filed as a South Dakota resident:  Linda Beale, Tax Home–where the heart is, but not necessarily where the taxes are lowest and Russ Fox,  Home Is Where the Family Is.


Jack Townsend,  Restitution in Tax Cases

Jason Dinesen,  “Consumer Reports” Highlights Identity Theft

Jim Maule,  Raising the Tax Shame Noise Level

Nanette Byrnes, Essential reading: GOP retreat on taxes likely if Obama wins, and more

Martin Sullivan,  The Critical Question. “If the Obama wins, will the Republicans comrpomise or double down?” Maybe we should ask the Ben Bernanke.

Russ Fox,  Las Vegas Attorney Accused of Tax Evasion and Structuring

And it wouldn’t be a weekend without a new Buzz from Robert D. Flach.


Quote of the day:

Wind energy tax credits, like all government-sponsored tax incentives, don’t work. They violate every principle of sound tax policy. The wind tax incentives place the risks on the public and promise the rewards to a chosen few. As the insurance company ad said, even a caveman could see that. Nevertheless, there is a bipartisan crescendo building to ensure the wind energy suppliers continue to receive their credits.  (David Brunori, Tax Analysts (subscriber link))


Tax Roundup, 9/5/2012: Laying it on thick for the fertilizer plant. Math is hard. So is tax, even with TurboTax.

Wednesday, September 5th, 2012 by Joe Kristan

Governor Branstad’s administration is making a big push to promote STEM education: Science, Technology, Engineering and Math.  This headline in the Des Moines Register today shows how badly we need math education, especially in Iowa’s “Economic Development” bureaucracy:

165 jobs, $110 million in aid

Officials mull boosting incentives to keep $1.3 billion fertilizer plant project in Iowa

This is the worst kind of smokestack chasing, which is always the preferred approach of “economic development officials.”  Never mind that Iowa already has competing fertilizer plants — as Sioux Citian Debi Durham, Iowa chief official economic developer, surely knows.    Never mind that Iowa and Illinois are getting played shamelessly by Orascom, the fertilizer company.  Never mind that the money comes from taxes paid by existing competitors, and by thousands of unsubsidized businesses like ours, and our employees.  Never mind all that — it’s about buying a ribbon-cutting, not about making the state a good place for everyone to do business Unless, of course, Roth & Company gets a nice state check for $21.3 million for the jobs we have already created.

At least some folks are catching on to the game.  From the article:

Orascom has attracted a diverse group of opponents, from parents, environmentalists and liberal groups such as Iowa Citizens for Community Improvement and Iowa Policy Project, to conservative groups such as Public Interest Group, Lee County Tea Party and Americans for Tax Reform.

So there’s agreement from left to right that it’s a bad idea for the state.  But if politicians think it’s a good idea for them, it will go through.

Related: Taking your wife’s purse to buy drinks for the girls and  LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION


Who catches the identity thieves?  Hint: it’s not Doug Shulman’s IRS.  From the Bradenton (Florida) Patch:

Det. B. Pieper from the police department’s gang unit put together the case by paying close attention during a routine drug bust…

Pieper was one of several detectives watching traffic coming to and from a house where police suspected drugs were sold. He said he and his partner watched a car leave the house and then run a stop sign. When they pulled over the car Brydson was in the passenger seat with a laptop and a bag of marijuana on her lap.

Brydson quickly closed the laptop, which made Pieper suspicious. When he searched her purse, he said he found several TurboTax debit cards with different names on them. He also noticed a 60-step instruction sheet on how to perform tax fraud through TurboTax.

So local cops have to do the IRS’s job of stopping the thieves who take $5 billion of our taxes annually while the IRS is busy building a new preparer regulation bureaucracy at the behest of the national tax prep firms.  Priorities!


 Courtney A. Strutt Todd: Congratulations on Your Scholarship. Don’t Forget to Pay Uncle Sam (Davis Brown Tax Law Blog)

TaxProf, Tax Planks in Democratic Party Platform

Andrew Mitchel, Partnership Definition

Martin Sullivan, The Effects of Interest Allocation Rules in a Territorial System (

Linda Beale, Romney and Private Equity’s Questionable Schemes for Paying Very Little Tax

Kay Bell, Tax moves to make in September 2012

Robert D. Flach has a new Buzz roundup of tax blog posts.

Jim Maule offers A Peek at the Production of Tax Ignorance.  It’s booming.

I think spending less than you earn works even betterDo Mandates or Tax Subsidies Do a Better Job of Boosting Savings?

Have a nice dayCBO: Federal Healthcare Spending Will Exceed Discretionary Spending by 2016 (William McBride, Tax Policy Blog)

GIGO: it’s Tax Court Doctrine!  From a case rejecting a taxpayer’s use of TurboTax as an excuse for a bad return:

It is apparent that a portion of the information petitioner entered into the TurboTax program was incorrect; hence the mistakes made (which resulted in the underpayment) were made by petitioner, not TurboTax. TurboTax is only as good as the information entered into its software program. See Bunney v. Commissioner, 114 T.C. 259, 267 (2000). Simply put: garbage in, garbage out.

Tim Geithner, call your office.

Cite:  Bartlett, T.C. Memo 2012-254.

Related:  Reason #17 to Hire Me: Blaming Turbo Tax Can Not Protect You From Penalties (Anthony Nitti)



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

Monday, August 27th, 2012 by Joe Kristan taxes: Trust a little, verify a lot.   Sad stories all around in Binghampton, New York, after an executive at a payroll service provider admitted stealing tax deposits, rather than remitting them to the IRS and the state.  From WBNG.Com:

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

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

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

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


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

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

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

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


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

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

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

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

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

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



It’s Guest Post Week on Taxgirl!

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

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

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

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

Jim Maule, Using Taxes to Measure Generosity

Christopher Bergin,  Taxing With the Stars

Robert D. Flach has a new Buzz on.

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


Tax Roundup, 8/15/2012: Revenge via 1099-C? Plus more on taxes in the campaign, and answering tough questions about your accounting job history

Wednesday, August 15th, 2012 by Joe Kristan

Should you issue a 1099-C if you have a client or customer that doesn’t pay you what they owe you?  Bruce the Missouri Tax Guy and Jason Dinesen both address that today.  Both posts are worth reading.  Jason explains:

So unless your business is in the business of lending money, you aren’t required to issue a 1099-C to a non-paying client.

But are you prohibited  from doing so? It doesn’t appear so, at least not under tax law.

What does issuing a 1099-C do?  In a couple of years the IRS computers will look for debt forgiveness income on your deadbeat’s tax return and send them a notice when they don’t pay taxes on the services they received from you without paying.  Peter Pappas, a Florida tax attorney blogger,  says “I have seen many cases where a disgruntled ex-partner or creditor rifled off an erroneous 1099-C just to get the taxpayer audited by the IRS.”

So you get a measure of vengeance.   Is it worth it? I think Jason is wise when he says:

Personally, I wouldn’t issue a 1099-C to a deadbeat client. I realize there may be some satisfaction in threatening a deadbeat and seeing them sweat. But I think it would cause more harm than good to go down the 1099-C route.

I agree.  Better to bill timely before they owe you too much, and walk away if they don’t pay.  Take care of your good customers and don’t waste your time on the deadbeats.

Related: A victory for bitter ex-mothers-in-law everywhere


It’s August 15.  Aren’t you glad we don’t have to re-extend tax returns any more?  A few short years ago, you could only “automatically” extend a 1040 until August 15.  You had to file a second extension request to get another 2 months extension, and you had to have a “good reason” for it.  If you didn’t give a reason, they would deny your request, so your return would be late.

Every tax pro learned to include a boilerplate statement on the second extension form, something meaningless like “Additional time is needed to gather the information necessary to prepare a complete and accurate return.”  It was really a waste of time but a potential trap.  Fortunately, the automatic extension is now six months, so August 15 is just another summer day at the office.


Ryan’s Goal: Low Taxes and Small Government, not a Balanced Budget (Howard Gleckman, TaxVox). All three would be nice, but right now two out of three would be a huge improvement.

William McBride asks  “Would Romney Pay Zero Taxes under the Ryan Plan?” at the Tax Policy Blog.

Kay Bell is Comparing Obama, Romney tax plans

Trish McIntire says “Use Your Tax Info for Election Analysis.”

Anthony Nitti, First Strippers, Now Masons. Everyone is an Employee.

It’s Wednesday, so that means Robert D. Flach of New Jersey Pennsylvania isbuzzing.


So tell me about your last accounting job.    From Columbia, S.C., reports:

The state Hospitality Association’s former accountant was sentenced Tuesday for stealing $500,000 from her employer.

Rachel Duncan pleaded guilty to federal tax evasion and wire fraud charges in April.

The 42-year-old was sentenced to 30-months behind bars and three years on probation.  She was also ordered to repay more than $350,000.

OK, what were your other achievements on the job?

Her plea came 10 weeks after chief executive officer Tom Sponseller was reported missing.

He was found 10 days later in a storage room. He had committed suicide.

Prosecutors said they found sexually-oriented photos of Duncan on Tom Sponseller’s computer. But prosecutors said there is no indication he received any of the $480,000.

OK, Miss.  We’ll get back to you…


Tax Roundup, 7/31/2012: Does the Shulman power grab threaten CPAs?

Tuesday, July 31st, 2012 by Joe Kristan

Robert D. Flach has another CPA-bashing post, making the far-fetched assertion that the new “registered tax return preparer” designation created under the lame new power-grabbing IRS preparer regulation rules will displace CPAs in the tax market.  Jason Dinesen, an Iowa enrolled agent, responds with CPAs: Don’t Fear the RTRP.   I think enrolled agents have more to worry about, because most people don’t know that they are held to much stricter standards than RTRPs, with their open-book  literacy competency test.

It’s an old discussion that hasn’t progressed much.  My position is here,  but this illustration works as a summary:

Gallup: Increasing Taxes on the Wealthy Is Lowest Priority Issue, Even Among Obama Voters(TaxProf) That’s good, because the rich guy isn’t buying anyway.

Tax evasion: “tastes great” or “less filling?”  Left-side tax prof and blogger Linda Beale says Tax evaders (and those who aide them), not regulatory complexities, cause tax evasion.  That’s true as a tautology, but Peter Pappas correctly notes that complexity is a co-conspirator.  When any set of rules gets too complex to follow short of unreasonable effort and expense, people cut more corners — and some ignore them altogether.

Jim Maule explains The Importance of Tax Record Keeping.  It’s sad how many taxpayers cost themselves money by being unable to support their deductions on audit.

William Perez: Sales Tax Holidays in Twelve States.  Iowa’s two day holiday for clothes starts Friday.

TaxGrrrl: Why I Don’t Believe That Anonymous Hacked The IRS For Romney’s Returns:

If you’ve ever tried to access records from the IRS, you’d know that the likelihood of finding 25 years of data in one place is practically nil. Prior to 1987 (that 25 year mark), tax returns were processed manually. Since that time, the IRS has become much more efficient, but a never ending supply of records isn’t generally available at the push of a button – even on the IRS side. Don’t believe me? Try ordering your old tax records.

So true.  KayBell has more, “Romney tax returns obtained by IRS database hacker? Just kidding!


Tax Roundup, 7/25/2012: Thrifty thief sentenced; trashy trusts; fleeing France

Wednesday, July 25th, 2012 by Joe Kristan

Thrifty thief gets 5 1/2 years.  The woman who got a fraudulent $2.1 million tax refund from Oregon and who subsequently went on the thriftiest spending spree ever was sentenced yesterday to 5 1/2 years behind bars.  From the Huffington Post:

Before her June 6 arrest, Reyes’ spending spree included about $1,800 in cash to buy a 1999 Dodge Caravan and spending $851 on tires and wheels.

She did allow herself a few little luxuries, too:

The affidavit says other purchases included a queen-sized air mattress, a deep fryer, an air conditioner and a cream and gray floral rug. She bought a sofa and recliner with brown leather trim.

Sadly, she was more careful with the money than the state was:

The return was set aside for review by processing staff and managers for potential fraud. But “some time later,” the affidavit said, a Revenue employee overrode the flagged payment and the refund was issued.

By policy, three agency employees are required to verify the override, the newspaper said. However, according to the affidavit, no one responsible for reviewing the return opened the file to look at it or looked at the W-2 form Reyes filed.

Call me when the state fills out its vehicle fleet with 12-year old used cars.

 In Sod We Trust.  From

The owner of a Sioux Falls sod business ducked taxes for almost 10 years before investigators caught on to the trust fund scheme he had used to evade capture, federal prosecutors said.

Jerome Adrian, 70, was arrested and appeared Friday in U.S. District Court in South Dakota on one count of conspiracy to defraud the United States, 12 counts of willful failure to collect or pay over tax, two counts of evasion of payment, five counts of tax evasion, four counts of willful failure to file tax returns, and one count of false tax refund.

Bogus trusts are an IRS “Dirty Dozen” tax scam.  They don’t work, though they might seem like they do until you get caughtRuss Fox has more.

Congress is pretending to address Taxmageddon, the expiration of the Bush-Obama era tax cuts at the end of the year.  Coverage includes Anthony Nitti’s Republicans Propose Their Own Way of Dealing With the Bush Tax Cuts, Kay Bell’s Republican definition of ‘temporary’ tax breaks depends on your income bracket, and Howard Gleckman’s Senate Democrats Would Keep Dividend Taxes Low, But Why?

“Tax Fairness” advocates, like the President and Citizens for Tax Justice, seem to think that there can never be bad consequences for jacking up taxes on “the rich.”  France is about to give a lab test on such ideas, including a 75% rate on income exceeding €1 million.  Veronique de Rugy, a newly-naturalized U.S. citizen who got out of France while the getting was good, explains the Consequences of High Taxes: French Edition.

Surprise! IRS Audits of S Corporation Returns: No-Change Rate Remains High, TIGTA Finds. But there has to be a pony in there somewhere.

The Iowa Department of Revenue has issued its summary of 2012 lowa tax law changes.

I hate to disagree with anything in Peter Reilly’s space, but I can’t abide the notion that it is the fault of the taxpayers and their advisors that the IRS is valuing at $65 million an artwork that cannot legally be sold.  The artwork contains an American Eagle, the sale of which is subject to severe penalties.  But read “‘Canyon’ Controversy – Blame The Advisers Not The IRS,” a guest piece in Peter’s space by Matthew Erskine, and decide for yourself.

Robert D. Flach has a new “Buzz” roundup of tax news.

Jason Dinesen: Same-Sex Marriage, Community Property, and Self-Employment Earnings

Jim Maule concludes a riveting 14-part series on the idea of having the IRS prepare returns for individuals using third party information reporting.

Where to start? What is Wrong with the Press? (David Brunori,



When we’re boring, we demand your full attention.

Tuesday, January 12th, 2010 by Joe Kristan

Professors at some big law schools are banning classroom portable computers, reports Above the Law:

You know, if I didn


Why does ‘the greater good’ always mean more power and money for them?

Wednesday, December 30th, 2009 by Joe Kristan

Nick Gillespie at

There is a looming showdown in American society between public-sector employees and the rest of us, in terms of job security and, especially, unsustainable gold-plated retirement and health benefits that are working hard to bankrupt whole states such as California, New York, and New Jersey

Remember that the next time they want to raise our taxes and we’re told it’s a choice between “individual greed” and “the collective good.”


Party like its 2002

Tuesday, January 20th, 2009 by Joe Kristan

The era of hope and change looks surprisingly like 2002. The text of the House Ways and Means tax bill is now available (hat tip: Benefitsblog), and its business proposals take us to the future by going back seven years:
– a five-year carryback for NOLs incurred in 2008 or 2009;
– 50% bonus depreciation for property placed in service in 2009.
– Extension of $250,000 bonus depreciation through 2009.
The bonus depreciation and Sec. 179 provisions extend current law one extra year.
The NOL provisions allow 100% offset of alternative minimum taxable income for the carrybacks. They also allow taxpayers to carryback only two years, rather than five. TARP recipients are shut out of the five-year carrybacks.
There are a few provisions that aren’t reruns of Bush stimuli. Taxpayers with income up to $75,000 of AGI ($150,000 for joint filers) get a “Making Work Pay” credit of up to $500, or $1,000 on joint returns. So your $75,000 job doesn’t pay now, but an extra $500 will make all the difference, apparently.
The bill also repeals the requirement that taxpayers receiving the first time homebuyer “credit” repay the amounts. Now the IRS goes from being the lender of first resort straight into the down-payment assistance business.
The bill also includes some other miscellaneous credits, including a temporary increase in the earned income credit and some new education credit provisions.
Dr. Maule correctly notes: “Just Because It Didn’t Work the First 50 Times Doesn’t Mean It Will Work Next Time.”
Hope and Change, indeed.



Monday, June 9th, 2008 by Joe Kristan

Roger McEowen has posted a summary of the tax provisions of the new farm bill at the ISU Center for Agricultural Law and Taxation site.
Meanwhile, Dr. Maule ponders the effective date of the new laws provisions, given how badly Congress botched the paperwork.



Monday, December 17th, 2007 by Joe Kristan

Villanova tax professor James Maule knows his lawyers, given that he teaches them for a living. He has made a discovery about his students:
Lawyers Are Just Like People: Some Good, Some Bad
While making his case, Mr. Maule provides evidence that some lawyers are more like weasels or black widow spiders. I’ll just note his phrasing: he is careful to say that lawyers are “just like people” — not “just like other people.” Such distinctions are helpful.