Posts Tagged ‘Quill’

Tax Roundup, 2/7/2013: Iowa Code Conformity Bill goes to Governor. And: West Des Moines denture tax evasion

Thursday, February 7th, 2013 by Joe Kristan

20130117-1The Iowa House of Representatives  passed without changes SF 106, the bill updating Iowa’s income tax to incorporate last month’s Fiscal Cliff tax bill.  The bill conforms to all federal changes except for bonus depreciation, which remains unavailable on Iowa returns.

Now the bill goes to Governor Branstad.  The Governor vetoed a prior conformity bill because it adopted bonus depreciation; he is expected to sign this one.

The early passage of these bills is a relief to taxpayers affected by the federal changes.  Now they know how to file their Iowa 2012 returns.  Among the items affected by the bill:

- Section 179 depreciation.  Iowa now adopts the federal $500,000 limit for 2012 and 2013.

- IRA charitable distributions up to $100,000

- The above-the-line deductions for educator expenses and college tuition

- The optional deduction for state and local sales taxes.

No word yet on when the Governor will act on the bill.

 

West Des Moines denture-maker pleads to tax evasion.  The West Des Moines Patch reports:

Charles R. Barbour, who entered his plea to one count of income tax evasion in a proceeding before U.S. Magistrate Judge Celeste F. Bremer, will be sentenced on May 9.

In it, Barbour admitted that he understated tax year 2006 income in the amount of nearly $81,000, tax year 2007 income in the amount of nearly $51,000, tax year 2008 income in the amount of nearly $52,900 and tax year 2009 income in the amount of $11,300.

From the plea agreement it appears that the charges involve diversion of business receipts from his denture-making business to a personal bank account, and improper deductions:

Barbour willfully claimed false business expenses on the Schedules C for tax years 2007, 2008 and 2009; deducting internet and cable expenses for his residence as advertising expense; rent payments on a condominium and an apartment as rent expense; loan repayments to his parents as equipment repairs and maintenance expense; payments for his daughter’s medical expenses as medical supplies; payments to a local country club as professional development; and child support payments as professional fees and contract labor expenses.

The standard IRS audit programs for business expenses look for personal expenses disguised as business expenses, and an experienced examiner knows where to look.  That makes sneaking personal expenses onto a business return a bad bet — and if you make a habit of it, it can become a much bigger problem than back taxes and penalties.

 

Tyler Cowen,  Will health insurance premia rise for young males?

 Look at Table 1– where it says that the average premium for young healthy males will go from $2,000 to a little over $5,000. Yikes.

When the largely-optional penalty for not buying insurance is $695, it doesn’t seem likely that healthy young males will buy a lot of insurance — especially when they can buy it when they get sick because of the rules against pre-existing condition limits.  It’s hard to imagine this working well.

 

Jack Townsend,  Article for Canadians with Unreported Canadian Retirement Plans and Accounts.  More news from the foreign tax compliance jaywalker-shooting front.

Linda Beale,  Soon-to-be Google litigation with IRS over 2003-4 returns?  A disclosure in their 10-K.

Kaye Thomas,  Gaps in Cost Basis Reporting.  Don’t just take as gospel what the broker tells you.

Ellen Kant, Super Bowl Loophole (Tax Policy Blog).  On how the hugely-profitable NFL, and other sports leagues, are tax-exempt.

Elaine Maag, The Immigration Debate: Another Reason We Ought to Separate Work and Family Credits (TaxVox).

Have you ever tried to shoot one?  Oh, I thought you said “Quail.”  There Is Nothing Perplexing About Quill (Cara Griffith, Tax.com):

By saying that Quill created a perplexing inquiry gives credence to the idea that states can get around the physical presence requirement, but they can’t.

Try telling that to Iowa.

 

Russ Fox has a new book out, Tax Strategies for the Small Business OwnerCool!

Yeah, that will solve the deficit. Obama repeats call to end tax break for corporate jets, and more. (Patrick Temple-West, Tax Break).  I’m sure that will be wonderful news at the HondaJet North Carolina production facility that is newly up and running.

TaxGrrrl, Taxpayer Alleges IRS Agent Offered Sex In Exchange For Lower Tax Penalties On Audit.  Sounds far-fetched, but based on what I have seen of IRS agents, it would be a human rights offense.

 

You expected “Days of Our Lives?” The Situation Around the Registered Tax Return Preparer Program Has Become a Really Bad Soap Opera (Going Concern)

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Iowa Senate subcommittee moves huge expansion of sales tax nexus

Wednesday, March 28th, 2012 by Joe Kristan

Amazon LogoThe state legislature is looking to pass a huge expansion of Iowa’s ability to collect sales tax from out-of-state businesses.  The bill is in the guise of “protecting Main Street” from the predations of Amazon, and the Iowans who buy from them, by closing the “Amazon loophole.”   There’s a lot more, though, if you look at the fine print.  From the text of  SF 2309:

(1)  A retailer shall be presumed to be maintaining a place of business in this state, as defined in paragraph “a”, if any person that has substantial nexus in this state, other than a person acting in its capacity as a common carrier, does any of the following:

   (a)  Sells a similar line of products as the retailer and does so under the same or similar business name

   (b)  Maintains an office, distribution facility, warehouse, storage place, or similar place of business in this state to facilitate the delivery of property or services sold by the retailer to the retailer’s customers.

   (c)  Uses trademarks, service marks, or trade names in this state that are the same or substantially similar to those used by the retailer.

   (d)  Delivers, installs, assembles, or performs maintenance services for the retailer’s customers.

   (e)  Facilitates the retailer’s delivery of property to customers in this state by allowing the retailer’s customers to take delivery of property sold by the retailer at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in this state.

   (f)  Conducts any other activities in this state that are significantly associated with the retailer’s ability to establish and maintain a market in this state for the retailer’s sales.

In other words, it wouldn’t just get companies that sell in Iowa through Amazon.  It would require anybody whose business has somebody who distributes their stuff in Iowa  to collect sales tax on items shipped directly to customers in Iowa, even by another subsidiary in a controlled group.  This would be a brazen violoation of the Supreme Court’s Quill ruling, which requires physical presence to impose a sales tax.  The KFC case, which expanded Iowa income tax nexis to taxpayers with only “intangibles” in Iowa,  was (lamely)  justified by saying Quill only covered sales taxes; they don’t even have that fig leaf here.  We’ll see if the whole legislature is in for another trip to the Supreme Court.  Ultimately only Congres is in a position to bring some order to interstate Internet sales tax rules.

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U.S. Supreme Court defers to Iowa

Tuesday, October 4th, 2011 by Joe Kristan

The U.S. Supreme Court has declined to hear KFC’s appeal of the Iowa Supreme Court decision saying Iowa can tax their income just because they have Iowa franchisees. The Tax Policy Blog is disappointed:

It is unfortunate that the Court declined to hear the case, as states undermine predictability and disrupt the national economy when they are permitted to reach beyond their borders to tax businesses with no property or payroll in their state. As occurred after the U.S. Supreme Court declined to hear a similar case in 2007 (FIA Card Services fka MBNA America v. West Virginia Tax Commissioner), such state efforts will probably continue. The Tax Foundation’s Center for Legal Reform will continue educational efforts emphasizing the value of the physical presence standard for interstate business taxation.

But what was the Supreme Court supposed to do? After all, the Iowa Supreme Court can overrule the federal courts.
Related: Iowa Supremes reject ‘physical presence’ requirement, stick KFC with income tax.

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Frying KFC

Tuesday, January 4th, 2011 by Joe Kristan

Roger McEowen of the ISU Center for Agricultural Law and Taxation is not impressed by last week’s Iowa Supreme Court ruling subjecting KFC to Iowa’s income tax:

That is plainly a policy-based argument. Policy decisions are to be left for elected officials, not the Court. That

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Iowa Supremes reject ‘physical presence’ requirement, stick KFC with income tax.

Friday, December 31st, 2010 by Joe Kristan

20101231-1.jpgIn the last batch of opinions for three of its judges, the Iowa Supreme Court yesterday upheld the Department of Revenue’s position that ‘physical presence’ is not required to subject taxpayers to Iowa’s corporation income tax.
KFC owns no Iowa restaurants or employees. It instead licenses franchisees in Iowa. Relying on the U.S. Supreme Court’s Quill decision, KFC argued that it’s lack of physical presence in Iowa exempted it from Iowa’s highest-in-the-nation corporation tax. As noted here last week, the Department of Revenue disagrees.
Quill held that a mail order vendor with no physical presence in North Dakota was exempt from paying sales and use tax there under Commerce Clause case law. Iowa Judge Appel’s 40-page opinion spends most of its time explaining why the same Commerce Clause allows taxation of a corporation with no Iowa physical assets. The opinion addresses the problem of a contrary U.S. Supreme Court opinion that’s less than 20 years old this way:

Finally, we think taxation of the income here is most consistent with the now prevailing substance-over-form approach embraced in most of the modern cases decided by the Supreme Court under the dormant Commerce Clause. When a company earns hundreds of thousands of dollars from sales to Iowa customers arising from the licensing of intangibles associated with the fast-food business, we conclude that the Supreme Court would engage in a realistic substance-over-form assessment that would allow a state legislature to require the payment of the company

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