Des 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
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
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.
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)