Posts Tagged ‘Kay Bell’

Tax Roundup, 3/11/14: The Taxpayer Hotel Edition. And: private-sector Kristy!

Tuesday, March 11th, 2014 by Joe Kristan

Des Moines public officials think a fancy new convention center hotel is just what we need to hang with the cool kids, reports KCCI.com:

A plan to build a four-star hotel next to Hy-Vee Hall and Wells Fargo Arena won’t happen unless Des Moines city leaders can convince the state’s economic development authority to fork over millions in tax incentives for the project.

Des Moines Assistant City Manager Matthew Anderson said this week is a prime example that proves why a hotel is needed next to the Iowa Events Center.

Fans from across the state are coming to downtown Des Moines in droves to cheer on their favorite teams at the boy’s state basketball tournament.

Cindy Curran said there’s something missing. “Accommodations to stay overnight,” said Curran. “A nice hotel with restaurants in there, amenities to go with that.”

wells fargo arena

A casual reader could be forgiven for thinking that there are no hotels within a few blocks of Wells Fargo Arena.  They might think that the Des Moines Marriot Downtown, with its own nice restaurant and bar, had suddenly vanished.  They might think the historic Renaissance Savery Hotel, home of Bos Restaurant, had closed down.  They might think the new Hyatt Place in the Liberty Building had already failed.  And has the historic Hotel Fort Des Moines and its Django Restaurant disappeared after all these years?

Nope, they’re all going strong, and all still connected to Wells Fargo Arena by an enclosed all-weather skywalk system.  In fact, Downtown Des Moines has more restaurants and places to stay than ever.  They need a new competitor, apparently, but one that can’t happen  without $34 million in subsidies tax incentives.

If a business can’t happen without taxpayer subsidies, that’s a sure sign that it shouldn’t happen in the first place.  Convention centers have been a money pit for governments around the country, as the think tank Heartland Institute reports:

As convention planners seek to have large new hotels and related facilities built for their events, taxpayers are often stuck footing the bill for what could be a building that sits empty much of the year.

It’s always easier to support a new business when you invest somebody else’s money.

Related: The Convention Center Shell Game.

 

KristyMaitreIowa’s IRS stakeholder liaison privatizes herself.   From the Iowa State University Center for Agricultural Law and Taxation:

CALT is pleased to announce that Kristy Maitre, the former IRS Senior Stakeholder Liaison for the State of Iowa, has joined our staff. Kristy brings 27 years of IRS experience to her role as CALT’s new tax specialist.

Practitioners who have attended our seminars are already familiar with Kristy and her vast breadth of practical knowledge of tax and estate planning. Kristy has taught hundreds of continuing education classes to tax practitioners around the country. At CALT, she will continue to offer training through live seminars, but will expand her reach with frequent webinars and other educational offerings through the CALT website. Stay tuned as CALT will soon unveil more exciting changes enabling us to better serve the tax practitioner community.

Great news for Kristy and ISU-CALT, bad news for IRS service.

 

William Perez, Free Tax Software Available Through IRS Free File

Russ Fox, Regulating Tax Preparers Always Prevents Tax Preparer Fraud (Not True, of Course)

potleafTaxGrrrl, It’s No Toke: Colorado Pulls In Millions In Marijuana Tax Revenue.  I think popular support for pot prohibition, with its attendant violence, prison crowding, and other social costs, will continue to decline.  At some point the lure of revenue will overcome the reflexive instinct of politicians to preserve control over things.

Jason DinesenWhat’s So Bad About More People Preparing Their Own Taxes?  “My goal is to have clients who actually need a professional preparer, or at the very least, people who could prepare their own taxes but who like the comfort provided by having a professional take care of it for them.”

One of these is not like the others  Filing season 2014: Death, taxes, root canals and refunds.  (Kay Bell)

 

Carlton Smith, Tax Court dodges CDP record rule ruling (Procedurally Taxing)

Jim Maule, Cracking the Tax Protest Movement.  “The unfortunate thing about the tax protest movement is that most of the people in it are vulnerable folks who fall for the siren song of the ringleaders, just as those who support special tax breaks, even without benefitting from them, have fallen for the siren songs of those who procure special tax breaks for themselves and their clients.”

 

Joseph Henchman,  Idaho Considering Complicated and Gimmicky Job Creation Tax Credit.  (Tax Policy Blog) The best tax incentive is a simple, low-rate tax system without gimmicky incentives.

taxanalystslogoMartin Sullivan, If the Camp Tax Reform Bill Won’t Pass, Why Is It So Important? (Tax Analysts Blog):

The Camp discussion draft has changed the tax policy landscape like no other single document in the last three decades, for two reasons. First, it has burst the bubble of all the feel-good tax reformers who have been wasting our time promoting unrealistic tax plans. The Camp plan is the ultimate reality check on tax reform. It is far more complicated and painful than marketers of tax reform have told the public to expect. It is unlikely that any realistic tax reform would be any shorter or sweeter than the Camp draft.

The second reason the Camp reform is monumentally important is the extensive and detailed workmanship that went into it.   

I’m not convinced — I think the initial draft of a tax reform plan should be a lot more idealistic.  The cynical, politically-necessary modifications will arrive soon enough on their own, and conceding so many of them up front only invites more.

 

Jeremy Scott, Camp Hits Popular Deductions Hard (Tax Analysts Blog).  “The elimination of the state and local tax deduction is one of the larger revenue raisers in Camp’s plan.”

TaxProf, The IRS Scandal, Day 306

 

Quotable:

When the law interferes with people’s pursuit of their own values, they will try to find a way around. They will evade the law, they will break the law, or they will leave the country. Few of us believe in a moral code that justifies forcing people to give up much of what they produce to finance payments to persons they do not know for purposes they may not approve of. When the law contradicts what most people regard as moral and proper, they will break the law–whether the law is enacted in the name of a noble ideal such as equality or in the naked interest of one group at the expense of another. Only fear of punishment, not a sense of justice and morality, will lead people to obey the law.

Milton Friedman, via David Henderson.

 

News from the Profession: The Profession is Really Reaching For the “I Still Let My Mom Pick Out My Outfits” Demographic (Going Concern)

 

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Tax Roundup, 3/10/14: Sioux City $afety Edition. And: rogue dentistry!

Monday, March 10th, 2014 by Joe Kristan

Sioux City Revenue Camera Windfall.  The Des Moines Register today lists the winners from revenue cameras around the state.  Public safety isn’t up there:

Tickets from automatic traffic cameras totaled $19.7 million for nine Iowa cities during the last fiscal year, but more than 34 percent of that money went to out-of-state vendors.

The summary:

20140310-1

Sioux City benefitted richly from Iowa’s status as the only state allowing revenue cameras on interstate highways:

Iowa is the only state in the country that allows speed cameras to be permanently placed on highways and interstates. The data collected by the DOT shows those cameras are the most lucrative: The two placed in a construction zone on Interstate Highway 29 in Sioux City brought in more than $4.5 million for the fiscal year ending in June.

gatsoThe evident failure of the cameras to stop construction zone speeding tells you how much they help public safety.  If they stopped speeding, there wouldn’t be so much revenue.  Of course, Sioux City also has a big incentive to generously define “construction zones” and leave them in place after construction is completed.  I drove through the I-29 zone on a Sunday night (no ticket for me!);  with no no workers around at the time, the only point of the construction zone speed limits when I drove through was camera revenue.

Some good news from the piece: “The number of red-light cameras nationally is dropping, according to a study by the Reason Foundation, a libertarian-leaning think tank.”  That’s because they’re a crock, a corrupt bargain between the operators and the municipalities, and people hate that.

 

William Perez, Need Extra Time to Finish up Your 2013 Tax Return?:

The IRS will grant a person an additional six months to file their tax return. To request this extra time, file an extension with the IRS on or before the deadline.

Filing an extension provides several benefits. Besides extra time to file the tax return, an extension also provides extra time to fund a self-employed retirement plan and to recharacterize IRA contributions.

And, contrary to myth, it doesn’t increase your chances of getting audited.  In contrast, filing an erroneous return to beat the deadline or get a quicker refund definitely increases your audit risk.

TaxGrrrl, Taxes From A To Z (2014): D Is For DRIP   

Kay Bell, Daylight Saving Time + gas taxes = boon for tax collectors, but some money-saving options for added daylight drivers 

Janet Novack, Pensions Create Yet Another Tax Trap For U.S. Expatriates

Russ Fox, False Checks, Trusts, and Ignoring Taxes Lead to Real Prison.  Indeed they do.

 

 Joseph Henchman, State Tax Reforms Are More Than Just Revenue Changes (Tax Policy Blog):

But more to the point, we consider 2013 one of the most successful years for tax reform we’ve seen in a while. We saw North Carolina cut its taxes but, more importantly, massively restructure them to become flatter, simpler, and more competitive. The real improvement in North Carolina wasn’t just the amount of taxes (though they did cut taxes, as noted above), but the structure of the tax code.

Beyond North Carolina’s landmark reform, Indiana under Governor Mike Pence (R) also moved to cut its personal income taxes and abolish its death tax. Wisconsin also made significant income tax cuts accompanied by positive structural changes authored by Representative Dale Kooyenga. Even in states that couldn’t achieve such sweeping reforms, valuable progress was made. Arizona implemented an important simplification of its sales tax code. Governor Martinez of New Mexico worked with her legislature to cut her state’s corporate tax. Texas made some positive reforms to its damaging gross receipts tax, the margin tax.

Notice one state missing there?  Anyone?  Iowa?  The Tax Update’s Quick and Dirty Iowa Tax Reform Plan is ready to go!  How about a 4% top individual rate, repeal of the Iowa corporation tax, and massive simplification — or do you like massive complexity, special favors for special friends, and the nation’s highest stated corporate rate?

 

Eric Todor, Tax Reform’s Quiet Protectionism (TaxVox): “In effect, income from the sale in the United States of goods manufactured overseas by controlled foreign subsidiaries (CFCs) of U.S.-resident multinational companies would be taxed at a higher U.S. rate than other income from the same factory”

 

William Gale, Alan Auerbach, Forgotten but Not Gone: The Long-Term Fiscal Imbalance (TaxVox):

First, ignoring projections for the future, the current debt-GDP ratio is far higher than at any time in U.S. history except for a brief period around World War II. While there is little mystery why the debt-GDP ratio grew substantially over the last six years – largely the recession and, to a smaller extent, countercyclical measures – today’s higher debt-GDP ratio leaves less “fiscal space” for future policy.

Second, while we clearly face no imminent budget crisis, our new projections suggest the 10-year budget outlook remains tenuous and is worse than it was last year, primarily due to changes in economic projections.

And the rich guy can’t pick up the tab.

 

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

George Will, The IRS’s behavior taxes credulity:

Obama breezily says there was nothing more sinister than “boneheaded decisions” by wayward and anonymous IRS underlings. Certainly boneheadedness explains much about this administration. Still, does he consider it interesting that the consequences of IRS boneheadedness were not randomly distributed but thwarted conservatives?

The rules that Obama says befuddled the IRS boneheads — to his benefit — read today exactly as they have read since 1959. For half a century they did not prevent the IRS from processing applications for tax-exempt status in less than three months. Some conservative group should offer $10,000 to anyone who can identify a liberal group that had the experience scores of conservative groups have had — an application delayed more than three years and receipt of an IRS questionnaire containing at least 60 questions.

Believing that there isn’t a “smidgen of corruption” is about as much of an intellectual leap as, say, believing dinosaurs and humans co-existed.

Via Instapundit

TaxProf, The IRS Scandal, Day 305

 

Jack Townsend has a List of 14 Swiss Banks Under Criminal Investigation

Quotable: 

Many smart people think preparers should be regulated. I just don’t agree. There is no market failure. If you don’t like your preparer, find another one. Or better yet, write your representative and ask for a tax system that doesn’t require low-income people to pay preparers.

David Brunori, State Tax Notes ($link)

 

I suspect he won’t need a preparer for awhile now.  From Going Concern:

Xzavier allegedly beat up a tax preparer when he found out the woman he was with wouldn’t be getting her refund in cash. After a security guard intervened, he is accused of whipping out his heat and shooting both the guard and two women. A fourth person was grazed by a bullet but not shot.

I’m sure that really helped her get that refund sooner.

 

Crazy news from Canada: Rogue dentist fined $33,000 for unpaid tax; Tung Sheng Wu practised dentistry illegally in the tri-cities and Burnaby

I’m pretty sure I’ve never seen the phrase “rogue dentist” before.

 

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Tax Roundup, 3/6/14: My lips are sealed edition. And: more budget!

Thursday, March 6th, 2014 by Joe Kristan
Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner still isn’t talking.  That would seem to make for a dull hearing of the House Committee investigating the harassment of Tea Party organizations by the IRS, but there was some interest.  From the Wall Street Journal:

A House hearing on the Internal Revenue Service scandal ended in acrimony, as the ranking Democrat, Rep. Elijah Cummings (D., Md.) accused Republicans of a “one-sided investigation” and GOP members walked out.

Chairman Darrell Issa (R., Calif.) ended the hearing after the lone witness, former IRS official Lois Lerner, declined to answer several of his questions, citing her Fifth Amendment privilege.

Yes, everyone is entitled to the protection of the Constitution, but those of us not sitting on a jury are also entitled to draw our own conclusions.  When the key figure in the scandal fears honest testimony will incriminate herself, you can be forgiven for questioning the President’s assertion that there is “not even a smidgen of corruption” involved.

Take it away, GoGos:

 

Althouse, After Lois Lerner re-asserts the 5th, Cummings yells at Issa and Issa cuts the microphone.  “Issa is closing down the meeting, Cummings asserts what he calls a “procedural question” that’s really a political scolding, and Issa cuts the microphone and walks out. It’s pretty unpleasant.”  Video provided.

TaxProf, The IRS Scandal, Day 301

TaxGrrrl, Former IRS Official Refuses To Testify Again, Lawyer Blasts “Partisan” Hearing.

Kay Bell, Tempers flare at IRS hearing. Reality show, anyone?

Peter Reilly, Lois Lerner Takes The Fifth Again – Political Theater?:

There are two narratives about this whole mess.  One is that there was something of a left wing conspiracy inside the IRS to pick on the political activity of organizations that were not supposed to be mainly political, which hurt those groups in their effort to prevent the President from being re-elected.  My blogging buddy, Joe Kristan, supports that theory having grown up in Chicago, where all sorts of enforcement is politically motivated.The other narrative is that the whole thing is a phony scandal.  I think that I am the only person left who has looked at this without fully making up his mind.

As Peter notes, I think the science is settled.

 

William Perez, Health Savings Accounts Provide a Tax-Deductible Way to Save for Medical Expenses

 

Economic supergenius

Smidgenless.

Andrew Lundeen, Kyle Pomerleau, The Tax Changes in President Obama’s Fiscal Year 2015 Budget (Tax Policy Blog):

He proposes to expand the child tax credit and the EITC, two of the largest family tax benefits. His budget also proposes to alter retirement plans and create an auto-enrollment IRA program. In order to pay for these expansions, his budget will raise taxes on high-income earners through a series of changes to tax expenditures, most notably placing a cap on the value of itemized deductions.

It will never be enough.  The rich guy isn’t buying.

Renu Zaretsky, Obama’s 2015 Budget Hits Capitol Hill (TaxVox)

Tony Nitti, Tax Aspects Of The President’s FY 2015 Budget . “…in simple terms, the President’s proposal would add a(nother) alternative minimum tax calculation to the current individual income tax regime.”

Paul Neiffer, How Much Longer for Section 1031 Exchanges?  ”  Most likely, nothing will happen this year, but in 2015, watch out.”

 

Cara Griffith, California Needs a Dose of Sunshine (Tax Policy Blog):

This issue arose after references to two forms were noticed in an FTB multistate audit technique manual

 By not disclosing forms like this, the FTB is enabling its auditors to take inconsistent positions regarding similarly situated taxpayers. If that’s the case, any guidance the FTB puts out on its application of the unitary business principle is meaningless.

When you have to disclose the standards you apply, you risk being held to them.

 

News from the Profession.  The Latest New Jersey CPA Magazine Cover is a Little Freaky (Going Concern)

 

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Tax Roundup, 1/5/14: President proposes $1 million Sec. 1031 cap. And: other doomed stuff!

Wednesday, March 5th, 2014 by Joe Kristan
Economic supergenius

0-99, 0-414

The President trotted out his old petty tax increases in his 2015 budget yesterday, and a few new ones.  The  new taxes would go towards, among other spending increases, an increase in the Earned Income Tax Credit welfare program for childless taxpayers.

If history is a guide, the Obama budget isn’t going to do well in Congress.  His own party leadership in the Senate has already pledged to pass no budget at all.  When his 2013 budget plan came up for a vote in Congress, it was rejected 99 -0 in the Senate and 414-0 in the House.

Still, it is worth mentioning some of the tax proposals, just so you are aware of them and their low likelihood of passage anytime soon.  Also, in light of the recent Camp “tax reform” proposal, apparently no tax provision is too dumb to get bipartisan consideration, so some of these might even pass someday.

S corporations: the bill would tax as self-employment income 100% of K-1 income from professional S corporations and partnerships of materially-participating owners.  Businesses covered would include health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, investment advice or management, brokerage services, and lobbying.  For some reason, regular compensation would no longer be wages, but would instead be self-employment income.  That would wreak havoc on everybody’s 401(k) and profit-sharing plans.

- Like-kind exchange benefits would be capped at $1 million per taxpayer per year.  That won’t be popular with the real estate industry.

The bill also drags out dozens of the old proposals from his prior budgets, including LIFO repeal, ordinary income treatment for carried interests, capping the value of deductions at 28%, and capping build-ups in retirement plans.  Nothing at all is likely to happen before the next election on these proposals, but as many Obama proposals are also included in some form in the GOP Camp plan, they all have to be considered viable next time a major tax bill shows signs of moving.

The TaxProf has a good link-filled roundup.  The official explanation of the revenue-raisers is here.

Other coverage:

Kay Bell, Obama budget proposes more child care help for younger kids

Leslie Book, President’s Budget Proposes Major Procedural and Administrative Changes (Procedurally Taxing).  “The popular media has generally described the plan overall the way Reuters did in reporting that it ‘stands little or no chance of being approved as is by Congress, where Republicans, who control the House of Representatives, disagree with the president’s policy priorities.’”

 

Des Moines Register, Voters OK increasing franchise fee in Des Moines.  The vote is the result of the city being ordered to repay an illegally-collected utility tax:

The money raised by increasing the franchise fee to 7.5 percent from 5 percent for seven years will be used to pay off about $40 million in bonds issued by the city to pay for the refund and administrative costs.

Among the “administrative costs” is $7 million in legal fees Des Moines was ordered to pay to the winning taxpayer attorneys after a scorched-earth court battle by the city to avoid repaying the illegal tax.  Next time, don’t collect an illegal tax, and pay up if you’re called on it.

 

Alan Cole, True Marginal Tax Rates under Chairman Camp’s Proposal (Tax Policy Blog).  Full of high-income phase-outs, it creates all sorts of goofy marginal rate anomalies:

Marginal Tax Rates Camp Tax Reform

Note the spike in rates at the low-end as a result of the earned-income tax credit phase-out.  That doesn’t even include the effect of the state EITCs that piggyback on the federal credit.  All of this is the opposite of tax reform.  Apparently neither party is ready for reform.

William Gale and Donald Marron, The Macro Effects of Camp’s Tax Reform (TaxVox): “How would Camp’s plan increase growth, and why is the range of estimates so wide?”

 

Paul Neiffer, Additional Tax Reform Items.  “Remember, this is just a proposal and nothing will happen this year.”

Gene Steurle, A Camp-ground for Tax Reformers (TaxVox).

 

20130419-1Russ Fox, Deadlines for Us, but Not for Them:

For practitioners, the current state of the IRS is such that you can expect a lot of delays in responding to notices. Think months instead of weeks. Expect to have to call the IRS to verify that your response was received, and make sure clients are aware that the IRS is moving like molasses rolling uphill. Make sure anything you send is documented: certified mail with proof of receipt if by mail; if faxing, make sure you have the proof of receipt. Given the lengthy delays our clients are going to be in fear for far longer…

For taxpayers, you need to be aware that expediency is not part of today’s IRS. You have to be expedient in responding to notices but don’t expect the IRS to be expedient in getting back to you. Do not worry if it takes a long, long time to resolve something with the IRS. That’s just par for the course today.

Unfortunately, clients generally assume that if the IRS has sent a letter, that means the practitioner screwed up.  Many people, especially old folks, just pay up when they get an IRS notice.

 

William Perez, Tax-Deductible Relocation Expenses

TaxGrrrl, Taxes From A To Z (2014): B Is For Basis   

David Brunori, Taxing Coca Cola while Exempting Broccoli is Bad Policy Even for Native Americans (Tax Analysts Blog):

 In any event, several newspapers reported that one of the sponsors of the proposal was himself obese. He decided to change his life and lost 100 pounds. And he did it without any tax increases or help from the government.

Like so many reformed smokers/overeaters/drinkers, he has become annoying about it.

Tax Justice Blog, State News Quick Hits: State Policy Makers Need a Tax History Lesson

 

TaxProf, The IRS Scandal, Day 300.

 

Cheer up!  Filing Your Tax Return Is Terrible — But It Was Worse 100 Years Ago (Joseph Thorndike, Tax Analysts Blog).

News from the Profession.  The Real Loser at the Oscars This Year Was PwC.  (Going Concern)

20140305-1Jason Dinesen shares his Tax Season Tunes:

Here’s a sampling of other tunes I listen to while working when not getting my Gordon Lightfoot fix:

  • Neil Diamond. Generally not his “famous” songs. I detest — and I mean absolutely revile — “Sweet Caroline,” for example. The original recording is okay, but he’s turned it into a hokey, over-the-top, karaoke show-tune over the last few decades. Blech. I like the more introspective songs like “Shilo,” “If You Know What I Mean,” “Stones,” pretty much anything from his relatively new “12 Songs” and “Home Before Dark” albums,  and a host of other Neil Diamond songs that most people have probably never heard of.

  • An mix of songs that include Billy Joel, pop rock from the 60s and early 70s, Elvis, Willie Nelson, Conway Twitty, AC/DC, Juanes, Bon Jovi, CCR, Johnny Cash and Jimmy Buffett.

In case you were wondering, I believe Jason works alone.

 

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

Tuesday, March 4th, 2014 by Joe Kristan

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

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

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

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

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

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

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

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

 

William Perez, Deducting Work-Related Expenses

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

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

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

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

Kay Bell,  Tax moves to make in March 2014

 

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

 

taxanalystslogoTax Analysts Blog is having a tax reform party:

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

Jeremy Scott, Comparing the Camp and Obama Bank Taxes:

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

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

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

Christopher Bergin, Tax Reform Only a Mother Could Love:

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

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

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

 

National Review, via InstapunditThe IRS Is the Problem:

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

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

TaxProf, The IRS Scandal, Day 299

 

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

 

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

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

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

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

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

 

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

 

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Tax Roundup, 3/3/2014: For whom does the AMT toll this year? And Lois Lerner: will she or won’t she?

Monday, March 3rd, 2014 by Joe Kristan

Laura Saunders, Beware the Stealth Tax; How to minimize the damage of the alternative minimum tax:

…the AMT now applies to eight times as many taxpayers as it did 20 years ago, and common AMT “triggers” often are less esoteric than in the past. “They can be as simple as having three or more children, taking a large capital gain, or—especially—deducting state and local taxes,” says Dave Kautter, managing director at American University’s Kogod Tax Center, who studies the AMT.

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That’s pretty much what I see in our practice.  AMT is rare for taxpayers with income under $100,000, and usually occurs in large families.  It can be impossible to avoid AMT in the $200,000 – $500,000 income range, especially in a state with an income tax.  Above $500,000, it typically involves large capital gains.  Both AMT and regular tax have the same 20% tax on capital gains, and the AMT doesn’t let you deduct the related state income taxes, so the AMT will kick in.

 

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

Ann Althouse,  Who put “acute political pressure” on Lois Lerner “to crack down on conservative-leaning organizations,” and why did Lerner need a “plan” to avoid “a per se political project”?:

I think it must mean that it was a political project and they were hard at work figuring out how to make it not look like what she knew it was. That’s a smoking gun.

Phony scandal.  Nothing to see here…

TaxProf, The IRS Scandal, Day 298

WSJ, No Change: Former IRS Official to Take the Fifth.  “A lawyer for former Internal Revenue Service official Lois Lerner said Sunday that she will decline to testify about IRS targeting of grass-roots conservative groups, contradicting a top GOP lawmaker.”  Presumably because there’s not a smidgen of wrongdoing.

 

TaxProf, Mulligan: ObamaCare’s Multiple Taxes Are Shackling the Job Market.  The TaxProf quotes from the University of Chicago’s Casey Mulligan: 

Once we consider that the new law has an employer penalty, too, the labor market will be receiving three blows from the new law: the implicit employment tax, the employer penalty and the implicit income tax. Regardless of how few economists acknowledge the new employment tax, it should be no surprise when the labor market cannot grow under such conditions.20140106-1

It’s funny how the same people can argue for high tobacco taxes to curb smoking insist that employment taxes won’t curb hiring.

 

Jason Dinesen,  Accounting for the 0.9% Medicare Surtax on Iowa Tax Returns

Kay Bell, Delayed Tax Refunds, TC 570 And An Important Distinction .  Don’t jump to conclusions about your delayed refunds.

William Perez, Resources for Filing Corporate Taxes for 2013.  “March 17th, 2014, is the due date for filing corporate tax returns.”

 Kay Bell, 5 ways to maximize tax-deductible business entertainment

Russ Fox, Former Chairman of Woodland Park, NJ Democratic Committee Bribes His Way to ClubFed

Jack Townsend, IRS CI Is Looking at Renunciations of Citizenship Just in Case .  Looking to take one last shot at the fleeing jaywalkers.

 

Jim Maule, Find Some money, Pay Some Tax:20131017-2

Every now and then we read of someone finding something valuable. This time, it’s a California couple who found a stash of gold coins on their property. According to this story, the couple found eight cans containing 1,400 coins, valued at approximately $10 million.

The joy of the moment is tempered, of course, by the existence of income taxes, both federal and state. Must the couple pay tax? Yes. The value of the coins is included in the couple’s gross income. It is ordinary income. The law is settled. 

Easy come, easy go…

 

Martin Sullivan, The Beginning of the End of Tax Reform (Tax Analysts Blog):

Enactment of the research credit in 1981 was the antithesis of simplification. It has a highly complex incremental structure and, even more problematic, it assigns tax directors and IRS agents the impossible task of distinguishing research from ordinary business expense. The Camp draft retains the credit and eliminates expensing. The opposite approach would be more sensible.

The research credit study industry is full of former Congressional staffers who like things the way they are.

William McBride, Scott Hodge, Top Line Assessment of Camp’s Tax Reform: Increases Progressivity and Taxes on Business and Investment (Tax Policy Blog):

In general, Camp simplifies and lowers tax rates for many taxpayers and businesses, but does so through a net tax increase on businesses and taxpayers earning over $200,000. As a result, the plan makes the individual tax code even more progressive, it increases the amount of redistribution from high-income taxpayers to other taxpayers, and it worsens the current bias against saving and investment—all of which will be a drag on long-run economic growth.

It looks more and more like the Camp plan was a false move.

William Gale, Dave Camp’s pitch to overhaul U.S. taxes: An impossible dream? (TaxVox)

 

It’s getting real in New Jersey, according to the London Daily Mail online:   ‘Ready to plead guilty’: Teresa and Joe Giudice set to reach plea deal on 41 charges of fraud and tax evasion.  If they were cheating on taxes, becoming national celebrities could have been a bad move.

 

 

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Tax Roundup, 2/28/14: Somber reasoning and copious citation edition. And: tax soda, not pop!

Friday, February 28th, 2014 by Joe Kristan

crackedThe courts rarely spend much time on tax protesters.  While optimistic and deluded folks may spend lots of time submitting documents trying to convince the judge that he is sitting in an admiralty court or something, courts rarely rise to the bait.  They typically dismiss the nonsense filings this way, in language arising from Crain (CA-5, 1984):

We shall not painstakingly address petitioner’s assertions with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit.

The Tax Court made an exception yesterday.   A taxpayer whose tax information apparently appears on a well-known tax protester site showed up before Judge Buch, and the judge decided to take advantage of a teaching opportunity:

The Court has taken the time, however, to address those arguments because Mr. Waltner appears to be perpetuating frivolous positions that have been promoted and encouraged by Peter Hendrickson’s book Cracking the Code: The Fascinating Truth About Taxation in America (2007). Indeed, it appears not merely that Mr. Waltner’s positions are predicated on that book but that his returns and return information have been used to promote the frivolous arguments contained in that book. Consequently, a written opinion is warranted.

I have mentioned Mr. Hendrickson before.  His most recent appearance here involved an appeal of his sentence on tax convictions.  Needless to say, if Mr. Hendrickson has “cracked the code,” a lot of good it did him.  Judge Buch addresses some of the contentions Mr. Hendrickson’s book makes, including the idea that most of us aren’t “persons” subject to the tax law and that “private sector” income is non-taxable.  Judge Buch addresses Mr. Hendrickson’s qualifications in tax law (let’s just say they are non-traditional, including a firebombing conviction).

The opinion describes Mr. Hendrickson’s main tax tactic:

This misguided view leads to the author’s strategy for filing tax returns, which was mirrored by Mr. Waltner’s returns. The author recommends “correcting” Forms 1099 by including a declaration that nothing that was received was taxable. Mr. Waltner did this. The author recommends creating substitute W-2s by changing only the amount of the reported wages. Mr. Waltner did this. The author recommends filing a Form 1040 based on these inappropriately revised forms. Mr. Waltner did this. The author recommends including FICA taxes amongst the taxes withheld. Mr. Waltner did this. 

In the end, this long Tax Court opinion comes to the same conclusion as all of the shorter ones addressing the same arguments, concluding that they don’t work.  The taxpayer, Mr. Waltner, was hit with a $2,500 penalty for making frivolous arguments.

The Moral:   No matter how many words they throw out there, tax protest arguments don’t work.  Also, it’s unwise to take tax advice from advisors whose arguments can’t keep themselves out of prison.

Cite: Waltner, TC Memo 2014-35

Related: Russ Fox, He Cracked the Code (but Won’t be Happy with the Result)

 

William Perez, Tax Credits for Families with Children

Me, IRS issues 2014 auto depreciation limits; luxury begins at $15,800

Jack Townsend, Another Sentencing of UBS Client.  In case you think bank secrecy still works.

 

20131209-1Len Burman, Hidden Taxes in the Camp Proposal (TaxVox):

The plan resurrects the 1960s era add-on minimum tax—the granddaddy of today’s uber-complex Alternative Minimum Tax. Effectively, the surtax can be0 thought of as an additional tax on certain preference items such as the value of employer-sponsored health insurance, interest on municipal bonds, deductible mortgage interest, the standard deduction, itemized deductions (except charitable contributions), and untaxed Social Security benefits. Although the list of preference items differs from the old add-on minimum tax, the idea is eerily similar.

The more I see of the Camp plan, the less it seems like reform.

 

Clint Stretch, 10 Reasons Democrats Should Like the Camp Tax Bill. (Tax Analysts Blog)  Generally reasons why it doesn’t count as actual reform.

Joseph Rosenberg, How Does Dave Camp Pay for Individual Tax Cuts? By Raising Revenue from Corporations (TaxVox)

Kay Bell, GOP’s tax reform bill DOA

 

TaxProf, The IRS Scandal, Day 295

Johannes Schmidt, New Soda Tax Proposed in Illinois (Tax Policy Blog).  That must mean it only applies in Southern Illinois, because it’s (properly) called “Pop” everywhere else in the state.

20140228-4

News from the Profession: Big 4 Firms Making Necessary March Madness Preparations as Usual (Going Concern)

 

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Tax Roundup, 2/26/14: House tax reform plan expands cash basis, boosts 179 limits. And: $133 million employment tax theft.

Wednesday, February 26th, 2014 by Joe Kristan

Cash basis expansion, permanent Section 179 increase highlight Camp tax reform plan.  The GOP House tax leadership has released their tax reform draft, nicely rounded-up by the TaxProf.  The plan would lower top individual and corporate rates to 25%, while making big changes in business taxation.

They have released two alternate plans for small business taxation.  One plan would tweak S corporation and partnership taxation, making elections easier and easing S corporation penalty taxes.  The other draft would do away with the current pass-through regimes and replace them with a single pass-through tax system.

The Camp draft would also greatly expand the availability of cash method accounting:

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I’m not sure how I feel about this.  I do like getting rid of the special rules for farmers and letting everybody have the same opportunity.  I less like the rule giving unlimited cash basis for sole proprietorships, as that would encourage people to keep things on their schedule C for tax reasons even if it is a bad structure otherwise.  Do we really need to preserve cash basis for a $100 million schedule C or Schedule F operation?  If something is that big, the “simplicity” argument doesn’t make sense.

I’m all for getting rid of the Section 263A stuff.

While I doubt that anything will happen with tax reform this year, there is a real possibility that things will start moving after the 2014 elections.

William McBride, Four Things to Look for in Chairman Camp’s Tax Reform Plan (Tax Policy Blog)

Renu Zaretsky, McConnell Throws Cold Water on Camp’s Tax Plan (TaxVox)

 

 

EFTPSTexans sentenced in massive PEO employment tax theft.  From Breitbart.com:

Federal prison sentences were recently handed down to three businessmen by Chief District Judge Fred Biery. The three defendants – John Bean, Pat Mire, and Mike Solis – are going to prison for their roles in a $133 million scheme involving numerous co-conspirators. The FBI and IRS conducted the investigations for the case, which is believed to be the largest criminal tax related case ever prosecuted in western Texas.

Bean and Mire both pled guilty to money laundering and mail fraud conspiracy charges. Solis plead guilty only to a mail fraud conspiracy charge.

The defendants admitted that from 2002 to 2008, they stole more than $133 million from clients of several of the Professional Employer Organizations (PEOs) that they owned and operated.

PEOs actually report client employees as their own, issuing W-2s and filing employment tax returns.  The danger of PEOs is that employers have no way to be sure their employment taxes are being deposited.  If the PEO is stealing them, the IRS will come back to the employers to collect.

With a non-PEO payroll service, the payroll tax returns are prepared for employers, who issue and sign them.  More importantly, non-PEO employers can go online using the Electronic Federal Tax Payment System and verify that their payroll taxes are being paid.

 

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

TaxProfThe IRS Scandal, Day 293.  Among the items in his daily scandal roundup is a Wall Street Journal editorial, Liberals vs. the IRS: Even the Left Doesn’t Want the Tax Man Regulating Speech:

In the Nation magazine, Nan Aron of the liberal judicial lobby the Alliance for Justice writes that 501(c)(4)s aren’t merely groups like Karl Rove’s Crossroads GPS, but are “made up of over 86,000 mostly small organizations nationwide” that are active participants in civic life.

“They weren’t invented in the last election cycle; they’ve been around for generations. Their purpose isn’t to hide donors, it’s to advance policies,” Ms. Aron adds. “These groups are involved in elections, because it’s often impossible to advance a policy cause without being involved in the political process.”

There’s no principle that would justify suppressing political rights of 501(c)(4) outfits that can’t apply equally to other exempt outfits.  Furthermore, there’s no real reason to impose taxes on political outfits.  The answer to speech you don’t like is more speech of your own, not suppressing what you don’t want to hear.

TaxGrrrl, IRS Proposed Rules For Nonprofits Alarm Conservatives and Liberals Alike   

 

IRS fights ID theft with one hand, helps it out with the other.  From PC World:

This tax season you may have more to worry about than how much you owe. A new study from Identity Finder finds the IRS is not properly protecting social security numbers in some tax returns…

The research revealed an alarming failure to safeguard sensitive data. Identity Finder uncovered an estimated 630,000 Social Security numbers exposed online in form 990 tax returns.

The most affected group were tax preparers–many of which used their personal SSN rather than their PTIN (preparer tax identification number). However, directors, trustees, employees, donors, and scholarship recipients were all impacted as well. 

It’s fair to point out that preparers have some responsibilty — they are often including SSNs unnecessarily, especially their own.  But that doesn’t excuse the IRS.

 

uni-logoSome UNI workers filing taxes finding Social Security numbers have been used (WCFcourier.com):

According to UNI officials, more than 20 employees have received “error” messages when filing their individual tax returns online, and their returns were rejected. Others who have yet to file say they called the Internal Revenue Service and found their Social Security numbers had been used. One person reportedly received a refund check at home from the IRS though they hadn’t filed a return yet.

UNI officials are playing down the possibility of identity theft, but that’s how I’d bet.  Any organization that collects social security numbers needs to be very careful with them, restricting access and shredding documents on disposal.

Jack Townsend, Stolen Identity Refund Fraud in the News

 

William Perez, Reporting Social Security Benefits

Kay Bell, Don’t fall prey to the Dirty Dozen tax scams of 2014

David Brunori, Great Opportunity for Tax and Public Finance Students (Tax Analysts Blog). “We are conducting our first student writing competition. You should encourage students who have written quality papers to submit them to studentpapers@tax.org.”

 

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Tax Roundup, 2/25/14: Temporary Permanence Edition. And: Reform week?

Tuesday, February 25th, 2014 by Joe Kristan

20120511-2Some of us just have jobs.  Others have callings.  If you feel you have a calling, it can be very difficult to sway you from your vocation.  Sometimes not even a permanent federal court injunction will do the trick.  

A permanent injunction apparently didn’t stop an Iowan whose calling appears to be to spread the gospel of ESOP.  John L. Henss was already promoting his vision of Employee Stock Ownership Plans when I moved to Iowa as a young CPA in 1985.  By a remarkable coincidence, Iowa had more than its share of tax litigation involving flawed ESOPs over the years (see, for example, here, here and here).

One of the most remarkable cases was the 1992 case of Martin v. Feilen (CA-8, 965 F.2d 660), involving alleged self-dealing and fiduciary breaches among the trustees and administrators of Feilen Meats, an Iowa packer.  Among the defendants was John L. Henss.

Judge Loken authored the decision of the Eighth Circuit on the case, a decision that went badly for Mr. Henss (my emphasis):

Henss was the dominant decision-maker for FMC and the ESOP with respect to all or nearly all the transactions discussed in this opinion. He also holds himself out as an ERISA expert who has structured and provided other services and advice to hundreds of ESOPs. In addition to engaging in the actionable self-dealing we have described, Henss’s trial testimony displayed an appalling insensitivity to the proper role of ESOPs and ESOP fiduciaries. For example, Henss stated repeatedly his view that ESOP fiduciaries are exempt from ERISA’s “prudent man” rule when investing plan assets in an employer’s stock or property.

To summarize, we affirm the district court’s judgment that Henss and Stephen Thielking, and their personal corporations, breached their ERISA fiduciary duties in causing the ESOP to engage in the above-described Transactions Subject to ERISA, and we affirm the district court’s permanent injunction against Stephen Thielking and Stephen K. Thielking, C.P.A., P.C. We modify the permanent injunction against John Henss and John L. Henss C.P.A., P.C., to further enjoin them from acting as a service provider to any ERISA plan. 

So that ended Mr. Henss’ career in the ESOP field, right?  Never underestimate the tenacity of a man with a calling.  His name reappeared in another ESOP case yesterday in Tax Court.  It was a remarkable case, actually, in that a partnership had an Employee Stock Ownership Plan.  But when you have a calling, a lack of a corporation with actual stock won’t stand between you and an ESOP.  But mere tenacity isn’t enough, according to Judge Kerrigan (my emphasis):

Respondent contends that because K.H. Co. was a partnership for tax purposes, it did not have qualifying employer securities. The parties do not dispute that K.H. Co. was a partnership at all relevant times. Indeed, K.H. Co. admits that it filed Forms 1065, U.S. Return of Partnership Income, for tax years ended September 30, 1995 through 2004. Because K.H. Co. was a partnership for tax purposes and did not have any stock, it did not have any qualifying employer securities for purposes of sections 409(l) and 4975(e)(7) and (8) in which the plan could invest. Therefore, petitioner failed to operate as an ESOP pursuant to its terms when K.H. Co. became its employer, sponsor, and administrator. 

But aside from the obvious one, what problems might this ESOP have?  Perhaps the required ESOP stock appraisal, performed for 2000, 2001 and 2002 by none other than John L. Henss.  Apparently “permanent” had already worn off by then.  From the Tax Court:

John L. Henss was chosen to appraise K.H. Co. The administrative record includes appraisals and appraisal summaries for only 2000, 2001, and 2002. Written on “JLH” letterhead, the cover letter of each appraisal states: “At your request, we have prepared an appraisal valuation of KH Company, L.L.C.” The cover letters refer to the “appraised value of common stock of KH Company, L.L.C.” The cover letters are all dated, but none of them are signed.

Mr. Henss’ qualifications are not described in the appraisals. The appraisal summaries state merely: “The undersigned holds himself out to be an appraiser. The undersigned is an accountant who is familiar with the assets being appraised.” Mr. Henss did not sign or date the appraisals or the appraisal summaries. 

     Petitioner claims that Mr. Henss has degrees in English, accounting, and law. Petitioner further claims that Mr. Henss “has been preparing appraisals of stock for employee stock ownership plans for many clients for several years” and that he is the author of a book on ESOPs. Petitioner also contends that Mr. Henss was in all other respects a person who was “independent” as set forth in the statute, the regulations, and the Commissioner’s announcements on the subject.

Section 1.170A-13(c)(5)(i)(A), Income Tax Regs., provides that a qualified appraiser is an individual who includes on the appraisal summary a declaration that he or she holds himself or herself out to the public as an appraiser or performs appraisals regularly. Because there is no signature below the statement on the appraisal summaries that the “undersigned holds himself out to be an appraiser”, the plan failed to meet this requirement. 

Not to mention that he had been enjoined from providing services to ERISA plans — a term that would seem to cover appraisal services.

Whatever the nature of his calling, things haven’t universally gone well in court for clients who have used Mr. Henss.   Perhaps when selecting an ESOP service provider, one might well take federal court injunctions into consideration.

Cite: K.H. Co. LLC Employee Stock Ownership Plan, T.C. Memo 2014-31.

 

taxanalystslogoIt appears the House GOP will release its tax reform plan today.  Tax Analysts Blog is on it:

Martin Sullivan, Can Dynamic Scoring Save Tax Reform? Don’t Count on It

Jeremy Scott, How to Pay for Camp’s Tax Reform Plan

Clint Stretch, The Tax Reform Blame Game

Renu Zaretsky, House GOP Tax Plan Hits This Week; IRS Getting Worked Over But It’s Still Working.  This is a new daily news roundup at TaxVox.

Tax Justice Blog, State Tax Breaks Pile Up.  Government by special favor always has its fans.

 

William Perez, Reporting Unemployment Compensation Benefits

S-SidewalkTony Nitti, Tax Geek Tuesday: 2013 Tax Planning Is Not Finished For S Corporations – How To Purge Problematic Earnings and Profits   

Kay Bell, Most taxpayers support tax preparer competency standards.  I find this a meaningless result, a question posed to people who have given approximately no thought to the issue and who have more developed views of Miley Cyrus than John Koskinen.

Peter Reilly,  New Jersey Gets To Second Guess IRS On Estate Tax Marital Deduction 

TaxGrrrl, Pharrell Williams & The Ultimate Charitable Hat Trick   

 

Liz Malm, Mississippi Lawmakers Consider Firearm Sales Tax Holiday (Tax Policy Blog).  Even for a good cause, sales tax holidays are a bad idea.

TaxProf, The IRS Scandal, Day 292

Is there nothing the tax law can’t do?  Meanwhile in Canada, You Get a Tax Credit For Not Stinking the Joint Up (Going Concern)

 

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Tax Roundup, 2/21/14: Last-day out edition. And: another Iowa top-ten finish!

Friday, February 21st, 2014 by Joe Kristan

Today’s the last day of this season’s only extended road trip, so here are a few items to travel with.

Another top-ten finish for Iowa.  In “How High are Capital Gains Tax Rates in Your State?” Kyle Pomerleau and Richard Borean at Tax Policy Blog rank state burdens on capital gains.  Iowa’s 29.6% combined federal and state capital gain rate is ninth (California’s 33% is the worst).

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Like so many things about Iowa taxes, it’s complicated.  Some taxpayers — those who meet both a ten-year holding period and ten-year material participation test — can sell some assets (but not stock or partnership interests) and have a zero Iowa capital gain rate.  Those who aren’t so blessed by the legislature get socked.

 

TaxGrrrl is back after the Forbes hack attack with IRS Reveals Dirty Dozen Scams For 2014.  Identity theft tops the list.  Take common-sense steps to protect yourself.  Never send your Social Security Number or similar tax information in an unencrypted email, for example.  If you need to get documents with confidential information to your preparer electronically, use a secure file transfer site.

Cara Griffith ponders What Triggers a Sales and Use Tax Audit? at Tax Analysts Blog.

Christopher Bergin says Progressivity Does Not Equal Equality (Tax Analysts Blog).  “I still support a progressive tax system, just not as a method of addressing income inequality.”

There’s no evidence that an income tax system with rates short of ridiculous can affect “equality,” however you want to measure it.  In fact, the fretted-over rise in inequality has coincided with a shift in taxes to “the rich.”

Top 1 pays more than bottom 90

If you seriously tried to use the tax system to level income differences, the best you would get would be achievement of inequality by means of mass poverty.

 

Howard Gleckman, How 19 Million Uninsured Tax Filers Could Get ACA Coverage.  (TaxVox).  He pushes the awful idea of dumping responsibility for enrolling people in the misbegotten Obamacare system on tax preparers.  It’s as bad an idea as giving responsibility for administering the healthcare  system to the IRS.  Preparers have more than enough complexity and difficulty to deal with as it is.

TaxProf, The IRS Scandal, Day 288

Tony Nitti, Kevin Durant Calls Foul On Tax Preparer Over Improper Deductions.  Funny, he didn’t seem to mind them when he signed the returns.  It never pays for preparers to curry favor with clients by using bogus deductions.  The same client who happily cashes the big refund check will throw you to the wolves in a heartbeat.

Kay Bell, Offshore account owners more likely to confess Swiss holdings

 

20140221-2Tax Justice Blog, Bipartisan Rush to Win Gold Medal in Tax Gimmickry: “A lot of gimmicky bills are proposed each Congressional session, but few are quite as ridiculous as the proposal by a bipartisan group of lawmakers in the House and Senate to create a new federal income tax break for the cash bonuses received by U.S. Olympic medalists.”

I have to disagree.  Many proposals are every bit as ridiculous, unfortunately, including a lot that have been enacted.

 

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Tax Roundup, 2/17/14: Big tax subsidy edition. And: the $70 million doggie treat!

Monday, February 17th, 2014 by Joe Kristan

20120906-1Do you think the legislature would approve an $12 million annual subsidy to support the operations of a publicly-traded corporation?  Trick question!  They already have.

The Department of Revenue last week released its listing of claims for the Iowa research credit over $500,000 for 2013.  Unlike the federal credit, the Iowa credit is “refundable” — if the company claiming the credit has less tax due than its credit, the state writes the company a check for the difference.  Of the $58.2 million in credits claimed, about 65% of them exceeded taxes due and were granted as refunds, according to the report.

Two John Deere entities combined to claim over $18 million in credits in 2013; assuming the 65% figure applies to them, that means the got a net $12 million subsidy from Iowa taxpayers.

The Des Moines Register reports:

Twelve of Iowa’s major employers accounted for more than 86 percent of tax credit money awarded for research and development last year, according to a new Revenue Department report.

Companies claimed a total of $53.3 million in credits for research and development in 2013, with 12 companies claiming $46.2 million of that amount. Including individuals who claimed credits, the total rises to $58.2 million.

While recipients of the credits will always argue passionately for their virtues, it’s impossible to justify cash operating subsidies from the state for a dozen well-connected corporations.  The Tax Update’s Quick and Dirty Iowa Tax Reform Plan would benefit all taxpayers, not just those who hire tax credit harvest consultants to get cash for what they would do anyway.

 

Liz Malm, Richard Borean, Lyman Stone, Map, Spirits Excise Tax Rates by State, 2014 (Tax Policy Blog)

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It looks like Iowa hits the sauce pretty hard.

 

Annette Nellen, State income tax filing post-Windsor.

Jason Dinesen, Glossary of Tax Terms: Enrolled Agent   

Kay Bell, IRS’ first batch of 2014 tax refund checks averages $3,317

 

Russ Fox, Tax on the Run Owners Run to ClubFed:

Here’s a scheme for you: The government has set up this new tax credit worth thousands of dollars. What if we find some impoverished individuals, have them fill out tax returns claiming this credit, and we pocket all that cash? We’ll just phony up some other parts of the return to make it look real. They’ll never catch us!

As an aside, this sort of thing happens with all refundable tax credits. It’s one of the reasons why they attract fraudsters like moths are drawn to bright lights.

Yes, this really happened…except for the part about never being caught.

But even if you catch them, that money is gone.

 

taxanalystslogoChristopher Bergin, To Fix the IRS, You Have to Fund It (Tax Analysts Blog)

This agency is so mismanaged that there may very well be corruption. But I have no proof of that. I do, however, agree with those who are calling for a special prosecutor. Because the way House Democrats are behaving – ignoring that there is any problem at all – is almost scandalous, and what the Obama administration is doing is useless.

And that brings me to the House Republicans. They think it’s a good idea to punish the IRS by cutting its budget. That won’t fix the problem, and it’s the classic cutting-off-your-nose-to-spite-your-face move.

We tax practitioners deal with the degrading IRS service levels every day, and it’s clear the IRS should be better funded.  It won’t happen, though, unless the IRS finds a way convince Republican appropriators that it isn’t a political arm of the other party.  Dropping the proposed 501(c)(4) regulations is probably a necessary, though not sufficient, first step.

 

TaxProf, The IRS Scandal, Day 284

Tax Justice Blog, Congress Is About to Shower More Tax Breaks on Corporations After Telling the Unemployed to Drop Dead.  Apparently the “extenders” bill is showing some life.

Jack Townsend, Government Files Protective Appeal in Ty Warner Sentencing 

 

Via Wikipedia.

Via Wikipedia.

The $70 million doggie treat.  The greyhound industry is a legacy of the early days of gambling in Iowa, but as opportunities to lose money recreationally have expanded, gamblers have lost interest in the doggies.   Yet state law still requires two casinos to retain their dog tracks.  Now the Des Moines Register reports that the casinos are willing to buy out the dogs for $70 million:

Combined betting on greyhound races in Dubuque and Council Bluffs has dropped from $186 million in 1986 to $5.9 million in 2012, a 97 percent decline. Both dog tracks typically have only a scattering of fans in grandstands that once held thousands of patrons.

The proposed legislation envisions a payment of $10 million annually for seven years for Iowa’s greyhound industry. This would include a total of about $55 million from Horseshoe Casino in Council Bluffs and about $15 million from the smaller Mystique Casino in Dubuque.

The casinos say they are losing $14 million annually on the dogs.   I would guess that horse racing in Iowa has a similarly hopeless economic model.

Somewhat related: Tyler Cowen, Triply stupid policies.

 

News from the Profession: Just What Every Accountant Wants for Valentine’s, Another Calculator (Going Concern)

 

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Tax Roundup, 2/14/14: Dallas county leads Iowa AGI. And: will you all be my valentines?

Friday, February 14th, 2014 by Joe Kristan

iowa countiesDallas County leads Iowa’s counties in AGI race; Decatur brings up the rear. The IRS this week released its individual tax return statistics by county and zip code this week.  I can’t resist wading into the data — I could wallow in it all day, but I won’t get paid for that this time of year.  I can get away with a few observations, though.

  • Iowans filed 1,420,569 1040s in 2011, reporting a total adjusted gross income of a little over $54 billion — an average of $53,033 per return.
  • Dallas County had the best 2011, reporting an average AGI of $78,169.  Dallas County is a fast-growing suburban county west of Des Moines.
  • Decatur County, a rural county on the Missouri border, was 99th and last, with average AGI of $35,323.
  • Polk County, Iowa’s most populous county, had average AGI of $59,570.
  •   $54 billion of Iowa’s $75 billion in AGI was wages.  $1.1 billion was interest and $1.2 billion was dividends.
  • Iowans reported $2.093 billion in AGI “business or profession net income.”  When politicians want to increase tax rates on “the rich,” they are taxing Iowa employers, whether or not they realize it.

 

20120906-1Iowa Senate extends NASCAR sales tax break.  When the Iowa Speedway opened in Newton, the Iowa General Assembly gave them a unique gift: they let the track keep sales tax it collects for 10 years.  One of the conditions for the gift was continued 25% ownership by Iowans, which inconveniently went away when NASCAR bought the track last year.

No problem!  The Des Moines Register reports that the Senate is moving swiftly to enact new legislation not only allowing the out-of-state owners to keep the sales tax they collect, but they are extending the deal, which was to expire in 2016, for an additional 10 years.

I’m sure the NASCAR people are fine folks, but so are the people who run every entertainment venue in Iowa that competes for Iowa’s leisure dollars.  Only NASCAR gets this special break.  NASCAR is also the beneficiary of a special federal break for “qualified motor sports entertainment facilities.”   NASCAR is controlled by a single wealthy North Carolina family.  It’s strange how the bipartisan leadership in the legislature gives them special treatment.

 

Wikipedia image

Wikipedia image

Beaned.  The Justice Department has filed a notice of appeal of the extraordinarily lenient tax evasion sentence — community service and no jail time — to the inventor of the Beanie Baby.   (Chicago Tribune)

 

William Perez, What Goes Where on the 2013 Form 1040

Paul Neiffer, John Deere Expects Increase (Hopes For) in Section 179 and Bonus Depreciation.  It’s good for equipment sales.

TaxProf, The IRS Scandal, Day 281

Jamie Andree, Celebrating Valentine’s Day with Comments on the Innocent Spouse Regulations.  (Procedurally Taxing).  Nothing says “I love you” like claiming innocent spouse relief.

 Tax Trials, Court of Appeals Rules that IRS Cannot Regulate Return Preparers

 

Scott Hodge, How Much More Redistribution is Needed to Make Every Family “Equal”? (Tax Policy Blog).   It will never be enough for some people.

Howard Gleckman, Why is the U.S. Olympic Committee Tax Exempt? (TaxVox).  Probably for much the same reason NASCAR gets special federal and Iowa tax breaks.

 

The Critical Question. Could a flatulence tax on cows slow climate change? (Kay Bell)

News from the Profession.  Turns Out Your Non-Diverse Wardrobe Probably Makes You a Better CPA (Going Concern)

Happy Valentine’s Day!  Infanti: Big (Gay) Love: Has the IRS Legalized Polygamy? (Going Concern).  Will you be my Valentine?  And you, and you…

 

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Tax Roundup, 2/13/14: Hatching a tax boost. And: spring training!

Thursday, February 13th, 2014 by Joe Kristan


hatch
Jack Hatch, Candidate for Governor,
yesterday introduced legislative text for his tax plan (SF 2164), which would result in a big tax increase for a lot of voters.

First the good points:  It would increase the minimum income subject to tax from the current $9,000 level to $20,000 for single taxpayers, and to $24,500 from $13,500 for heads of household and surviving  spouses.  It reduces the number of tax brackets from nine to four.  And it eliminates the deduction for federal taxes.  It increases the depended credit to $500, from $40.

Unfortunately, the way he adjusts the brackets will result in a big tax increase for taxpayers at not very high income levels.  His 6.2% bracket would kick it at taxable income of $42,091.  Under current law, 6.2% is roughly the highest Iowa effective rate when you take the deduction for federal taxes into account.  Under current law, that starts at $67,230 for 2014.  With a top rate of 8.8%, the Hatch plan means about a 25% increase in the top rate at the highest brackets — and his top rate begins at taxable income of only $88,822.

I did some quick computations on four very simplified taxpayers — single filers with one item of ordinary income.  The results are below:

 

hatch2014

The result is a small tax cut at the lower brackets, but some big increases in higher brackets.  Remember that much of the income taxed at higher brackets is pass-through business income.  That makes it a big tax increase on employers.  It’s hard to see how this will sell.

 

20121120-2Megan McArdle, Latest Obamacare Delay Is Probably Illegal:

That doesn’t mean that the courts are going to step in. Courts don’t just swoop down and body-check the executive branch or Congress every time one of them oversteps its constitutional powers. They wait for someone to sue. And in order to sue, you need to have legal standing, which, Adler points out, no one seems to. It’s not enough to say that your taxes will be higher, or your government measurably less constitutional, because of the government’s actions. You need to prove that you have been substantially harmed, and it’s not clear that anyone can.

Unlike Megan, I think a successful lawsuit is a real possibility.   There are surely employers just over the 100-employee limit who will be at a disadvantage compared to those who are just under, and who therefore don’t have to comply with the mandate.  While I am not a lawyer and far from a specialist in “standing,” that seems like somebody who would have it.

 

TaxGrrrl, The IRS, The Refund Process and That Pesky 1121 Code.  It appears earned income credit refunds are getting held up.  Considering the level of fraud and error in the program, it’s hard to fault the IRS here.

Jason Dinesen, Iowa Charitable “Checkoffs”

Something that a lot of taxpayers (and tax preparers — including me) in Iowa often overlook is the “charitable checkoffs” a taxpayer can make on their Iowa tax return. Taxpayers can choose to donate money on their Iowa return to these causes:

  1. Fish and Wildlife: donations made here go towards Iowa’s Wildlife Diversity Program, which monitor’s the state’s “non-game” wildlife.

  2. Iowa State Fair Foundation: donations made here help fund improvements to the Iowa State Fairgrounds.

  3. Firefighters/Veterans Trust Fund: donations made here are split 50/50 between helping volunteer fire departments with training and helping veterans with things such as job training.

I like the wildlife one best.

 

Paul Neiffer ponders IRS Data by Zip Code and County.  It’s full of interesting stuff, and I hope to post about our local zip codes and their 2011 tax data.

Kay Bell, IRS options after losing tax preparer regulation appeal. Um, do their job, and don’t try to revive the failed power grab?

William Perez looks at the Percentage of Tax Returns Claiming Itemized Deductions.

 

Andrew Lundeen, The Economics of Senator Wyden’s Tax Reform Plan (Tax Policy Blog):

Though the plan does simplify the individual side of the tax code, the most important measure of tax reform plans should be the growth it produces. On that measure, this plan falls short predominately due to its treatment of capital.

It does go the wrong way.

 

Jack Townsend, Article Analyzes Counter-Intuitive Effects of IRS Offshore Penalty Structure.  “As the authors note, ‘the GAO Report indicates [that] taxpayers with little or no criminal or civil fraud exposure were punished proportionately in higher amounts than those who participated and had true criminal tax exposure.’”

Of course.  You have to shoot the jaywalkers so you can be nice to the real crooks.

 

Peter Reilly, Pilot To Black Panther To Pastor Calls For Financial Transparency In Churches.

TaxProf, The IRS Scandal, Day 280

 

Career Corner.  If No One Will Hire You, Maybe It’s Because Your Parents Aren’t Offering to Pay Them   (Going Concern).  Probably not, though.

Bleacher Nation, Chicago Cubs Pitchers and Catchers: REPORT!!!  Let’s do this.

 

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Tax Roundup, 2/12/14: Lawless and Unregulated edition. And: Lincoln!

Wednesday, February 12th, 2014 by Joe Kristan

20130121-2As we reported yesterday, the IRS preparer-regulation power grab failed in the D.C. Court of Appeals.  The three-judge panel unanimously ruled that “The IRS may not unilaterally expand its authority through such an expansive, atextual, and ahistorical reading” of the law.

One grumpy IRS person told us that we would regret it, that Congress will pass a worse IRS-run preparer regulation regime.  While it’s possible, I don’t think Congress is in any mood to give the IRS more power right now (see TaxProf, The IRS Scandal, Day 279).

It’s a victory for taxpayers, for preparers, and for the rule of law.  One hope it is a good omen for future court decisions on the on-the-fly rewrites of the Obamacare effective dates.

My endzone dance is here.  The Tax Prof has a roundup of coverage, as well as a guest op-ed: Johnson: The D.C. Circuit Rejects the IRS’s Regulation of Tax Return Preparerswhich says “At bottom, Loving stands for the proposition that exigency does not excuse illegality.” 

Other tax bloggers weigh in:

Russ Fox, DC Court of Appeals Rules Against IRS: Loving Decision Upheld.  “The real problem is the huge complexity of the Tax Code, and the biggest villain here is Congress. Rather than regulating tax professionals, we need to regulate (gut) the Tax Code itself.”

Leslie Book, Initial Reactions to the Government’s Loss in Loving (Procedurally Taxing):  “The government may seek to get Supreme Court review of the matter, or may work with Congress to get specific legislative authority. I offer no views on the odds of the government seeking cert, but its sound beating in two opinions leaves the possibility of obtaining cert and a victory in the Supreme Court seemingly small.”

Joseph Henchman, Big Win for Taxpayers: IRS Loses Effort to Expand Power Over Tax Preparers (Tax Policy Blog).  “In May 2013, we filed a brief opposing an IRS appeal of a court decision striking down their regulation of small tax preparers.”  That’s the brief I joined, along with fellow tax bloggers Russ Fox and Jason Dinesen.

Trish McIntire, The IRS Lost!  “I don’t know if there can be any more appeals (not a lawyer) but I bet there will be a tax preparer bill in Congress soon.”

 

20130419-1Paul Neiffer, When Farmers Barter.  While bartering is taxable, Paul muses: “Some of these barter transactions are properly reported, however, my educated guess is that much higher percentage is not.”

William Perez, How to Handle Owing the IRS

Tony Nitti, Tax Geek Tuesday: Allocation of Partnership Liabilities “Admit it. Nobody really understands what’s going on in this remote corner of the K-1; typically, most tax preparers just apply the tried-and-true “same as last year” approach to allocating liabilities, and trust that it won’t matter in the end.”  Oh, it does, it does.

Jana Luttenegger, “Extensive Wait Times” Ahead with the IRS (Davis Brown Tax Law Blog).  And it’s not like they were brief before.

Kay Bell, The pros and cons of tax refunds.  While logically you don’t want to let the taxman sit on your money, clients always seem happiest with a fat refund.  That leads many tax advisors to sandbag a bit on payments.

TaxGrrrl, Yes, Olympic Wins Are Taxable (And Should Stay That Way) 

 

Peter Reilly, Pilot To Black Panther To Pastor Calls For Financial Transparency In Churches 

 

Jack Townsend, Corporate Corruption Case Charged With Swiss Bank Accounts to Hide the Loot 

Tax Trials, The Tax Education of Lauryn Hill

Annette Nellen links to the Video of IRS Commissioner Koskinan on the filing season.

 

The Iowa Department of Revenue has a Facebook page!  It’s a good idea, and they actually answer questions, like this:

 20140212-1

It’s great that they are answering disgruntled taxpayers for everyone to see.  Best thing is that it’s available to anybody, not just Facebookers.  You don’t have to bring yourself to “like” the Department of Revenue to read it.

 

David Brunori, Tax Breaks for Lawyers — No Joke (Tax Analysts Blog):

I read recently in the Kansas City Business Journal that Missouri gave a big law firm $2.8 million in tax incentives to move to Kansas City. I thought there must be some kind of mistake. Certainly, no politician would agree to give citizens’ hard-earned money to lawyers. And certainly, they would not give citizen money to big-firm, wealthy lawyers. But once again, reality trumps good tax policy. The Missouri Department of Economic Development gave the nearly $3 million to attract the international law firm Sedgwick LLP to downtown Kansas City. 

Must be a rough neighborhood if that’s considered an improvement.  Or, more likely, Missouri has completely lost its mind.

 

Tax Justice Blog, The States Taking on Real Tax Reform in 2014.  One blog’s “real tax reform” is another blog’s march to madness.

News from the Profession: Big 4 Dude Says Dudes at His Firm Rewarded For Treating Non-Dudes Like Dudes (Going Concern)

 

LincolnToday is Abraham Lincoln’s birthday.  He was born 205 years ago today in Kentucky, before anybody thought of an income tax.  His presidency saw the first U.S. federal income tax, passed to finance the Civil War.  The Revenue Act of 1861, Section 49, imposed a flat 3% levy “upon the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever” over $800.  It was replaced by a progressive levy in 1862, with a 3% rote on income over $600, with a 5% rate kicking in at $10,000.

The tax expired under its own terms in 1866, after Lincoln’s death.  Lincoln never came back, but the income tax returned to stay in March 1913.

 

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Tax Roundup, 2/11/14: Employer mandate “shared responsibility” delayed for some. And: fresh scam!

Tuesday, February 11th, 2014 by Joe Kristan

20121120-2It’s such a disaster, we’re only going to force some employers to do it right now. The IRS has issued final regulations on the employer health insurance mandate that delay their impact on companies with 50-100 employees until 2016.  The “shared responsibility provisions” — such a creepy name — will still apply to employers with 100 “full-time equivalent” employees in 2015.  The Wall Street Journal reports:

 Under the original 2010 health law, employers with the equivalent of at least 50 full-time workers had to offer coverage or pay a penalty starting at $2,000 a worker beginning in 2014. Last year, the administration delayed the requirement for the first time by moving it to 2015.

The new rules for companies with 50 to 99 workers would cover about 2% of all U.S. businesses, which include 7% of workers, or 7.9 million people, according to 2011 Census figures compiled by the Small Business Administration. The rules for companies with 100 or more workers affect another 2% of businesses, which employ more than 74 million people.

You’ll look in vain in either Sec. 4980H, the “shared responsibility” tax code section, or Sec. 1513 of the Affordable Care Act, which enacted 4980H, for anything that says the provision can take effect later than 2014.  Once again the administration is making it up as it goes in a tacit admission that Obamacare is a half-baked mess.  I hope somebody with 100 employees sues the IRS on equal-protection grounds to enjoin this politically-motivated selective enforcement.   To me it’s another clue that the individual mandate will also be delayed, and ultimately abandoned.

Paul Neiffer, Some ACA Relief for Employers with 50 to 99 Employees

Jason Dinesen, The Affordable Care Act and Small Businesses   

Martin Sullivan, Forget Obamacare for a Minute. Here’s Some Good News About Health Policy (Tax Analysts Blog).  

 

Via Wikipedia

Via Wikipedia

New filing season, same old scams.  Our area IRS Taxpayer Liason says this email is circulating:

Dear Applicant,

An Income Tax repayment is a refund of tax that you’ve overpaid.
Internal Revenue Service  ( IRS ) has received new information about your taxable
income you’ve overpaid too much tax through your job or pension in previous years.

There was a mistake with your tax, which an error occurred on your tax return,
and therefore your income reduced. Your employer also used the wrong tax code.

You are eligible to receive a refund of $2670.48 USD as your recent tax refund.
IRS will send you a repayment. You’ll get the repayment either by cheque in the post or by bank transfer.

Please click here to get your tax refund on your Visa or Mastercard now.

Note : Your refund can be delayed for a variety of reasons. For example submitting
invalid records or applying after the deadline.

Best Wishes,

IRS Tax Refund Service Team
Internal Revenue Service.

Of course it is a scam.  Some obvious clues: a real IRS notice doesn’t have to tell you that it’s dealing in “USD.”  We say “checks” in the US; you get “cheques” in Canada, the UK, or other old Commonwealth countries.  IRS doesn’t do refunds on credit cards.  And, of course, the most important clue:  the IRS will never initiate contact you with an e-mail or phone call.  If an email says it’s from the IRS, it’s not.

 

TaxGrrrl, Understanding Your Tax Forms: The W-2   

 

haroldHooray for Hollywood!  Movie Producer Peter Hoffman Charged With Film Tax Credit Fraud.  It involves Louisiana, which continues its co-dependent relationship with Hollywood with film tax subsidies.  Iowa, sadder but wiser, now prefers producer room and board subsidies to Film Tax Credits.

 

Howard Gleckman, Incoming Senate Finance Chair Wyden Outlines His Tax Agenda (TaxVox):

Speaking in Los Angeles to a conference sponsored jointly by the USC Gould School of Law and the Tax Policy Center, Wyden framed his tax agenda around several key issues:

Narrow the gap between taxation of investment income and ordinary income.

Significantly increase the standard deduction.

Simplify and enhance the refundable Child Tax Credit and Earned Income Tax Credit.

Revise savings incentives by creating a new investment account for all Americans at birth, shift savings subsidies from high-income taxpayers to low- and moderate-income households, and consolidate and simplify the current tangle of existing tax-preferred savings incentives.

Enhance job training.

Restore Build America Bonds—a short-lived idea that partially replaced tax-exempt state and local bonds with direct federal subsidies. He’d also seek ways to encourage business to funnel overseas earnings into domestic infrastructure investment.

It’s a disappointing agenda from somebody considered a thoughtful center-left voice on tax policy.   Any tax on investment income is best understood as a double-tax, and I don’t think by “narrowing the gap” he means lowering ordinary inocme rates.  His second, third and fourth points are fine, but the “Enhance job training” and “Build America Bond” proposals are just political pinatas to be broken open by insiders.  If you want to see what jobs training dollars really accomplish, I refer you to Iowa’s own CIETC.

 

TaxProf, The IRS Scandal, Day 278

checkboxJeremy Scott, Check the Box for Tax Avoidance (Tax Analysts Blog).  

The check-the-box rules allowed multinationals to create entities that were treated one way in a foreign jurisdiction and another by the United States. These entities, so-called hybrids, are at the core of companies like Apple’s tax strategies, and they have been used to bring about obscenely low effective tax rates (2.3 percent on $700 billion in foreign earnings, according to the Obama administration).

I think any corporate above zero is obscenely high.

 

Kyle Pomerleau, Proposal to Exempt Olympians’ Prize Money from Taxation: Good Politics, Wrong Solution (Tax Policy Blog)

Kay Bell, IRS takes a bite out of U.S. Olympic medalists’ winnings

 

Keith Fogg, Holding People Hostage for the Payment of Tax – Writ Ne Exeat Republica (Procedurally Taxing). No, he’s not talking about tax season.

 

News from the Profession: PwC Will Probably Be the First Accounting Firm to Replace Interns With Robots.  (Going Concern).  Makes sense, as they were the first to do so with partners.

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Tax Roundup, 2/10/14: The New Mexico double-dip edition. And: we got it right. We’ll fix that!

Monday, February 10th, 2014 by Joe Kristan

bureauofprisonsTwo bites at the apple were two too many for a New Mexico man.  Evading $25 million in federal taxes is bad enough, but illegally collecting $225,000 in farm subsidies on top of that seems like piling on.  From a Department of Justice Press Release:

Bill Melot, a farmer from Hobbs, N.M., was sentenced to serve 14 years in prison today to be followed by three years of supervised release for tax evasion, program fraud and other crimes, the Justice Department, Internal Revenue Service (IRS) and U.S. Department of Agriculture’s (USDA) Office of Inspector General announced today.  Melot was also ordered to pay $18,469,998 in restitution to the IRS and $226,526 to the USDA. 

Melot was previously convicted of tax evasion, failure to file tax returns, making false statements to the USDA and impeding the IRS following a four-day jury trial in Albuquerque, N.M.  According to court documents and evidence presented at trial and at sentencing, Melot has not filed a personal income tax return since 1986, and owes the IRS more than $25 million in federal taxes and more than $7 million in taxes to the state of Texas.  In addition, Melot has improperly collected more than $225,000 in federal farm subsidies from the USDA by furnishing false information to the agency.  

He had been sentenced to only five years, but the appeals court decided he needed some more time before putting in another crop.

For a little farmer, Mr. Melot got around:

  Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Bahamas, in 1992, and failed to report the account to the U.S. Treasury Department as required by law.

If the government’s sentencing memorandum is to believed, Mr. Melot isn’t down with this whole paying taxes thing, filing a blizzard of “baseless” motions and attempting to conceal assets.  For example:

Defendant’s disregard for this Court commenced immediately… Within 24 hours of his release, between August 21 to August 24, 2009, Defendant and his immediate family were observed purchasing 19 money orders for $1000 each at a Moneygram counter, which is located at the Walmart in Hobbs, New Mexico.

a. Each money order was for $1,000.
b. Each money order listed “Bill Melot” in the memo line. The money orders also each listed Defendant’s home address, 2805 E. Rose Road.
c. Each money order was payable to Mueller, Inc., a Ballinger, Texas company, which builds outdoor sheds.

Videos from Walmart showed Defendant wearing the same clothing that he wore when he was released from custody. The money orders, along with an additional $5,260.94 in cash, were used to pay off the balance due on a metallic shed for Defendant’s farm, which he claimed not to own in his statement to Pretrial Services. The purchase of this barn flatly contradicted Defendant’s earlier claim of near indigence

The appeals panel seems to have believed the prosecution, as Mr. Melot got the full sentence requested.

Russ Fox has more at Really Big Tax Evasion Leads to Really Long Sentence at ClubFed.

 

Via Wikipedia

Via Wikipedia

Oops.  It appears the Iowa legislature accidentally repealed the state sales tax on heavy equipment purchases in 1998, reports Siouxcityjournal.com:

The inadvertent change – which slipped by the department, the legislative code editors, and lawmakers and their staffs in the vetting process — didn’t come to light until last summer, when an attorney contacted the department about the Iowa Code section. At that time, legal staff at the department and the Iowa Attorney General’s office determined that the 2008 action had “rendered that tax obsolete,” Daniels said.

“It was not the department’s intention, nor do we believe that it was the Legislature’s intention, to remove that tax or repeal that tax,” said Daniels, whose agency has asked lawmakers in Senate Study Bill 3117 to restore the sales tax on heavy equipment retroactive to July 1, 2008. 

Sound tax policy tells the legislature to expand the exemption, rather than repeal it.  The heavy equipment will normally be used in business, and business inputs shouldn’t be subject to sales taxes.  It just shows that the General Assembly can occasionally get it right, but will immediately take corrective action when it finds out.

 

 

William Perez offers An Overview of the Income, Deductions, Tax and Payment Sections of the Tax Return

Kay Bell comes through with 6 steps to help you become the best tax client. She omits step number seven: pay your preparer promptly.  No matter how good you are with the first six steps, omitting step seven disqualifies you from the “best” list.

TaxGrrrl, Delayed Tax Refunds, The EITC & How We’re Getting It Wrong   

 And despite its original intent, if the idea is to encourage taxpayers to work more, the current iteration of the EITC fails miserably. As you earn more, your benefits go down, not up. At some point, the incentive to work more is mitigated by the specter of a lesser credit.

It’s a poverty trap.

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

 

TaxProf, The IRS Scandal, Day 277

Sounds like a good reason to me.  Broken Tax Code Offered as Reason for Reform (Annette Nellen)

Peter Reilly, Benefit Of Clergy – Why Special Tax Treatment For Ministers Needs To Go.  Constitutional Does Not Equal Sound Tax Policy”

Stephen Olsen, Summary Opinions for 02/07/2014 (Procedurally Taxing).  It’s a roundup of tax procedure cases and posts.

Jack Townsend, Germany Moves Against Offshore Bank Evaders 

An unwarranted meattax approach: Scientist Proposes Discouraging Meat Consumption with New Tax (Joseph Henchman, Tax Policy Blog).

Flicker image courtesy Michael Coghlan under Creative Commons license.

Flicker image courtesy Michael Coghlan under Creative Commons license.

 

Career Corner.  No Shirt, No Shoes, No Accounting Degree, No Probl– Actually, Small Problem (Going Concern).

 

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Tax Roundup, 2/7/14: Love it or leave it edition! And: Coralville tax scam.

Friday, February 7th, 2014 by Joe Kristan


20140207-1
Making America a better place to leave.  
2013 Expatriations Increase by 221% (Andrew Mitchel):

We do not believe that the primary reason for the increase in expatriations is for political purposes or for individuals to reduce taxes.  Instead, we believe that there are likely three principal reasons for the recent increases in the number of expatriations:

  1. Increased awareness of the obligation to file U.S. tax returns by U.S. citizens and U.S. tax residents living outside the U.S.;
  2. The ever-increasing burden of complying with U.S. tax laws; and
  3. The fear generated by the potentially bankrupting penalties for failure to file U.S. tax returns when an individual holds substantial non-U.S. assets.

The increase in expatriations may also be partly due to a 2008 change in the expatriation rules.

When a foot-fault can break you, you might not want to play the game anymore.  When they start shooting you for jaywalking, you might not want to be on that street at all.

 

20140106-1It’s never too cold for a tax scam.  From CBS2Iowa.com:

Coralville police say they’re receiving more reports of a telephone tax scam. CBS 2 News first told you about the scam last month. The IRS says the scam targets taxpayers, especially recent immigrants. A caller claims to be an IRS agent and says the victim owes money. The victim is told to repay the money using a preloaded debit card or a wire transfer. If the victim refuses, the caller threatens to arrest or deport them or suspend his or her drivers license. The scammer uses a fake name and fake IRS badge number. The caller has found a way to make caller IDs show the number as the IRS toll-free line. To appear more legitimate, the scammer may also send a fake email or recite part of the victim’s social security number. After threatening the victim, the caller may hang up. A second scammer may later call the victim, pretending to be from the local police department or DMV.

It sounds like the scam described in this IRS web page.  If they haven’t sent you a letter first, the IRS isn’t going to call you.  Nor will they contact you via e-mail.  The IRS gives this advice:

  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.
  • If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
  • If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov.  Please add “IRS Telephone Scam” to the comments of your complaint.

Paying taxes you actually owe is enough fun without sending extra to scammers.

 

20121120-2

Fiduciary Income Tax Blog, 65-Day Rule — 2014:

Fiduciaries of estates and complex trusts have the option to treat certain distributions as having occurred last year. An election can be made with respect to distributions made within 65 days after the end of a tax year. The 65th day of 2014 is Thursday, March 6.

Think of it as a trust mulligan.  With the 3.8% Obamacare Net Investment Income Tax applying at around $12,000 of trust income, many trusts will want to use the 65-day rule to get the income to beneficiaries whose income is under the thresholds.

 

William Perez, Understanding Personal Exemptions

Jason Dinesen, Financing a Small Business: 4 Items to Remember.  “Don’t spend money just to get tax deductions.”

Kay Bell, Federal itemized deduction claims state-by-state

TaxGrrrl, Looking For Your Tax Refund? What You Need To Know So Far For 2014 

 

This Koskinen isn't the IRS commissioner

This Koskinen isn’t the IRS commissioner

Christopher Bergin, New IRS Commissioner Wants to Move Forward – We Should Let Him (Tax Analysts Blog):

Koskinen needs the time and space to do what everybody agrees must be done: Fix the IRS. The investigations must continue. But the new commissioner needs to move forward as well. That means not avoiding the problems, but going at them in a positive, not in a negative way. That’s what good leaders do. We should give the man a chance to show us he is one.

He could hardly be worse than the last one.

Howard Gleckman, Individual Income Taxes May Soon Generate Half of All Federal Tax Revenue (TaxVox)

CBO explains much of the rise in individual income taxes by expected increases in real incomes produced by a recovering economy, including higher wages, salaries, capital gains, and income to owners of pass-through firms, who report their taxes on their individual returns. CBO also expects a significant increase in distributions from retirement accounts for at least the next few years, driven in part by higher asset values.

Two other reasons: Higher tax rates for upper-income households (including the surtax in the Affordable Care Act) and the phenomenon known as real bracket creep. Tax brackets are adjusted for inflation but not economic growth. For at least the next few years, CBO figures incomes will grow faster than those inflation-adjusted brackets.

Oddly, these projections assume the expiring provisions actually expire.  Not likely.

Joseph Henchman, Response to Jesse Myerson’s Land Tax Idea (Tax Policy Blog).  Nice effort, but I’m not sure you need to respond to somebody who says Communism gets a bad rap.

TaxProf, The IRS Scandal, Day 274

Jack Townsend, Another Swiss Bank Enabler Indicted in SDNY

J. Richard Harvey, Jr., Surprising Statistics on Corporate Disclosures of Uncertain Tax Positions (UTP) (Procedurally Taxing):

 

The Critical Question: Does the NFL Need a Billion Dollar Subsidy Annually from Taxpayers? (Tax Justice Blog)

Career Corner.  Protip to Government Accountants: If You’re Into Kiddie Porn, You Probably Shouldn’t Watch It At Work (Going Concern)

 

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Tax Roundup, 2/6/14: Mortgage credit program revived for Iowa. And: why your state budget surplus is a mirage.

Thursday, February 6th, 2014 by Joe Kristan

IFA logoThe Iowa Finance Authority has opened a program that will allow some Iowans to claim a credit, rather than a deduction, for mortgage interest.  From an IFA press release:

The Iowa Finance Authority has announced that eligible Iowans may buy a home and reduce their federal income tax liability by up to $2,000 a year for the life of their mortgage.

The 2014 Take Credit Mortgage Credit Certificate program will be available beginning this week through IFA Take Credit Program Participating Lenders. Approximately 585 Iowa home buyers are expected to benefit from the program.

It has been some years since these credits were available in Iowa.

The credits aren’t for everyone.  They are targeted to lower-income borrowers, with income limits varying by county.  IFA has a “quick check” page for users to determine eligibility.  But for those who qualify, they are a handy way to reduce mortgage costs.  The credit is claimed on Form 8396.

 

TaxProf, TRAC: IRS Criminal Prosecutions Up 23.4% in Obama Administration.  This is probably due to the explosion in tax-refund theft that was less of a priority than regulating preparers was for the Worst Commissioner Ever and the Obama Administration.

 

taxanalystslogoCara Griffith, The Myth of the Budget Surplus (Tax Analysts Blog):

There seems to be a lot of good news about state budgets lately. Newspaper headlines have changed from doom and gloom over budget crises during the recession to questions about how states will manage budget surpluses. Unfortunately, there are financial problems lurking beneath the surface, and one of the largest may be the underfunding of state and local government pension and healthcare plans.

Even Iowa’s relatively well-funded pension plan is 20% underfunded actuarially, and even that uses an absurd assumption of 7.5% investment returns.  The Taxpayers Association of Central Iowa has a lengthy, but excellent, analysis.  Public defined benefit plans are a lie.  They are a lie to taxpayers understating the cost of current pension accruals, a lie to public employees about what they will get after retirement, or both.

 

Elaine Maag of TaxVox raises Questions About Expanding the Childless EITC:

The EITC is often criticized for its built-in marriage penalty. Imagine a single mom with three kids who earns $17,500. Prior to marriage, she qualifies for the maximum credit of $6,143. But if she marries someone with identical earnings, the additional income will reduce her EITC to just $3,670.

If the childless EITC were expanded and the husband had his own EITC, he would lose all or part of his benefit when the couple married, magnifying the tax increase this couple would face relative to when they were not married. As long as the EITC phases out at higher incomes and is tied to joint income, this will remain an issue.

Not to mention the massive level of EITC fraud and the punitive marginal tax rates on taxpayers working their way out of poverty.

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

 

Jana Luttenegger, Expired Housing-Related Tax Rules (Davis Brown Tax Law Blog).  The exclusion for forgiven mortgage debt is the biggie.

William Perez, Finding the Right Filing Status.  If you are legally married, it’s either joint returns or married filing separate.  Single status is unavailable, even for same-sex couples married in a state that allows them to get married who live in a state that doesn’t.  William provides some excellent explanation.

 

20130419-1Janet Novack, IRS: Don’t Call Us, Look It Up On IRS.Gov.  Well, you might actually get a correct answer that way.

Kay Bell, What the ‘Taxman’ does and doesn’t collect 

 

TaxProf, The IRS Scandal, Day 273

Howard Gleckman, The Cruel Political Paradox of Deficit Reduction (TaxVox)

Carl Smith provides Another Update on Rand Cases in Tax Court at Procedurally Taxing.  The Rand cases hold that an “underpayment” for purposes of penalties does not include the portion of refundable tax credits that tax tax below zero.

Going Concern, Pot Taxes May Not Be Such a Cash Cow Due to, Well, the Cash.  Not to mention the disallowance of all non cost-of-goods-sold deduction for legal dealers.

 

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Tax Roundup, 2/4/14: Sometimes the tax crime isn’t the worst crime. And the Carnival moves on.

Tuesday, February 4th, 2014 by Joe Kristan

WashingtonRule 23 of George Washington’s Rules of Civility has a lot going for it:

When you see a Crime punished, you may be inwardly Pleased; but always show Pity to the Suffering Offender.

Yet even the Father of His Country might have had a hard time suppressing a smile over a federal tax sentencing in California yesterday.  From the Contra Costa Times:

A former San Ramon family law attorney was sentenced to two years in prison Monday for evading taxes and illegally eavesdropping on a client’s estranged spouse with the help of a now-incarcerated private investigator who set up divorcing men for drunken-driving arrests.

Mary Nolan, 62, of Oakland, already relinquished her law license and paid $469,000 in back taxes Sept. 27 after she pleaded guilty to four counts of tax evasion and one count of illegal eavesdropping.

Nolan represented the ex-wives of two men who were arrested after [the private investigator's] attractive female employees lured them into drinking and driving. Those convictions were expunged after the scheme became known in 2011, when Butler and jailed former Contra Costa Narcotics Enforcement Team Commander Norman Wielsch were caught selling drug evidence and admitted to pimping and robbery, among other crimes.

Oddly, the sentencing judge not only failed to impose the 33-month sentence requested by the prosecution, but he also seemed to think the tax charge was more serious than the honey-trap thing, reports Concord Patch:

Breyer told Nolan during the sentencing today, “To eavesdrop on conversations that clearly weren’t intended for an adversary to hear is a
very unfair thing to do.”

But he said he was especially concerned about the failure of Nolan, as a lawyer, to pay the taxes due.

“What I find most troubling is the fact that you were a lawyer. Lawyers have that special responsibility not just to know the law but to follow it,” he told Nolan.

Yes, evading $400,000 of taxes is a bad thing, whether or not you are a lawyer.  Still, ruining lives setting up and framing people to win divorce cases strikes me as worse than making the IRS work hard for its money.   Maybe when you’re a federal judge, things start to look a bit funny.

 

 

Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

Well, technically “a bunch” isn’t “a smidgeon.”   ‘Not Even a Smidgeon of Corruption’ at IRS, Obama Says.  (Tax Analysts, $link).   If so, it sure is funny how Lois Lerner was so quick to invoke her 5th amendment right against self-incrimination.  

Clint Stretch, Dumb Mistakes Aren’t Crimes.  (Tax Analysts Blog)  He says “IRS employees will not knowingly do someone’s political bidding.”  History shows otherwise.

 

 

TaxProf, OMB: EITC Is 4th Most Error-Prone Federal Program, With 22.7% Error Rate.  If it makes you feel better, the three worse ones are all Medicaid or Medicare.  Makes you want the government and IRS to pay in a bigger role in health care, for sure.

 

Minnesota:  Come for lovely winter weather, and stay for the annual tax hit!  The Minnesota Center for Fiscal Excellence has computed the annual cost for a high-earning individual of life in the tundra.  It’s not cheap:

MNvIA

Of course, beautiful Iowa doesn’t have a lot to crow about, as it looks good only by comparison with Minnesota.  While the hypothetical taxpayer could only buy a nice new sedan annually for the savings of moving from Minnesota to Des Moines, she could buy some really nice wheels every year with a move to Sioux Falls.

 

Tony Nitti, Tax Geek Tuesday: Reasonable Compensation In The S Corporation Arena:

The IRS Fact Sheet provides “The amount of the compensation will never exceed the amount received by the shareholder either directly or indirectly. However, if cash or property…did go to the shareholder…the level of salary must be reasonable and appropriate.”  This language would seem to indicate that there is no requirement that compensation be paid to a shareholder-employee provided the shareholder also foregoes distributions. Even with that bit of guidance from the IRS, it is prudent advice to encourage a profitable S corporation to start making reasonable salary payments to its shareholder-employees as soon as it has the means to do so.

Unfortunately, the IRS has shown that it will attempt to force a salary even when the means are lacking.

Paul Neiffer, You Can File Income Tax Returns Now (Maybe)

 

Jeremy Scott, Making Tax Reform a Partisan Issue (Tax Analysts Blog):

And it isn’t hard to see why. Linking tax reform to the debt ceiling risks making it a partisan issue. Forcing Congress to take up reform is a GOP victory, because it causes Democrats to give up on a clean bill. So Democrats, many of whom are sympathetic to the tax reform process, will have to oppose tax changes because Republicans have politicized the debate, defining tax reform as a win for their side.

Ah, the majesty of government.

 

Lyman Stone, New Study: High Excise Taxes Drive Cigarette Smuggling in Boston, New York, Providence (Tax Policy Blog).  That has to be the most predictable news of the day.

Sad news from Kay Bell “The time has come, however, to put the Tax Carnival on hiatus.”  It’s a lot of work to put one together.  Thanks, Kay, for all of the help you’ve given tax bloggers over the years with the Carnival of Taxes.  So until she feels like reopening the Carnival, let’s have one last ride on the Midway.

20120829-1

 

Going Concern, Here Is a Short List of People Less Deserving of Bonuses Than IRS Employees.  Hard to argue with the list, especially the first two, but I would throw in the other branches as well.

 

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Tax Roundup, 2/3/14: The Fable of the Wife’s Purse and your legislature. And: start with the right name!

Monday, February 3rd, 2014 by Joe Kristan

20120906-1Why do state legislators enact such dumb laws?  After speaking to a group of State Senate Presidents, David Brunori has some thoughts ($link, unfortunately) on why they persist in enacting special incentive breaks for their special friends:

I said that tax incentives are largely unnecessary because business location decisions are mainly determined by labor costs and access to markets (Boeing proved that to some extent). But several senators quickly asked about industries such as filmmaking or high-tech, in which labor costs and market access aren’t nearly as important: Taxes would matter more, yes? I had to fall back on the “government still shouldn’t be picking winners and losers” argument, which I think is a powerful one. But it doesn’t resonate well with those who pick winners and losers all the time — in all aspects of public policy.

My response would be giving tax breaks to one business or industry means screwing all of your other constituents to pay for it.  It’s like taking your wife’s purse to the bar to buy drinks for the girls — yes, there are winners, but somebody loses too, and even the winners don’t respect you.

I like this “destroy the village to save it” argument:

 One senator asked whether widespread use of tax incentives would eventually make the corporate tax so irrelevant that its repeal would be easy. Again, indignantly, I explained all that is wrong with incentives. The senator said he agreed and was merely pointing out that the widespread use of incentives was a sure way to eliminate the corporate tax.

If that were true, I think we’d have seen at least one corporate tax collapse under the weight of its loopholes.  If any state corporation tax were ripe for collapse, it would be Iowa’s.  It has the highest rate in the nation, but its loopholes and credits make it pretty much useless, raising less than 5% of Iowa’s tax revenue.  Yet it still is going strong.

The best explanation for our bad tax policies are found in the “Public Choice” analysis of public policy pioneered by Gordon Tullock and James Buchanan.  They say that public officials, like everyone else, respond to incentives.  The incentives for legislators and their executive-branch enablers are to give money to well-connected constituents who will reward them with campaign cash.  They understand and appreciate the largesse, and the taxpayers whose pockets are being picked don’t notice the little larcenies that make the largesse possible.

Or, in my Fable of the Wife’s Purse, the girls at the bar know who’s buying, but the wife doesn’t, so the incentives are all in favor of the bar girls.

 

taxanalystslogoChristopher Bergin, The State of Our Union: My, My, My (Tax Analysts Blog):

The only thing new about the myRA is that it’s being done by executive fiat, which makes it lamer still. That leads me to a question: Shouldn’t we have the Treasury Department working on reforming our tax code instead of running around placing fig leaves over tough truths, such as the fact that many of us don’t save enough for retirement? A suggested starting point: Treasury should study why the myriad provisions already in the tax code that are designed to provide incentives to save for retirement aren’t working.

Oh, I’m sure the next tax code change will work so much better than all of them so far.

 

20111040logoWilliam Perez, Getting Your Name Right on the Tax Return:

If a person changed their name last year, now is a good time to check their Social Security card. The name shown on a person’s Social Security card is the name the IRS expects to see on the tax return. If a person’s name has changed, the person will first need to update their name with Social Security before using their new name on their tax return.

This problem comes up every year.  If you get married, or divorced, and you change your name, you need to file under the name that Social Security has if you e-file.  Even if you paper-file, using the “wrong” name can delay your refund.

 

Jason Dinesen,Life After DOMA: Gift Tax

Russ Fox, Tax “Professionals” Behaving Badly.  Russ recaps tax pros gone off the rails.

Annette Nellen passes on Tax mistakes to avoid – WSJ article.  I wonder if the WSJ will follow up with “Tax mistakes to seek.”

Kay Bell, Married couples filing joint returns share all tax liability, too.

 

Scott Drenkard, Indiana House and Senate Pass Business Personal Property Tax Reform.  “Taxes on business personal property are more distortive than other means of collecting revenue.”

Ben Harris, Variation in EITC Take-up, County by County:

The regional variation in the EITC is stark. The counties with the highest share of taxpayers taking up the EITC are overwhelming located in the Southeast. As can be seen in the accompanying map, a large share of counties in Alabama, Georgia, and Mississippi have over half of their taxpayers claiming the EITC. With few exceptions, almost all counties with high rates of EITC take-up are located in the South.

Half?  Wow.

 

nfl logo

TaxGrrrl, Ads Score Big At Super Bowl And At Tax Time, Too   

Peter Reilly, Flap About NFL Tax Exemption Seems Silly.  Not as silly as Denver’s first play from scrimmage yesterday.

Tony Nitti, Super Bowl Tax Tale Of The Tape: Who Ya’ Got?  “When the party winds down late Sunday night, we’re greeted with the reality that we’re mere hours away from starting another hellacious ‘busy season’ work week, this one with a bit of a hangover.”

 

TaxProf, The IRS Scandal, Day 270

Jack Townsend, Administration Insists that FATCA Will Not Be Further Delayed.  We must make personal finance a huge hassle for Americans abroad as quickly as possible.

 

On Friday Going Concern wished you a Happy First Day of the Tax Filing Season!

 

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