Posts Tagged ‘Michael Schuyler’

Tax Roundup, 2/17/16: Nationwide ‘unregulated’ tax practice regulated out of business. And: Where’s Roger?

Wednesday, February 17th, 2016 by Joe Kristan

20150921-1The Wild West of Unregulated Tax Practice. Well, not entirely: Federal Court Shuts Down Nationwide Tax Preparation Business (Department of Justice):

A federal court in Chicago has ordered Servicios Latinos Inc. to close its nationwide tax preparation business, the Justice Department announced today.  The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that the defendants falsely understated their customers’ tax liabilities or overstated their customers’ entitlement to a tax refund.  The injunction also prohibits Lopez, Pamela Miranda and Jorge Miranda from acting as federal tax preparers, owning or operating tax preparation businesses and employing tax preparers.  The defendants agreed to entry of the injunction, but did not admit the allegations in the complaint.

The abortive IRS preparer program had an ethics component. I’m sure that this would never have happened if the barred preparers had attended a one-hour ethics CPE course.

They were successful, until now:

According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states, with locations including Kennet Square, Pennsylvania; Kansas City, Missouri; and Las Vegas, Nevada. 

They probably had many clients who were delighted at the big refunds that the stodgy preparers down the street were too timid to claim. The press release says the now-closed firm’s alleged stock in trade included phony child tax credits and earned income tax credits. Sometimes a big refund can turn out to be expensive. Now their satisfied clients can look forward to their “Dear Taxpayer” letters.

This shows that the government has powerful tools to shut down bad actors. Regulation would not improve the conduct of good preparers, but it would saddle them with useless expense and paperwork. It’s just another form of occupational licensing, this time to the benefit of the national tax prep franchise outfits.

 

RMceowenPaul Neiffer, Welcome Aboard Roger McEowen:

Roger just recently left the Center For Agricultural Law and Taxation (CALT) at Iowa State University and I am pleased to let everyone know that he has agreed to join CliftonLarsonAllen as a tax director for our Agribusiness and Cooperative group.  He will be based out of Des Moines and will continue to do his normal seminars around the country and provide additional advice for our clients on income and estate tax and succession planning (along with other advice).

Roger recruited me as a speaker for the CALT Farm Tax Schools for the past several years. Congratulations, Roger, on your move to the private sector!

 

186 companies get refunds under Iowa R&D tax credit (Des Moines Register):

Critics of the program have questioned why so few companies claim such a large part of the tax credits. They’ve also questioned why the state is providing companies with money when it faces tight budgets.

Supporters of the research activities tax credit, however, have said the tax credit helps the businesses decide where to locate and where to conduct their research. Providing the tax credit helps spur investment in Iowa, some have said.

People who get free money always have good reasons why it should keep coming.

Related: What Iowa considers more important than Sec. 179. 

 

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Jason Dinesen. Glossary: Form 8332. “Form 8332 is a tax form signed by a custodial parent to release their claim to a dependency exemption for a child and give it to the non-custodial parent.” It’s a wonderful way to enable parents to continue fighting long after the divorce is final.

TaxGrrrl, Understanding Your Tax Forms 2016: Form 1099-INT, Interest Income. “The ‘FATCA filing requirement’ box is ticked if the information reported on this form is required by rule or statute to comply with the Foreign Account Tax Compliance Act (FATCA). If this box is checked, you may have your own FATCA related reporting requirements, including the filing of a Report of Foreign Bank and Financial Accounts (FBAR).”

Russ Fox, Board of Equalization Excoriated for Ignoring the Law and Binding Precedents, “This is just another reason why the business climate in California is so dreadful.”

Kay Bell, Louisiana budget gap could shut down LSU football. The most important function of the state university system, apparently.

Jack Townsend, The Revenue Rule: Is It Relevant Any More? Should It Be? “Historically, the ‘Revenue Rule’ has been a barrier to one country seeking to collect taxes in another country.”

Keith Fogg, Why is the IRS Collecting Taxes for Denmark? ({rocedurally Taxing)

Peter Reilly, How Valid Is Tax Foundation Dynamic Scoring? It’s all modeling, which is always questionable. Still, taxes do matter. The same people who insist 70% tax rates won’t be ruinous insist soda taxes affect behavior. They’re half right that way.

Robert Wood, Kim Kardashian + Kanye West File Taxes Separately. Maybe You Should Too. If I were married to Kim Kardashian, I absolutely would.

 

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Ajay Gupta, Justice Scalia’s Tax Law Jurisprudence—Just as Acerbic and Prophetic (Tax Analysts Blog). “In cases involving the interpretation of federal tax statutes, Scalia brought to bear his general disdain of legislative history.” And he was not a friend of commerce clause challenges to state taxes.

Michael Schuyler, What Would The Administration’s $10 Oil Tax Do To The Economy And Federal Revenue? (Tax Policy Blog). It would go into, among other things, “high-speed rail.

Howard Gleckman, Cruz’s Flat Tax + VAT Would Cut Revenues By $8.6 Trillion. If only there were a candidate with a plan that would improve the tax system and not increase the deficit

TaxProf, The IRS Scandal, Day 1014

Tax Justice Blog, Tax Justice Digest: Voodoo Economics — Corporate Tax Watch — Social Contract. Check out what the left side of the tax conversation is up to. Oddly, the words “social contract” don’t show up in the post. Maybe because I never signed it?

 

News from the Profession. Would an Accountant Ever Fall for a Phony IRS Call? “And if a CPA did get duped, it’s not like he or she could tell anyone about it. If they did, they’d literally die from the embarrassment.”

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Tax Roundup, 6/22/15: Iowa shovels more economic development fertilizer. And: Paul flat tax fever!

Monday, June 22nd, 2015 by Joe Kristan

 

20120906-1It’s getting deep. The giant pile of tax credits for the big Lee County fertilizer plants got a little deeper last week. The Iowa Economic Development Board Friday voted for an additional $21.5 million in tax credits for the project. The Quad City Times compares that appropriation to other state spending:

Iowa’s elected legislators negotiated for five months on Iowa school funding, before reaching a compromise that provided $55 million in one-time money that will only assure the status quo: No one expects improvements.

On Friday, Gov. Terry Branstad’s Iowa Economic Development Board added another $21.5 million in tax credits to the $85 million in state incentives already lavished on a foreign fertilizer company under construction in Lee County.

No legislative vote.

No deliberation by elected officials.

Not even a hint of how this new pile of Iowa taxpayer money will help Iowans. Representatives of the parent firm Orascom, of Egypt, said the $21.5 million in tax credits will add 11 jobs to the 180 expected at the plant.

This latest giveaway brings local, state and federal taxpayer investment to $500 million in the $1.9 billion project. That’s right, taxpayers are covering 25 percent of Orascom’s project.

So almost $2 million per “job.” And that assumes they wouldn’t have completed the project without a little more cash from the state, which is improbable. That’s $21.5 million from those of us without connections at the state to fertilize an already richly-subsidized project. We can be confident that some wee portion of that $21.5 million will go to attorneys and consultants who pulled the strings to make it happen.

The state board also wasted $8 million in tax credits on ribbon cutting opportunities in Sioux City involving a convention center and hotel — which experience nationwide shows will be a fiscal nightmare. Because who better to allocate investment capital than politicians who are spending other people’s money?

Iowa’s cronyist tax credit boondoggle is long overdue for the scrapyard. It lures and subsidizes the influential and the well-lobbied at the expense of their less well-connected competitors and their employees. It’s time for something like the Quick and Dirty Iowa Tax Reform Plan to improve Iowa’s abysmal business tax climate for everyone — not just the cronies.

 

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Russ Fox, Arbitrage Is Legal, But You Better Pay the Taxes. It looks at the tax troubles of a recently-indicted Tennessee politician.

Annette Nellen, Uber, Lyft and others – worker classification in the 21st Century. I used Uber over the weekend visiting my son in Chicago, and it’s pretty slick. It’s also here in Des Moines. A few weekends ago, my other son was playing music in the Court Avenue entertainment district on the street and an Uber driver stopped, got out a guitar, and started jamming with them. That doesn’t sound like an employee to me.

Kay Bell, Tax gift for Father’s Day: help paying for child care

Jason Dinesen, Iowa Adoption Credit and Special-Needs Adoptions

Peter Reilly, Joan Farr Claims IRS Denial Of Exempt Status Is Example Of Persecution Of Christians

 

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Presidential Candidate Rand Paul has proposed a 14.5% flat tax. I haven’t had a chance to study it, but its base-broadening, rate-lowering approach is promising. The Tax Policy Blog looks at the plan in The Economic Effects of Rand Paul’s Tax Reform Plan (Andrew Lundeen, Michael Schuyler) and No, Senator Paul’s Plan Will Not ‘Blow a $15 Trillion Hole in the Federal Budget’ (Kyle Pomerleau). The second one is in response to Bob McIntyre’s post in Tax Justice Blog, Rand Paul’s Tax Plan Would Blow a $15 Trillion Hole in the Federal Budget.

Howard Gleckman, Rand Paul’s Tax Cut Isn’t Quite What It Seems (TaxVox)

 

TaxProf, The IRS Scandal, Day 771Day 772Day 773, Day 774.

News from the Profession. Ex-BDO CEO’s Quest to Get Firm to Pony Up for His Legal Bills Not Going So Well (Caleb Newquist, Going Concern)

 

 

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

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

Paul Ryan

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

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

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

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

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

Source: The Tax Foundation

Source: The Tax Foundation

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

 

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

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

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

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

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

 

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

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

Not every problem is a tax problem.

 

Via Wikipedia

Via Wikipedia

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

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

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

 

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

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

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

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

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

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

Jack Townsend, USAO SDNY Announces Another Offshore Account Client Plea

 

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

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

 

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

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

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

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

 

TaxVox is also flooding the SOTU zone:

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

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

William Gale, Adjusting the President’s Capital Gains Proposal

 

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

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

 

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Tax Roundup, 12/9/14: Just because your manager steals your payroll taxes doesn’t get you out of them. And: Rashia!

Tuesday, December 9th, 2014 by Joe Kristan

No news on extenders yet. 

 

EFTPSDouble the pain: Idaho business manager steals payroll taxes, but IRS still wants them. An implement dealer in Idaho hired a manager to run day-to-day operations. He learned the hard way that while you can delegate your payroll tax function, you can’t escape it.

The taxpayer, a Mr. Shore, hired Mr. Lewis to run Bear River Equipment, Inc. (BRE), a McCormick Tractors dealership. Mr. Lewis had managed the dealership before Mr. Shore acquired it, so it seemed a sensible hiring decision.

Things started to go wrong quickly. Mr. Lewis failed to remit payroll taxes in his first year running the dealership. Mr. Shore kept up with the business by phone and made quarterly visits, according to a U.S. District Court judge, and he also reviewed financial results. This process enabled him to note unpaid taxes in 2005, the first year of operations, and he had Mr. Lewis get them caught up.  As owner, Mr. Shore had checkbook authority, but he let Mr. Lewis take care of it for him.

The judge explains how things went very wrong (my emphasis):

In August 2007, Shore received notice from an Internal Revenue Service Agent that there were some serious issues with BRE’s employment taxes for 2006 and 2007. This notice was the first time Shore became aware that BRE’s 2006 and 2007 payroll taxes had not been paid. Shore subsequently learned that Lewis had been embezzling from BRE, failing to pay creditors or pay BRE’s taxes, and stealing BRE’s assets. Upon discovering Lewis’ fraud, Shore fired Lewis and took over management of BRE.

Not a good hire, in hindsight. It proved fatal to the business:

Shore ultimately decided to close BRE because he believed he could not pay all of the liabilities and contribute sufficient working capital to keep the company going. Before closing the company, however, Shore allowed more than $120,000 from BRE’s checking accounts to be paid to unsecured creditors other than the United States.

Via Wikimedia Commons

Via Wikimedia Commons

As it turns out, that was a false move. The tax man gets really, really upset when payroll taxes aren’t remitted to the IRS. The business was incorporated, which protects owners from most liabilities incurred inside the corporation. The tax law, though, allows the IRS to collect payroll taxes from “responsible persons,” regardless of the existence of the corporation, if there is a “willful” failure to remit. The court held that Mr. Shore was a “responsible person” even though he didn’t run the business day-to-day:

…despite delegating his authority to Lewis and permitting him to run BRE’s daily affairs, Shore remained a “responsible person” because he had effective control of the corporation and the effective power to direct the corporation’s business choices, including the withholding and payment of trust fund taxes.

It’s not enough to be “responsible.” The tax law requires “willful” nonpayment of employment taxes to assess them against a responsible person. The $120,000 payment was a bad fact, according to the court:

Here it is undisputed that Shore learned of BRE’s unpaid tax liability in August 2007. It is also undisputed that BRE paid more than $120,000 to unsecured creditors after Shore learned of BRE’s tax liability. Shores’ failure to remedy the payroll tax deficiencies upon learning of their existence in August 2007, while subsequently allowing corporate payments to be made elsewhere, including to unsecured creditors, constitutes “willful” conduct under § 6672.

The Moral? There are a number of lessons to be drawn here. One is basic accounting controls. It appears that the manager had far too much control over the accounting function and bank accounts, enabling him to loot the company, and the payroll tax account, before the owner caught on.

Even with poor accounting controls, though, the owner could have detected the non-payment of payroll taxes. These are supposed to be remitted under the Electronic Federal Tax Payment System (EFTPS). Users of EFTPS can log into their payroll tax account and monitor their payments. Had Mr. Lewis done so, he might have detected the failure to make payments that ultimately ballooned into a million-dollar payroll tax deficiency.

Cite: Shore v. U.S., DC-ID, No 1:13-cv-00220

 

Gas Tax Fever: Branstad Weighs Proposed Gas Tax (CBS2Iowa.com): “On Monday Governor Branstad said he would keep an open mind on raising the tax if a bipartisan plan came to his desk and he’s hopeful lawmakers can come to some agreement this coming year.”

 

Mason City Sundog Morning. It’s cold here today.

Peter Reilly, Chief Counsel Advice Provides Timely Warning About 1099 Filing Requirements. “A recently released memo from the IRS Chief Counsel – CCA 201447025 – drives home for me the point that there is probably a lot of exposure out there from not filing 1099s.”

Robert D. Flach has your Tuesday Buzz, with a typically rich set of tax links, including one to Prof. Maule’s thoughts on being nice to siblings.
 

Jason Dinesen, 5 Things About EAs: We’ve Been Around Since 1884
 

Paul Neiffer, Are We Getting Section 179 Fatigue? “After purchasing a lot of equipment over the last 4 years to take advantage of Section 179, I am not sure how much capital is still available to purchase even more equipment to get the Section 179 deduction.”
 

Kay Bell, Attention older IRA owners, your RMD is due by Dec. 31
 

Michael Schuyler, The Government’s Tax-Transfer System Is Extremely Progressive (Tax Policy Blog):

In November, the Congressional Budget Office (CBO) released the latest annual edition of its report on the distribution of household income and federal taxes, with data for 2011. The CBO study confirms that the federal tax system is progressive. It further shows that government transfers to households are also progressive.

It appears that way:

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Chart from Tax Policy Blog

 

Jeremy Scott, The New GOP Congress and the Congressional Budget Office (Tax Analysts Blog). “If Republicans accept the premise that shaking up congressional staff would make it look like they are rigging the process in favor of their proposals, that undermines the logic behind their priorities to begin with.”

Isabel Sawhill, The Lee-Rubio Family-Friendly Tax Is a Disappointment (TaxVox)

Martin Sullivan, Rand Paul Puts Chokehold on Cigarette Taxes — He’s Got a Point (Tax Analysts Blog).:

But there are still 42 million smokers in the United States. Nicotine is extremely addictive. These folks should elicit our compassion, not our contempt. And if we are going to fine them for their sins, the revenues should not inure to our benefit.

State governments are loathe to give up their nicotine fix.

 

TaxProf, The IRS Scandal, Day 579

 

Rashia says "thanks, Commissioner!"

Rashia says “thanks, Commissioner!”

Rashia gets time off. The self-proclaimed “Queen of IRS Tax Fraud” will return from exile a little sooner, thanks to an appeals court decision yesterday. From Tampa Bay Online:

A federal appeals court has thrown out Wilson’s two sentences, ruling that senior U.S. District Judge James S. Moody Jr. made procedural errors that may have increased her total prison term by more than 3 1/2 years.

Her convictions stand and Moody retains discretion. But he must recalculate the formula he used to determine punishment and he must resentence Wilson, now 29, at a future hearing.

Ms. Wilson is unlikely to be coming home right away. She is serving a 21-year sentence on charges related to identity theft refund fraud. She got in trouble after taunting the IRS on her Facebook, which also included photos of her posing with wads of stolen cash.  The article explains the background for the sentencing reduction:

The original sentencing was especially complex because Wilson was indicted twice in 2012. In one case, she pleaded guilty to possessing guns, illegal for a felon. In another, she admitted to netting more than $3 million through aggravated identity theft and wire fraud.

When using social media, sometimes it pays to be discreet.

 

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Tax Roundup, 12/23/2013: The joys of being at-risk. And: commence self-destruction sequence!

Monday, December 23rd, 2013 by Joe Kristan

S imageS image20091210-1.JPG‘Tis the season to be at-risk.  We mentioned yesterday how you can get basis for deducting S corporation losses by making a loan to the corporation.  But not just any loan.  If you borrow from another S corporation shareholder to make your loan, your basis won’t be “at-risk.”

A Monroe, Iowa farmer learned that the hard way with his 1991 loan, as we discussed long, long ago:

Larry Van Wyk, a farmer from Monroe, Iowa, got a taste of the dangers of the at-risk related-party loan rules back when farmers were their primary target. He owned an S corporation farm 50-50 with his brother-in-law, Keith Roorda. On December 24, 1991, Larry borrowed $700,000 from Keith. The loan was fully-recourse, so the brother-in-law could proceed ruthlessly against Larry in the event of non-payment. Larry used about $250,000 to repay money he owned the S corporation and loaned the remainder to increase his basis to enable him to deduct losses.

 Unfortunately, Larry’s brother-in-law had “an interest in the activity” – he owned half of it. This made the deduction not “at-risk,” even though no loan from a brother-in-law is without risk in a very real sense. The efforts of some of the finest tax attorneys west of the Mississippi were unavailing; the Tax Court agreed with the IRS, and Larry lost his losses.

It’s not enough to avoid borrowing from another shareholder; you don’t want to borrow from somebody related to another shareholder.  And as “interest in the activity” isn’t necessarily the same as “shareholder,” you should watch out for borrowing from anybody else involved in the business.  The safe thing is to visit your friendly community banker for your loan.

This is another of our daily year-end 2013 tax tips — one a day through December 31!

 

Weekend update!  In case you missed it over the weekend:

2013 Winter Solstice Tax Tip: S corporation basis and

Winter Sunday tax tip: loans for S corporation basis.

 

William Perez, Roth Conversions as a Year-End Tax Strategy

Jason Dinesen,  Six Things I’m Talking to My Small Business Clients About at Year-End (Part 2) 

 

This Koskinen isn't the IRS commissioner

This Koskinen isn’t the IRS commissioner

We have a Commissioner.  Senate Votes 59-36 to Confirm John Koskinen as IRS Commissioner (TaxProf).  A lot of folks have noted that once again we have a Commissioner who hasn’t done taxes for a living.  That doesn’t have to be fatal.  Anybody who has hung around CPA firms can tell you that somebody who is good at taxes can be pretty terrible at running an organization.

Still, it’s not a great sign.  The new guy, John Koskinen, will be 79 years-old when his five-year term runs out.  He got his reputation as a “turnaround guy” at Freddie Mac in the wake of the financial crisis, preserving the bureaucracy as responsible as any for the financial meltdown.  I suspect he was hired to protect the agency, not the taxpayer.

By the way, there is another Koskinen.

 

The crumbling mandate.  Tax Analysts reports ($link):

Individuals whose health insurance plans were canceled by insurers because they did not meet the requirements of the Affordable Care Act will be eligible for an exemption from the individual mandate penalty that takes effect in 2014, the Department of Health and Human Services said late December 19.

20121120-2Megan McArdle says this means Obamacare Initiates Self-Destruction Sequence:

As Ezra Klein points out, this seriously undermines the political viability of the individual mandate: “But this puts the administration on some very difficult-to-defend ground. Normally, the individual mandate applies to anyone who can purchase qualifying insurance for less than 8 percent of their income. Either that threshold is right or it’s wrong. But it’s hard to argue that it’s right for the currently uninsured but wrong for people whose plans were canceled … Put more simply, Republicans will immediately begin calling for the uninsured to get this same exemption. What will the Obama administration say in response? Why are people whose plans were canceled more deserving of help than people who couldn’t afford a plan in the first place?”

Arnold Kling put it more pithily: “Obama Repeals Obamacare.”

They’re desperately improvising as they go.  Not a good situation, considering the mandate tax is supposed to take effect in less than two weeks.   I’m starting to doubt that it ever gets enforced.

Related: Paul Neiffer, Cancelled Health Insurance Policies

 

20121220-3Kay Bell, Singing the praises of tax-favored retirement savings

Brian Mahany, IRS Ordered To Pay Taxpayer’s Legal Fees 

Russ Fox, The Death of the Death Master File (Sort of)

Peter Reilly,  Woody Allen’s Blue Jasmine Has A Tax Lesson.  If you don’t wan’t to stay married to a spouse, you might not want to file a joint return either.

TaxGrrrl,  12 Days Of Charitable Giving 2013: Esophageal Cancer Action Network

Robert D. Flach has a special Monday Buzz!

 

Tax Justice BlogUltra-Wealthy Dodge Billions in Taxes Using “GRAT” Loophole

Michael Schuyler, Why A Death Tax “Loophole” May Make Economic Sense (Tax Policy Blog).

Jack Townsend, Swiss Bank Hype and Over-Hype.  ” Merely having U.S. clients with undeclared accounts is not the problem for those banks; it is those banks actions to become complicit in the U.S. clients’ failure to report the accounts.”

Jim Maule finds his inner libertarian, embracing a Reason Foundation report calling for elimination of the home mortgage deduction in exchange for lower rates.

 

News from the Professon.  PwC Won’t Stop Beliebin’ In Ugly Christmas Sweaters (Going Concern)

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Tax Roundup, 8/12/2013: Good intentions edition. And the mysteriously-lucrative profession of German toilet attendant.

Monday, August 12th, 2013 by Joe Kristan

Good intentions don’t always mean good results.  That’s one of the lessons in Michael Schuyler’s post  Evaluating the Growth Effect of the Earned Income Credit at the Tax Policy Blog:

The Tax Foundation study concluded that while the EIC raises the incomes f low-income workers, its net result is to reduce both national output and total hours worked.  This result may seem surprising because the credit creates a strong incentive for workers with very low incomes who are within the EIC’s phase-in range to work more since each extra dollar of earnings brings a larger credit.  Unfortunately, for the larger number of low-to-middle income workers who are within the EIC’s phase-out zone, the loss of benefits with rising earnings generates a powerful deterrent against additional work effort.

 That “deterrent effect” results from the high hidden marginal tax rate on income in the EIC phaseout range:
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.

The credit was invented with the worthy intention of encouraging those with the lowest incomes to find work, but it has the unintended, though predictable, effect of discouraging those who already have jobs from moving up.  It does, however, have a fine stimulative effect on grifters, as up to 25% of the credit is issued improperly (examples here and here).

 

IRS, Disclosure Authorization and Electronic Account Resolution retirement delayed three weeks.  It’s nice of them to delay making it harder for tax pros to resolve client problems.

  

Richard Doak, Salesman in Chief: Governors today focus on handing out tax ‘incentives’:

In the early days of the Republic, many states got burned by canal-building schemes and other enterprises that well-connected corporations talked state governments into financing.

By the time the Iowa constitutions were written, in 1846 and 1857, people had become wary of states getting involved with corporations. Hence the restrictions such as those in the Iowa Constitution.

Today, the restrictions are easily gotten around, and the spirit of state-corporate separation expressed in the Constitution is ignored as government rushes into entanglements.

Politicians will sell their souls for a mess of ribbon cuttings and press releases.

 

Megan McArdle, Fixing the Mandate From Hell:

I’m kind of surprised to hear a lot of liberals agree that the 30-hour rule is bad policy, and even more surprised to hear that it would be easy to repeal or reform. In fact, while I opposed the law, I find it easy to see why they designed an employer mandate for all employers who worked more than 30 hours, and difficult to imagine how it could be reformed.

Welcome to the brave new world of 29-hour per week jobs.

 

Brian Strahle,  FEAR AND UNCERTAINTY:  ARE YOU PLAYING THE “WAIT AND SEE” GAME?  “In the world of state taxes, companies are faced with vast amounts of
‘uncertainty’ when applying multiple state rules that lack conformity to  their company’s situation.”  I don’t think you need to qualify the uncertainty with scare quotes.

TaxProf, The IRS Scandal, Day 95

Kay Bell, New York cop pleads guilty to identity theft, tax refund fraud

Jack Townsend, Is It the Defendant’s Burden to Prove Good Faith As a Defense to Willfulness?

Peter Reilly,  Windsor As A Precedent – Much More Than Taxes

TaxGrrrl, IRS Releases List Of Americans Hoping To Expatriate, Number Tops 1,000

Russ Fox, Once Again, Registration of a Tax Preparer Doesn’t Stop Him from Bad Behavior.   Tax preparer regulation just gives the bad ones a government seal of approval.

 

Look on the bright side! AICPA to CPA Exam Candidates: Hey, at Least You Don’t Have Kidney Stones! (Going Concern)

Flushing out tax crime.   Toilet attendant who kept £35,000 in loose change she made from tips faces tax evasion charges in Germany after investigators discover 1.4 tonne pile of coins in her garage (London Daily Mail).

It sounds like she was some sort of bathroom boss:

The website reported how the woman would drive to a number of toilets across the country in her Mercedes collecting the money.

Police started investigating the woman after she fell out with an employee.

Officers were called to one of the toilets after the pair started fighting but they later opened investigations into how the company was run after suspicions were raised.

It’s the price they pay, apparently, for not having savage unsupervised bathrooms like we deal with here.
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