Is Instant Tax Service still dead? Maybe not, reports TaxGrrrl: In Apparent Defiance Of Court Order, Fourth Largest Tax Biz In Country Preps For Sale :
Within a week of the Order, [founder "Fez"] Ogbazion was said to be engaged in discussions relating to the sale of the company, an activity that would appear to be barred under the injunction. Todd Bryant, General Counsel for ITS Financial, confirmed via email that “[a]n asset sale is being considered.”
It was a puzzle, though, as to who might be interested in purchasing the beleaguered company.
An insider, it turns out. TaxGrrrl questions whether that will work, given that the court order seems designed to destroy the company and salt the earth so it can never return. Judge for yourself (my emphasis):
Based on the foregoing, IT IS HEREBY ORDERED pursuant to I.R.C. §§ 7402 and 7408 that Defendants ITS Financial, LLC, TCA Financial, LLC, Tax Tree, LLC, and Fesum Ogbazion, and their representatives, agents, employees, attorneys, and/or any person or entity acting in active concert or participation with them, are PERMANENTLY ENJOINED from directly or indirectly, by use of any means:
A. Operating, or being involved with in any way, any work or business relating in any way to preparation of tax returns; and, accordingly, Defendants ITS Financial, LLC, TCA Financial, LLC, and Tax Tree, LLC shall cease to operate; and Defendant Fesum Ogbazion shall cease operating, or being involved with in any way, any work or business relating in any way to preparation of tax returns;
B. Acting as tax return preparers; and/or acting or operating as a franchisor of businesses relating in any way to preparation of tax returns;
C. Supervising or managing or assisting tax return preparers; and/or owning, operating, or engaging in work or a business relating in any way to preparation of tax returns;
D. Assisting with or directing the preparation or filing of tax returns, amended returns, claims for refund, or other related documents;
E. Representing before the Internal Revenue Service any person or organization whose tax liabilities are under examination or investigation by the IRS;
F. Organizing, promoting, providing, advising or selling any business or work of tax services;
They seem to be looking for a loophole here by selling assets, rather than stock, though the injunction against “selling any business” would seem to cover that. I suspect the judge will make things clear in the coming days.
Prior coverage: Judge shuts down Instant Tax Service.
Instant Tax, meet Mo’ Money. Owner of St. Louis tax prep franchise gets 20 months for fraud (stltoday.com):
The owner of a Mo’ Money tax preparation franchise in St. Louis was sentenced to 20 months in federal prison on Tuesday after pleading guilty in July to conspiracy to commit tax fraud and aiding and abetting the preparation of false tax returns.
Jimi Clark, 57, of Memphis, Tenn., and four employees were arrested and indicted in October 2012 on one felony count each of conspiracy to commit tax fraud. All were accused of falsely claiming educational tax credits on at least 47 tax returns for 2009.
Refundable credits like the American Opportunity Credit and the Earned Income Credit are the fuel for the fraudulent return industry.
Lyman Stone, California Film Tax Credit Faces Controversy, Delay (Tax Policy Blog):
A recent FBI sting in California revealed that state Senator Ron Calderon may have taken up to $60,000 in exchange for pushing to lower eligibility requirements for California’s $100-million-a-year film tax incentive program. This isn’t the first time film incentives have been connected to corruption and scandal. Indeed, a scandal about misallocation of film tax credits ultimately led to the demise of Iowa’s program over the last few years.
Sometimes I think that Iowa’s Film Credit Program was just an elaborate “Bait Car” episode that ultimately didn’t run because the stealing was too easy.
Elizabeth Malm, Maryland Governor Touts Benefits of Film Tax Credits, Despite Evidence to the Contrary (Tax Policy Bl0g). Iowa has stopped giving filmmakers money and is instead giving them time, with no apparent bad economic effects.
David Henderson, Saez You: Income Distribution without Key Components of Income. It turns out one of the most-cited articles on income inequality leaves out a lot of income, particularly government transfers and welfare benefits. He notes notes, increased transfers are always advocated as a cure for inequality, and yet by the measuring stick used, it can never “help.”
Clint Stretch, Turning Down the Heat on Energy Tax Policy (Tax Analysts Blog). He notes the new oil and gas boom, and that “Oil and gas tax incentives are not responsible.”
TaxProf, The IRS Scandal, Day 195
Howard Gleckman, Baucus Proposes International Tax Reform But Future Action Remains Uncertain (TaxVox)
According to the plan, passive income from overseas activities would continue to be taxed at U.S. rates. Most income from the sale of goods and services overseas would also be taxed at full U.S. rates. The draft would end the practice of deferral that allows firms to avoid U.S. tax on foreign earnings until they bring those profits home. However, income that is currently parked overseas would be taxed at a 20 percent rate payable over 8 years.
Baucus would move the U.S. closer to a territorial system favored by many multinationals and GOP lawmakers. Under such a system, income is taxed in the jurisdiction where it is earned rather than by the firm’s home country. While the plan does not fix a specific tax rate, staffers say Baucus is aiming to reduce the corporate rate from 35 percent to about 30 percent.
But in the Baucus plan, this shift closer to a territorial tax comes at a price. To limit the ability of multinationals to game the system, the plan would impose a stiff minimum tax on income earned overseas by foreign affiliates of U.S. parent companies.
Reducing the corporate rate is fine, but remember that most business income is taxed on 1040s anymore.
Peter Reilly has been playing hooky at the commemoration of yesterday’s 150th anniversary of the Gettysburg Address. I’m jealous.
The Critical Question: Hasn’t the Government Done Enough to Mess Up Higher Education Finance? (David Brunori, Tax Analysts Blog) Well, I’m sure they can always mess it up even more.
News from the Profession. Non-Traditional Holiday Celebrations at Accounting Firms, Care To Add Yours?