They got him for the trailer. The filmmaker who got more transferable tax credits under the Iowa film tax credit program than anyone else was convicted Friday of first degree fraud with respect to the program. From the Des Moines Register:
Dennis Brouse, 64, could face up to 10 years in prison at a sentencing hearing scheduled for March 23. Brouse owned Changing Horses Productions, a company that received $9 million in tax credits from the scandal-ridden Iowa Film Office. Brouse starred in the company’s main series, “Saddle Up With Dennis Brouse.”
Prosecutors claim Brouse bought a 38-foot camper trailer from an elderly couple, Wayne and Shirley Weese, for $10,500 in cash. But prosecutors charged that Brouse claimed the trailer cost twice that much in a statement for tax credits that he turned in to the state.
The State Auditor’s Report on the program reported that Changing Horses claimed 50% tax credits for many other doubtful items. For example, they claimed a $1 million value for a “sponsorship” awarded to a feed company that had refused to sign a document with that value on the grounds that it was “grossly overvalued.” This enabled the company to get tax credits that likely were more than 100% of the money spent in Iowa by the filmmaker.
Mr. Brouse had a prior conviction on charges related to the film program overturned, and his attorney says he will appeal this conviction.
While Iowa’s film credit program was spectacularly mismanaged, it was only one extreme example of the unwisdom of the state legislature attempting to manage Iowa’s economy via the tax law.
Iowa conformity bills advance. The bill to update Iowa’s income tax to reflect the December federal “extenders” bill cleared both the House and Senate taxwriting committees. I think than means the bills won’t be delayed, and we can get on with Iowa’s tax season. Both bills conform for pretty much everything in the federal tax law, including the increased Section 179 deduction, but do not conform to federal bonus depreciation.
Dahls checks out. The central Iowa grocery chain was broken up Friday in a bankruptcy liquidation. Seven stores will re-open under another name.
Perhaps the greatest victims of the failure are longtime Dahls employees who owned the company through their Employee Stock Ownership Plan. They get nothing, or close to it.
Iowa passed a special break for sales of companies to ESOPs in 2012. Proponents pointed to the employee ownership of Dahl’s major competitor, Hy-Vee, in support of the bill.
The Dahls example shows a dark side of employee ownership — the way it concentrates a large portion of employee retirement assets in a single vulnerable asset.
Jason Dinesen, Do I Have to Have Form 1095-A Before I Can File? “Yes, you need the Form 1095-A if you got premiums through an insurance exchange.”
William Perez, Need More Time? How to File for a Tax Extension with the IRS
Jim Maule, When Is A Building Placed in Service? “Because the taxpayer presented undisputed evidence that certificates of occupancy had been issued, that the buildings were substantially complete, and that the buildings were fully functionally to house the shelving and merchandise, they had been placed in service within the required time period.”
Jana Luttenegger Weiler, Sharing Financial Responsibility at Tax Time (Davis Brown Tax Law Blog). “Whatever your situation, it is important to keep good records so that someone else can pick up where you left off, if needed.”
Paul Neiffer, $500,000 Permanent Section 179 Could be Coming Soon! “The House Ways and Means Committee is expected to vote on seven expired tax provisions on February 4, including making permanent Section 179 expensing at the $500,000 level.” Given the politics involved, I’m not holding my breath.
Robert Wood: Receipts Rule IRS Keeps Quiet: They’re Optional. Well, sometimes they aren’t optional, and they always help.
Russ Fox, This Never Works…:
Patrick White is the owner of R & L Construction in Yonkers, New York. He liked his home and he liked to gamble. There’s nothing wrong with that. He took payroll taxes withheld from his business and used that money for his homes and for gambling. There’s a lot wrong with that, especially when it totals $3,758,000. Mr. White pleaded guilty to one count of failing to pay over payroll taxes to the government. He’ll be sentenced in May.
Russ throws in some good advice about using EFTPS.
Robert D. Flach regales us with THE TWELVE DAYS OF TAX SEASON
Stephen Olsen, “Summary Opinions for 1/6/15-1/23/15” (Procedurally Taxing). News from the tax procedure world.
Christopher Bergin, Robin Hood and Other Fables (Tax Analysts Blog):
When it comes to taxation, President Obama has his own particular points of view. He may use terms such as “middle-class economy” or say things like “the rich can pay a little more,” but at the core he views the tax system as either a mechanism that helps the rich hang on to their ill-gotten gains or as a “honey pot” to fund his political ideas and base. It’s all politics. And that’s why we will see no progress – regarding the gas tax, taxation of businesses, or any other kind of real tax reform – until there has been a change in administrations.
In fact, the major lesson we’ve learned from this latest episode is that when it comes to of tax reform, the Obama administration has the “tinnyist” of tin ears. Whether the merry men and women at the White House believe that section 529 tuition savings plans benefit the ”rich,” they should know that when American voters actually recognize and identify with a tax break by its code section number (in this case, 529), be careful — very, very careful. You usually can’t sneak a fast one into the tax code when taxpayers know the section by number.
Hard to argue with this.
Arnold Kling, 529: Popular != Good Policy. “529 plans subsidize affluent people for doing what they would have done anyway–send their kids to exclusive, high-priced colleges.” Maybe, but it still is better than rewarding borrowing by subsidizing it.
Howard Gleckman, Obama’s Failure to Kill 529 Plans May Say Less About Tax Reform Than You Think (TaxVox). “But the survival of these education subsidies does not mean that a rate-cuts-for-base-broadening swap will never be possible.”
TaxProf, The IRS Scandal, Day 634
Matt Gardner, Facebook’s Record-Setting Stock-Option Tax Break (Tax Justice Blog). 595 words on the evils of the deduction for stock option compensation without one word noting that every dollar of “phantom” deduction for the issuing corporation is also a dollar of “phantom” income to the employees — and usually at higher rates than the corporation pays.
Scott Drenkard, Gov. Kasich’s Plan May Be A Tax Cut, But It’s Still Poor Policy. (Tax Policy Blog) “Unfortunately, the plan which is set to be announced next Monday by Governor Kasich isn’t going to address any of these problems and will probably make them worse.”
Career Corner. You Should Take a Nap This Afternoon Because Science (Adrienne Gonzalez, Going Concern)