Posts Tagged ‘TaxProf’

Tax Roundup, 10/6/15: Tax Fairy fails to show up for Kansas ESOP. And: lots of other tax stuff.

Tuesday, October 6th, 2015 by Joe Kristan

tax fairyThe ESOP Tax Fairy Cult has long had Midwest adherents. The Tax Court told gave a Kansas believer the bad news yesterday — there is no tax fairy.

A successful Kansas orthopedic surgeon, a Dr. Prohaska, set up a new corporation, DNA Prof Ventures, with his wife. The surgeon and his wife were the only DNA employees. On the day it was incorporated, DNA created an employee stock ownership plan for its employees.

Problems arose. Tax Court Judge Dawson tells the story:

On December 31, 2008, DNA issued 1,150 shares of class B common stock to the trust with a par value of $10 per share. The trust then allocated the 1,150 shares of DNA stock to Dr. Prohaska’s ESOP account in 2008.

During 2008 DNA did not pay any salaries, wages, or other officer’s compensation. For 2009 DNA issued separate Forms W-2, Wage and Tax Statement, to Dr. and Mrs. Prohaska reporting the respective amounts of $4,500 (during its fourth quarter beginning October 1). DNA issued Forms W-2 for 2010 to Dr. and Mrs. Prohaska reporting the respective amounts of $3,000.

DNA deducted a $1,350 retirement plan contribution on its Form 1120, U.S. Corporation Income Tax Return, for 2009.

Although DNA was the sponsor of the ESOP, it did not file any Forms 5500, Annual Return/Report of Employee Benefit Plan, for plan years 2008, 2009, and 2010.

The IRS examiners found problems with this and other aspects of the way the ESOP was run (my emphasis):

    In this case, the ESOP had two separate failures to follow its plan document during 2008. First, the ESOP sponsored by DNA Pro Ventures allowed Dr. Daniel J. Prohaska and Amy Prohaska to participate in the ESOP as of the plan year ending December 31, 2008, in violation of the terms of the ESOP plan document regarding eligibility and participation. Second, the ESOP plan document required the ESOP to use appraisal rules substantially similar to those issued under I.R.C. sec. 170(a)(1) when it obtained annual appraisals for the same plan year. The ESOP, however, failed to obtain any appraisal for the 2008 plan year or for any plan year.

That led to a bad result:

For the reason stated above, it is determined that the ESOP is not qualified under I.R.C. sec. 401(a) for the plan years ending December 31, 2008 and all subsequent plan years. As a result, the Plan is not exempt from taxation under I.R.C. sec. 501(a) for trust years ending December 31, 2008 and all subsequent plan years.

A Google search reveals that the ESOP reported net assets of nearly $400,000 at the end of 2012. That would mean that much additional income for the ESOP participants over the term of the ESOP.  That’s an expensive sacrifice to the tax fairy. As the ESOP was set up the same day as the corporation, it appears likely that the purpose of the corporation was to feed the ESOP. Iowa has been a hotbed for bad ESOPs. While there is no evidence showing that this is linked to any other bad ESOPs, I note that the corporation had an Iowa mailing address.

The Moral: ESOPs aren’t easy. They can be useful under the right circumstances, but they require appraisals and careful compliance with the plan document an ESOP rules. They aren’t an easy tax shelter, and there is no ESOP Tax Fairy.

Cite: DNA Pro Ventures Inc. Employee Stock Ownership Plan, T.C. Memo 2015-195.




It’s Tuesday, so it’s Buzz-day for Robert D. Flach. He rounds up news ranging from the developments in the Section 105 $100-per-day penalty (Tax Update coverage here) to the ongoing problems in keeping EITC from squirting all over the place.

Kay Bell, IRS says ‘No’ to tax-exempt status for pet care group offering heated spa, massages and other animal amenities. My beagle would approve this exemption.

Jason Dinesen, Glossary: MACRS. “MACRS refers to “modified accelerated cost recovery system,” which is the default depreciation method used for tax purposes.”

Russ Fox, Well, That’s One Way to Avoid ClubFed. But fatal heart attacks have serious non-tax drawbacks.

Peter Reilly, Boston Bernie Backers Probably Not Bashing Bruins



Joseph Thorndike, The ‘Cadillac’ Tax Shows Why Obamacare Was Never Built to Last (Tax Analysts Blog). “All of which suggests that Obamacare will be in trouble for a long time.”

TaxProf, The IRS Scandal, Day 880

Joseph Henchman, California Supreme Court to Decide Fate of 48-Year-Old Multistate Tax Compact. (Tax Policy Blog). “Maybe it’s time we accept that the MTC isn’t working, and the Gillette case might be the first step of that realization.”

Renu Zaretsky, Evasion, Cuts, Hikes, and Drops. Today’s TaxVox headline roundup covers a planned “global crackdown” on tax evasion, business tax cuts in New Hampshire, and much more.

Leslie Book, District Court Hands IRS Loss in its Bid to Exclude Discretionary Treaty Benefits From Judicial Review (Procedurally Taxing).

Robert Wood, As IRS And DOJ Hunt Offshore Accounts, Banks Pony Up.


News from the Profession. Oh Great, Public Accounting Discovered the Selfie Stick (Caleb Newquist, Going Concern)



Tax Roundup, 10/5/15: Cool implosion, but no tax break. And more tax fairy tales!

Monday, October 5th, 2015 by Joe Kristan

This happened in Downtown Des Moines over the weekend:

YouTube Video Courtesy star105

Preservationists wanted to save the building, the old YMCA. I never understood this. Some beautiful buildings have been lost in Des Moines, but this isn’t one of them. If you aren’t willing to buy a building and fix it up yourself, it doesn’t seem right to tell the owners that they have to do it with their own money.

But did they get a tax break for the implosion? Did they get to write off the cost of the building when they brought it down? It would seem logical — obviously the building is a total loss. But no, it doesn’t work that way. Internal Revenue Code Section 280B is pretty clear:

In the case of the demolition of any structure—
(1) no deduction otherwise allowable under this chapter shall be allowed to the owner or lessee of such structure for—

(A) any amount expended for such demolition, or
(B) any loss sustained on account of such demolition; and

(2) amounts described in paragraph (1) shall be treated as properly chargeable to capital account with respect to the land on which the demolished structure was located.

So not only is there no write-off of the building, the cost of the demolition itself is capitalized, along with any remaining basis in the building — to be recovered only when the land is sold someday. So the income tax law doesn’t encourage implosions. Pretty much the opposite.




Jack Townsend, IRS Makes FOIA Disclosures to Tax Analysts Regarding OVDP and Streamlined Processing. “One point that was already known to practitioners is that rejection of the transition streamlined relief inside OVDP is not a determination of wilfulness so that, upon opt out, the wilfulness penalty is pre-determined.”

Peter Reilly, Rand Paul Suffers Setback In Foreign Reporting Lawsuit


Kristine Tidgren, Let the Motions Begin: Drainage Districts Seek Partial Summary Judgment. Des Moines Water Works is suing upstream drainage districts for not keeping nitrates out of the river. 

Annette Nellen, Obamacare – can pieces be removed? “Obamacare has too many complicated tax provisions in addition to many complicated non-tax provisions.”

Kay Bell, Time to make your flexible spending account choices

Sonya Miller, Freezing the Refunds of Our Guests (Procedurally Taxing). “We are aware of a group of nonresident taxpayers (taxpayers that fall under the rules for aliens temporarily present in the United States as students, trainees, scholars, teachers, researchers, exchange visitors, and cultural exchange visitors) who had their 2014 refunds frozen.”

TaxGrrrl, Treasury Sends Dire Warning To Congress: We’re Running Out Of Money Faster Than Expected.



TaxProf, The IRS Scandal, Day 877878879. They’re still talking about impeaching Koskinen. If the administration really wants to build trust in the IRS, they’ll dump him. Until they do so, we can assume his stonewalling and stiff-arming of the GOP appropriators is the behavior the administration wants out of him.

Scott Greenberg, New Study Shows that Tuition Deduction Does Not Increase College Attendance (Tax Policy Blog):

 Last year, Bulman and Hoxby published a similar study of three federal education credits, which concluded that all three have a “negligible” effect on college attendance. This finding was in stark contrast to the Obama administration’s claim that the expansion of the American Opportunity Tax Credit made it possible for 12 million more students to earn a college degree.

The increase in subsidies over the years coincides with wild increases in tuition costs. I don’t believe that’s a coincidence.


Renu Zaretsky, Hope’s Limits, Math, and Cuts. Today’s TaxVox headline roundup talks about the apparent death of an international tax reform effort and efforts to improve IRS verification of earned income tax credit eligibility.


Russ Fox, There Is No Magic OID Process. Just like there is no Tax Fairy.

Me, Chasing the Tax Fairy. My latest at, the Des Moines Business Record business professionals’ blog. I discuss four manifestations of the Tax Fairy cult – The ESOP Fairy, the Home-based Business Fairy, the Pennies-on-the-dollar Fairy, and the Classic 105 fairy that Hank Stern spotted.




Tax Roundup, 10/2/15: What your Health Savings Account can do that your IRA can’t. And: They don’t stay bought.

Friday, October 2nd, 2015 by Joe Kristan

20150803-1Your IRA isn’t an HSA. Last week I was asked whether there was a penalty for taking money from an Individual Retirement Account to pay for surgery. I said there was no penalty, but that it was taxable income. The person who asked was surprised and confused, thinking that penalty and taxation are the same thing. They aren’t.

The Tax Court faced a similar question yesterday. A 47 year-old taxpayer took money from her IRA to pay medical expenses for her non-dependent son. The IRS noticed, presumably via a computer match, and assessed her a 10% early withdrawal penalty, as well as regular income tax. Judge Guy explains the issue:

Generally, if a taxpayer receives a distribution from a qualified retirement plan before attaining age 59-1/2, section 72(t) imposes an additional tax equal to 10% of the portion of the distribution which is includible in the taxpayer’s gross income. Sec. 72(t)(1) and (2). The additional tax is intended to discourage taxpayers from taking premature distributions from retirement plans — actions that frustrate public policy encouraging saving for retirement…

Section 72(t)(2)(B) provides an exception to the imposition of additional tax to the extent that retirement plan distributions “do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).” Section 213 in turn allows as a deduction “the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent…

The “dependent” part was bad news:

The record reflects that petitioner did not claim her son as a dependent for the year in issue and fails to demonstrate that her son met the definition of a dependent provided in section 152. Consequently, we conclude that petitioner is not eligible for the exception under section 72(t)(2)(B) — even assuming that she used the funds in question to pay her son’s medical expenses.

But even if she did qualify to avoid the 10% tax (she didn’t), the withdrawal would still have been subject to income tax.

Health Savings Accounts look a lot like IRAs — they allow tax-free build-up, and they can be tapped penalty free like IRAs for retirement income. But HSA funds withdrawn for medical expenses are tax-free — not just penalty free. As with the IRA, though, the medical expenses have to be the taxpayers, the spouse’s, or a dependent’s. This extra flexibility makes HSAs a better savings vehicle than an IRA for those who qualify.

Not everybody qualifies. You need a “high deductible” health insurance policy to qualify for an HSA. For 2015 a “high deductible plan” is one with an annual deductible of at least $1,300 for single coverage and $2,600 for family coverage.  Annual out-of-pocket costs can’t exceed $6,450 for single coverage and $12,900 for family coverage. The 2015 contribution limits are $3,350 for single coverage and $6,650 for family coverage.

Unlike employer “flex-plan” arrangments, there is no “use it or lose it” feature in HSAs. You can accumulate contributions and save them for a year with large medical expenses, or for retirement. You don’t have to withdraw the funds in the same year as the medical expenses, either; if you had medical expenses in year 1, you can wait until year 2 to withdraw the amount and still have it tax-free.

Cite: Ireland, T.C. Summary Opinion 2015-60

Related Links:

IRS publication 969.

Kiplinger, FAQs about Health Savings Accounts.




Maria Koklanaris, ConAgra Foods, Winner of Largest-Ever Nebraska Incentive Package, Moving to Illinois (Tax Analysts, subscriber link):

ConAgra Foods Inc., recipient of the largest tax incentive package ever awarded in Nebraska, announced October 1 that it would move its corporate headquarters from Omaha to Chicago, cutting at least 1,500 jobs in the process.

As I’ve said before, incentive tax credits are like taking your wife’s purse to the bar to buy drinks for the girls. It cheats the person who’s paying, the girls aren’t impressed, and if you leave with one, she’s not the type to be faithful.


It’s Friday! It’s Buzz Day for Robert D. Flach. Trumpmania figures prominently.

Jason Dinesen, How to Protect a Deceased Person’s Identity. “Thankfully, Congress has now limited access to the Death Master File, which was the cause of much of the identity theft relating to deceased people.”

Paul Neiffer, Form 1099-G Does Not Always Require Schedule F Reporting. “The key thing to remember is just because USDA or a cooperative issues a Form 1099 does not mean the income has to be fully reported on Schedule F and subject to full self-employment tax.”

Jim Maule, Taxation of Prizes, Question Three. “The question, however, also referred to the local or state sales tax. The awarding of a prize is not a sale, so the sales tax ought not apply.”

Kay Bell, Hurricane Joaquin intensifies, threatens East Coast…maybe. Maybe you should dust off your disaster recovery plan once in awhile.

Leslie Book, Restitution Based Assessment and Tax Return Preparers: An Uneasy Mix (Procedurally Taxing). On the problems the IRS has in getting restitution from crooked preparers.

Robert Wood, Marijuana Goes Native American And Tax Free




David Henderson, via Don Boudreaux:

Herbert Hoover, in the midst of the Great Depression, more than doubled the top [income-tax] rate to 63 percent and increased the bottom rate by more than nine times to 4 percent.  He did this in spite of the fact that raising income tax rates during a depression lengthens the depression.  Franklin Roosevelt carried on Hoover’s policy throughout the 1930s and increased tax rates further.  By 1940, he had raised the top tax rate to 81.1 percent on incomes over $5 million.

Putting the “great” in the Great Depression.


Stephen Entin, Expensing: The Right Tax Treatment for All Investment Regardless of Financing Arrangements (Tax Policy Blog)

Howard Gleckman, How Investment Managers (And Maybe You) Would Benefit From Trump’s Tax Plan (TaxVox).

Cara Griffith, Idaho Legislators Shamed Into Good Behavior (Tax Analysts) Politicians, bureaucrats and cockroaches prefer darkness.

Carl Davis, Michigan Becomes the 26th State Where Online Retailers like Amazon Must Collect Sales Tax (Tax Justice Blog).


TaxProf, The IRS Scandal, Day 876. Lois Lerner and the Wisconsin witch hunt.


The Critical Question. Is Technology Making Accountants Dumb and Lazy? (Chris Hooper, Going Concern).



Tax Roundup, 10/1/15: Carried interests are good for you. State tax incentives aren’t.

Thursday, October 1st, 2015 by Joe Kristan

Public domain image via WikipediaSympathy for the Devil. The devil is “carried interest” taxation of partnerships interests. Megan McArdle discusses this devilry in Sure, Debate Carried-Interest Taxes. Or Something That Matters.:

It’s fundraising gold for Democrats, and a perennial talking point for liberal columnists: hedge funders pay taxes on some of their income at the lower rate for capital gains, rather than the higher rates assessed on “ordinary income” (read: money you earn by working).

If you only know about it from politicians, you get the idea that the only beneficiaries of the carried interest are hedge fund managers who light their cigars with $100 bills. If you see it in tax practice, though, it looks different.

The “carried interest” is really a profits interest, or a preferential allocation of profits, to an employee or manager of a partnership. A private equity manager might get no current equity in an investment, but a portion of the profits. The same rule lets a partnership give an interest in future earnings to the business’s managers or employees. It’s a partnership version of stock options (options are allowed for partnerships, but the differences between partnership and corporation taxation makes options less attractive in partnerships).

Carried interest opponents find this “abusive” when the business does well and gets sold. The result is a portion of the gain on the sale of the business goes to the managers and employees with carried interests, who may have not put cash into the business. But it’s the same total amount of gain taxed. It’s just that some of it gets allocated from the investors to the managers. The investors are presumably fine with it because they have gain to share — that’s why they cut the managers and employees into the deal in the first place.

But isn’t this abusive because it treats “compensation” as capital gain rather than ordinary? Not really — the investors are forgoing the same ordinary deduction, so the net effect is the same. There’s no conceptual reason why a profits interest — which by definition has no value when granted — can’t generate capital gain. (Of course, I think taxing capital gains in the first place is the real abuse). And in many cases the carry includes an allocation of ordinary business income in tax years prior to the sale, so for that part of the deal, there’s not even a conceptual abuse.

Ms. McArdle is puzzled about the attention the issue gets:

The carried interest issue is thus a convenient way for Democrats making stump speeches to claim that they’re really going to do something about inequality and cronyism, and maybe fund some important new spending on hard-working American families. With the entrance of Jeb Bush and Donald Trump into the arena, it is also a way for Republicans to seem tough on rich special interests while simultaneously proposing tax plans that will help affluent Americans hold on to a lot more of their income and wealth.

As with most Washington Issues, my actual level of concern about carried-interest taxation hovers somewhere between “neighbor’s bathroom grout drama” and “Menudo reunion tour.” Nonetheless, I’m beginning to wish that Congress would get rid of it without demanding anything in return, just to force politicians to talk about something that actually matters.

I’m less willing to just go along. Any “reform” of carried interest will complicate an already byzantine partnership tax law. It will inevitably create traps that will cause tax pain for people just trying to run their business and put beans on the table. At worst, it can become a potential nightmare like the Section 409A rules, which were enacted to punish long-defunct Enron, but which now menace any employees who have a deferred comp deal with their employer.

And of course any carried interest “reform” won’t shut up those who want to jack up taxes on “the rich” for more than a moment before they find another hate totem.

Related, but not agreeing: Peter Reilly, President Obama Could End Special Tax Treatment For Two Twenty Guys



Don Boudreaux, a blogging economics professor, makes a good case against the Export-Import Bank that works just as well against state “economic development” subsidies and tax credits (my emphasis):

Second, subsidies doled out by governments weaken, not strengthen, their economies.  To see why, suppose that other governments conscript all 22-35 year olds within their borders and force these conscripts to work at subsistence wages for the industries located within those countries.  Further suppose that the results are beneficial for corporate shareholders in those countries: their companies export more and rake in higher profits than they would without such conscription.  Should Uncle Sam therefore follow suit? 

Economically, the only difference between export subsidies as they exist today in reality and the above hypothetical is that real-world export subsidies are less extreme than is conscription.  Yet no essential economic difference separates real-world subsidies from such hypothetical conscription: each is a government policy of forcibly seizing resources from some people in order to bloat the purses and wallets of other people.

Substitute “economic development tax credits” for “subsidies” and “other states” for “other countries,” and you have the case against the tax credits paid for by Iowa taxpayers to lure and subsidize their competitors.


David Brunori, A Word of Advice for Legislators of All Stripes (Tax Analysts Blog). You should read the whole thing, but I especially like this: “That politicians can impose economic policy through tax incentives is more akin to a Soviet five-year plan than to anything Adam Smith ever said.”



Russ Fox, TIGTA: “IRS Can’t Track International Correspondence.” IRS: “So What.” “It turns out that the IRS doesn’t know what happens to much of the mail the agency sends overseas.” And it doesn’t much care.

TaxGrrrl, Government Shutdown Avoided For Now: Funding Bill Only Temporary.

Kay Bell, Federal government funded for 10 more weeks




TaxProf, The IRS Scandal, Day 875. Today’s installment features Robert Wood on newly-revealed bonuses to IRS employees:

As you read about bonuses, you might recall other reports saying that 61% of IRS employees caught willfully violating the tax law aren’t fired, but may get promoted.

And people wonder why anyone might not want this organization regulating tax preparers.


News from the Profession. Accounting Had a Toxic Culture Before It Was Cool (Leona May, Going Concern). “As ‘The Great Email Chain of 2013’ demonstrates, the public accounting workaholic culture has spawned a whole bunch of work-obsessed, white-collar monsters.”

Well, our little firm isn’t so monstrous. If you feel abused and would like to live in Central Iowa, drop me a line. We might be able to improve things for you.




Tax Roundup, 9/30/15: Taking from rich doesn’t give to the poor; state incentives favor the big.

Wednesday, September 30th, 2015 by Joe Kristan

Today we have two instances where policy tanks that I usually disagree with make important tax policy points.

TPC logoFirst, The center-left Tax Policy Center, a project of the Brookings Institution (which I castigate below), makes an important observation about the overrated problem of income inequality in their paper, Would a significant increase in the top income tax rate substantially alter income inequality? The summary (my emphasis):

The high level of income inequality in the United States is at the forefront of policy attention. This paper focuses on one potential policy response: an increase in the top personal income tax rate. We conduct a simulation analysis using the Tax Policy Center (TPC) microsimulation model to determine how much of a reduction in income inequality would be achieved from increasing the top individual tax rate to as much as 50 percent. We calculate the resulting change in income inequality assuming an explicit redistribution of all new revenue to households in the bottom 20 percent of the income distribution. The resulting effects on overall income inequality are exceedingly modest.

I have zero hope that politicians will heed this. Just because you take from the rich doesn’t mean it goes to the poor. It goes to the well-connected, as in the next item.

Second, the not-so-center-left Good Jobs First takes the side of the angels in the battle against state tax incentives, with a survey of small businesses called In Search of a Level Playing Field:

A national survey of leaders of small business organizations reveals that they overwhelmingly believe that state economic development incentives favor big businesses, that states are overspending on large individual deals, and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. 

I think they have this exactly right. It’s not start-ups that get the big deals from the legislature and the Economic Development bureaucrats. It’s the well-connected and wealthy companies that know how to work the system. The rest of us get to pay for it.




Jason Dinesen, The Iowa School Tuition Organization Tax Credit. “Iowa offers dozens of obscure tax credits. The one I get asked about most is the tax credit available for donations to a ‘school tuition organization’ or STO.”

Kay Bell, Maryland issuing court-ordered county tax credit refunds. If you don’t want to repay illegal taxes, don’t collect illegal taxes.

Russ Fox, How to Wynne Your Money Back in Maryland

Paul Neiffer, IRS Provides List of Counties Eligible For Additional Extension on Livestock Replacement

Jim Maule, Taxation of Prizes, Question Two. He quotes a post from a sweepstakes message board:

 I won concert VIP tickets, there is no value on the tickets, so I can’t sell them. If no value is on them, why am I paying taxes on them? 

Mr. Maule explains that there is a value. If there isn’t, then why didn’t the winner give them away?





InsureBlog, Yes, The New York Obamacare Co-op [squandered*] $340 Million. *The actual headline uses a more colorful term.

Robert Wood, Hillary Backs Cadillac Tax Repeal


TaxProf, The IRS Scandal, Day 874. Today’s edition features IRS agents abusing their power on everyday taxpayers. But we can trust them to regulate their tax preparer adversaries, right?

Arnold Kling, Hypocrisy and Cowardice at Brookings. Arnold addresses the firing by the Brookings Institution of Robert Litan, a scholar accused by Senator Elizabeth Warren of “writing a research paper to benefit his corporate patrons.” He is appalled:

1. Robert Litan is one of the most decent individuals in the whole economics profession.

2. Giving Litan’s scalp (sorry for the pun) to Elizabeth Warren does nothing to bolster the integrity of Brookings. It amounts to speaking cowardice to power.

There’s more. The episode is appalling, and it shows the totalitarian tendencies that are barely beneath the surface of Senator Warren’s populism.




Alan Cole, Donald Trump’s Tax Plan Will Not Be Revenue-Neutral Under Any Circumstances (Tax Policy Blog)

Jeremy Scott, Trump’s Tax Plan Is Pretty Much GOP Orthodoxy (Tax Analysts Blog)

Matt Gardner, How Donald Trump’s Carried Interest Tax Hike Masks a Massive Tax Cut for Wealthy Money Managers (Tax Justice Blog)

Peter Reilly, Trump Tax Plan Would Increase Deficit By Over $10 Trillion

Tony Nitti, Love Trump, Hate Romney, But Their Tax Plans Are One And The Same

Renu Zaretsky, Thirty days, goodbye September, shutdown talks—maybe in December. Today’s TaxVox headline roundup covers shutdown politics, plans to use reconciliation procedures to pass bills repealing pieces of Obamacare, and tax Trumpalism.


See you at Hoyt Sherman Place tonight!



Tax Roundup, 9/29/15: Iowa, worst of the worst in corporate taxes. And: Trump, CPA extinction events, more!

Tuesday, September 29th, 2015 by Joe Kristan

20120906-1The U.S. Corporation tax is the worst in the OECD. So that makes Iowa… The Tax Foundation yesterday released its 2015 International Tax Competitiveness Index, an international counterpart to their State Business Tax Climate Index. The news isn’t good for the U.S. (my emphasis):

The United States provides a good example of an uncompetitive tax code. The last major change to the U.S. tax code occurred 29 years ago as part of the Tax Reform Act of 1986, when Congress reduced the top marginal corporate income tax rate from 46 percent to 34 percent in an attempt to make U.S. corporations more competitive domestically and overseas. Since then, member countries of the Organisation for Economic Co-operation and Development (OECD) have followed suit, reducing the OECD average corporate tax rate from 47.5 percent in the early 1980s to around 25 percent today. In 1993, the U.S. government moved in the opposite direction, raising its top marginal corporate rate to 35 percent. The result: the United States now has the highest corporate income tax rate in the industrialized world.

Iowa’s 12% rate is the highest state corporate tax rate in the U.S. Iowa’s corporation tax ranks 49th out of 50 states in the 2015 State Business Tax Climate Index. That makes us extra-special.

The United States places 32nd out of the 34 OECD countries on the ITCI. There are three main drivers behind the U.S.’s low score. First, it has the highest corporate income tax rate in the OECD at 39 percent (combined marginal federal and state rates). Second, it is one of the few countries in the OECD that does not have a territorial tax system, which would exempt foreign profits earned by domestic corporations from domestic taxation. Finally, the United States loses points for having a relatively high, progressive individual income tax (combined top rate of 48.6 percent) that taxes both dividends and capital gains, albeit at a reduced rate.

Estonia gets the best scores:

Estonia currently has the most competitive tax code in the OECD. Its top score is driven by four positive features of its tax code. First, it has a 20 percent tax rate on corporate income that is only applied to distributed profits. Second, it has a flat 20 percent tax on individual income that does not apply to personal dividend income. Third, its property tax applies only to the value of land rather than taxing the value of real property or capital. Finally, it has a territorial tax system that exempts 100 percent of the foreign profits earned by domestic corporations from domestic taxation, with few restrictions.

Unfortunately, for some of the current presidential candidates, the worst features of the U.S. system are their favorite parts.




Robert D. Flach’s Tuesday Buzz rounds up topics from Blue-to-Red migration, saving too much (hard to do), and the tax costs of stock sales.

Russ Fox, Cash & Carry Your Way to Tax Evasion:

Mr. Kobryn was determined to lower his tax burden. Instead of making sure all expenses were noted on his tax returns and perhaps contributing to a SEP IRA, he decided to not deposit all of the cash into his business bank account. He knew about the currency transaction reporting (CTR) rules, so he made his cash deposits just under $10,000 and deposited them into several branches of his local bank.

That’s a reliable way to attract IRS attention.

Robert Wood, Lance Armstrong Legal Settlement Makes Tax Problem On Steriods. He paid tax on his biking income, but deducting the lawsuit costs isn’t so straightforward.

Stephen Olsen, Summary Opinions for the week ending 8/28/15 (Procedurally Taxing). This roundup of recent tax procedure developments includes a baby picture, no extra charge.




Megan McArdle, Obamacare’s Nonprofit Insurers Are Failing, Predictably. Iowa’s CoOportunity was only the first.

TaxProf, The IRS Scandal, Day 873


Howard Gleckman, Trump Proposes a Huge Tax Cut. YUUUGE!

Peter Reilly, Trump’s Plan Inverts Traditional Tax Planning Makes Carried Interest Moot. “If you think that Trump will win and enact this program normal tax planning is the order of the day.”

Kay Bell, Trump’s ‘amazing’ tax plan zeroes out taxes for some.


News from the Profession. In Order Save the Accounting Profession, It Has to Be Destroyed First (Caleb Newquist, Going Concern). “I’ll even take it a step further and say a mass extinction is exactly what the accounting profession needs.”



Tax Roundup, 9/28/15. IRS logic: A and B are part of set X. A is part of Set X, so B isn’t. And: Blood Moon!

Monday, September 28th, 2015 by Joe Kristan


Flickr image by Sage under Creative Commons license

Flickr image by Sage under Creative Commons license

On further review, it’s silly. I’ve had a weekend to think about last weeks IRS “Action on Decision” to continue trying to collect self-employment tax on Conservation Reserve Program payments in the Eighth Circuit. It’s a poke in the eye of the court, and one that will probably not help the IRS when it inevitably has to defend itself before the Eighth Circuit Court of Appeals.

The gist of the IRS position is that because legislation was enacted in 2008 that specifically stated that CRP payments are payments for renting real estate, and therefore, not self-employment income, to taxpayers collecting Social Security, they suddenly become self-employment income to everyone else.

The Eighth Circuit majority ruled in Morehouse that CRP payments to non-farmers pre-2007 were real estate rentals. Logically, saying that a subset of those payments are real estate rentals shouldn’t by itself make other payments something else. But that’s what the IRS argues.

Unfortunately, the IRS has now made uncertain a seemingly-settled area of the tax law. They did so by taking a position that, if taken by a taxpayer, might trigger negligence penalties. It really is another example of the need for a “Sauce for the Gander” rule that would make the IRS liable to taxpayers for penalties for faulty IRS positions in the same way taxpayers have to pay penalties for bad positions to the IRS.

Prior Coverage at IRS: Post-2007 CRP payments remain self-employment income unless you collect Social Security.


Scott Sumner has posted an outstanding set of tax policy observations: Our bizarre system of taxing capital (Econlog). You really should read the whole thing, but I’ll give you a taste:

It’s difficult to think of a more bizarre and foolish policy than the practice of taxing capital. Consider:

1. If it were appropriate to pay taxes on capital gains, why wouldn’t it be appropriate to pay negative taxes on capital losses? Economic theories tend to be symmetrical. And yet capital losses do not result in negative taxes, except in certain limited cases. And why only those cases?

2. Economic theory suggests that two people with essentially identical economic outcomes should pay identical taxes. But consider two people who both bought 1000 shares of Apple stock for $50/share at the beginning of the year. One sold the shares on November 9th at $100 and bought them back 5 minutes later at the same price. Both held 1000 Apple shares at year-end. To an economist those two outcomes are essentially identical. But one person must pay a large tax on capital gains, while the other does not. Why?

A fan of capital gain taxes would say that just means we should tax unrealized capital gains. Mr. Sumner is not such a fan:

A simpler and fairer solution would be to abolish all taxes on capital, and start over.

But because that would help “the rich,” it isn’t happening. Nothing is too stupid or counterproductive to do to them.


"Blod moon" photos by Jose Guerrero, taken in Columbia. Used by permission.

“Blood moon” photos by Jose Guerrero, taken in Colombia. Used by permission.



A client should not take the finished returns from his/her tax professional and just sign and mail without actually looking at them. The client should carefully review all the forms and schedules that make up the returns before signing the return, and ask the preparer if there is something that he/she does not understand.

And that is the problem with clients who wait until the very last minute — I mean October 15, when no further extensions are available — to finish their tax information. They obviously aren’t going to give the return a good review when they have to immediately sign the e-file authorization or run it to the post office. But if there is something seriously wrong, the IRS isn’t going to take “I didn’t have time to review before filing” as an excuse.


Kay Bell, Electric vehicle tax credits favor the wealthy. You don’t see many Teslas, or for that matter Chevy Volts, in poor neighborhoods.

Paul Neiffer, Involuntary Conversion of Livestock. “If a farmer sells livestock because of consequences of a drought, the payment of income tax on the taxable gain from the sale may be postponed.”

Jason Dinesen, How to Calculate an RMD. If you don’t start withdrawing from your IRA when you hit 70 1/2, the penalties pile up.

Jim Maule, Taxation of Prizes, Question One. “So a person wins a prize, tells the company awarding it that the winner cannot accept it because it will be taxed, creating a liquidity problem, and the company spokesperson says, in effect, ‘Not a problem, it’s not in cash, we won’t send a Form 1099.'”

Peter Reilly, A Slick Estate Planning Trick And Intimations Of Mortality. “The Tax Court decision in the case of Jean Steinberg is a great example of planners taking a rule that is meant to prevent taxpayers from getting away with something and using it to, well, get away with something.”

Russ Fox, Neymar Tax Evasion Investigation Continues; Judge Freezes $48 Million of Assets. Considering how impossible Brazil’s tax system is, it would be surprising if somebody there weren’t guilty of a tax crime.


brazil chart 2


Tony Nitti, House Bill Would Give Tax Deduction, Credit In Exchange For Learning Science And Math. The tax law. Is there anything it can’t do?


Jack Townsend, GE Asks the Supreme Court to Screw Up Again to Bless a BS* Tax Shelter. *Expletive deleted.

Leslie Book, Fifth Circuit Tackles Intersection of TAO Rules and Statutes of Limitation (Procedurally Taxing). “Earlier this week in Rothkamm v US, the Fifth Circuit issued an opinion that considered whether a wife’s application for a Taxpayer Assistance Order (TAO) concerning a recovery of funds levied from her bank account to satisfy her husband’s tax debt tolled the nine-month wrongful levy statute of limitations.”




David Brunori on historic preservation credits ($link): “Nothing says boondoggle like giving rich folks tax dollars to fancy up old buildings.”

TaxProf, The IRS Scandal, Day 870Day 871Day 872. Including musings about how the IRS gagged on Tea Party gnats but swallows Clinton Foundation camels.

Scott Greenberg, Senate Democrats’ Bill Would Overhaul the Treatment of Energy in the Tax Code (Tax Policy Blog):

Currently, nearly every source of energy is subsidized to some extent by the federal government. This means that the U.S. economy is more energy-heavy than it would be under normal market conditions, leading to an inefficient allocation of resources. The Senate Democrats’ bill would continue to heavily subsidize energy production in the United States.

In general, tax expenditures, such as energy subsidies, leave the federal government with less revenue, requiring higher tax rates overall on individuals and businesses.

Anybody who thinks Congress will wisely allocate these subsidies to create our optimal energy use mix for the country hasn’t been paying attention in recent decades.

Renu Zaretsky, A Resignation, and… Resignation. Today’s TaxVox headline roundup covers the implications of Speaker Boehner’s resignation, a politician promising more tax credits! and the sublime awfulness of trying to pay business taxes in Brazil.


News from the Professon. Deloitte Dabbles in Orwellian Tracking Devices (Greg Kyte, Going Concern). “The gadget looks and works like what you would expect if an ID badge had sex with an iPhone.”



Tax Roundup, 9/25/15: IRS: Post-2007 CRP payments remain self-employment income unless you collect Social Security.

Friday, September 25th, 2015 by Joe Kristan

binIRS says not farming is just like farming, for self-employment tax purposes. Last year the Eighth Circuit Court of Appeals ruled that non-farmers are not subject to self-employment tax on conservation reserve program payments received for not planting land. The IRS yesterday announced (AOD 2015-02) that it disagrees with the decision. It said that it will follow the decision only within the Eighth Circuit, and even there only for pre-2008 payments.

The Eighth Circuit panel said that CRP payments are properly treated for non-farmers as rentals from real estate, which are not subject to SE tax. The IRS says it still disagrees, and it said that a 2008 law change “clarified” things (my emphasis):

In addition, the 2008 amendment to section 1402(a)(1) to treat CRP payments made to Social Security recipients as rentals from real estate effective for tax years beginning after December 31, 2007, served to clarify that other CRP payments are not excluded as rentals from real estate. Congress neither enacted a blanket exclusion with respect to CRP payments (or CRP payments made to non-farmers) nor evidenced any disagreement with the analysis of the Sixth Circuit in Wuebker. Although the statutory amendment does not apply to the years at issue in Morehouse, the implication is that prior to the amendment, CRP payments to farmers and non-farmers alike are not excludible from self-employment income as rentals from real estate. If these payments were already excluded as rental payments then the amendment would have been unnecessary. After the amendment, the implication is that CRP payments to farmers and non-farmers alike are not excludible from self-employment income unless made to Social Security recipients.

That conclusion may not go unchallenged. Roger McEowen of the Iowa State University Center for Agricultural Law and Taxation had a different take after the Eighth Circuit decision came down:

For CRP rents paid after 2007, the question is whether the recipient is a materially participating farmer.

That means the IRS can be expected to reject refund claims for SE tax paid by those not receiving Social Security payments. From the AOD:

We recognize the precedential effect of the decision in Morehouse to cases appealable to the Eighth Circuit. Accordingly, we will follow Morehouse within the Eighth Circuit only with respect to cases in which the CRP payments at issue were both (1) paid to an individual who was not engaged in farming prior to or during the period of enrollment of his or her land in CRP and (2) paid prior to January 1, 2008 (i.e., the effective date of the 2008 amendment to section 1402(a)(1)). We will continue to litigate the IRS position in the Eighth Circuit in cases not having these specific facts. We will also continue to litigate the IRS position in all cases in other circuits.

This means the whole issue will assuredly end up back in the courts sooner or later. For now, though, we are on notice that the IRS considers current CRP payments to be subject to SE tax in all circuits.

Robert D. Flach has a fresh Friday Buzz roundup of tax bog posts, with items including the awfulness of the coming tax season, state tax fairness, and the savers tax credit.

TaxGrrrl, 7 Budget & Tax Related Reasons We May Be Headed Towards A Government Shutdown.

Kay Bell, Bartering is a great — and taxable — way to buy and sell. A lack of cash doesn’t mean a lack of tax.

Jim Maule, In What Year Should a Prize Be Reported as Gross Income?. “The question is simple. When a person wins a prize, in what year should the person report the income on the federal income tax return?”

Sheldon Kay, “Judging Litigating Hazards – Another View” (Procedurally Taxing). “He [Keith Fogg] also suggests that Appeals officers “with little or no knowledge of litigation” cannot properly analyze evidentiary questions or properly evaluate hazards of litigation. I respectfully disagree with his assessment.”

Annette Nellen, Challenges of base broadening


Alan Cole, Cadillac Tax Working as Planned on Auto Workers (Tax Policy Blog). ”

The situation above is not a mistake in the Affordable Care Act; rather, it is the Cadillac tax fulfilling both of its intended goals.

The first goal is to encourage substitution from employer health benefits back towards ordinary compensation, like wages and salaries…

The second goal of the Cadillac Tax is to raise revenue.

By delaying the painful parts, the bill fooled enough people long enough to get enacted. Now the rubes are catching on, but it’s too late.

Robert Wood, Bernie Sanders And Republicans Both Urge Cadillac Tax Repeal




TaxProf, The IRS Scandal, Day 869

Norton Francis, The Trouble with State Tax Triggers (TaxVox). “Here’s how a tax trigger works: A state cuts taxes over a period of years. There may be an initial tax cut that takes effect right away but future reductions are tied to some other benchmark, typically (but not always) achieving an overall revenue target.”

Sebastian Johnson, Maine Republicans Double Down on Tax Cut Fervor (Tax Justice Blog).


If only he had been regulated by the IRS. Oh, wait… IRS Agent Busted for Extorting Money From Marijuana Dispensary Owner (High Times, Via the TaxProf)



Tax Roundup, 9/22/15: A resounding call to document your mileage. And: preparer regulation, IRS service, lots more!

Tuesday, September 22nd, 2015 by Joe Kristan


No Walnut STYou know you’re having a bad day in Tax Court when:

After concessions, the remaining issue relating to deductions claimed on petitioner’s Schedule A is whether she is entitled to deduct an additional $1,616 of mileage expense that she claimed as part of her unreimbursed employee business expense deduction. The answer is a resounding no.

I’m pretty sure that the Tax Court judges never read their opinions out loud, so I don’t think it was literally resounding. Still, it’s fun to imagine Judge Marvel calling the court into session, calling out a booming “NO!” and then adjourning.

The “no” may hae been resounding because of a little error the Judge detected in the taxpayer’s evidence. The taxpayer claimed mileage deductions for going between work locations. Travel expenses have to meet the special substantiation requirements of Sec. 274(d), where the taxpayer maintains evidence, such as calendars or mileage logs, to prove the deduction. This taxpayer went through a lot of effort generating a log from her work history. However…

Petitioner testified at length regarding how she prepared the reconstructed log. She testified under oath that she had worked for both ATC and MSN throughout 2007 and carefully explained her work assignments for each employer, including her work assignments for ATC from January through September 2007. Unfortunately for petitioner, the document that ATC provided to her summarizing her work history with ATC shows that she did not start her employment at ATC until October 2007. That document demolished any credibility that petitioner’s reconstructed log and her sworn testimony might otherwise have had. [emphasis added]

The Moral? No matter how much effort goes into reconstructing your unreimbursed work mileage, it doesn’t help you if you didn’t actually have the job.

Cite: Spjute, T.C. Summ. Op. 2015-58




Bryan Camp has a long piece in Tax Notes today ($link) arguing that the IRS can and should “cut and paste” its way into a new preparer regulation regime. I won’t argue the legalisms, though I think if the IRS thought it plausible, it would have tried it already.

I will point out that in an article with 101 footnotes, there is no discussion of additional costs to the taxpayers, or whether the benefits exceed those costs. He discusses evidence that “unregulated” preparers make more errors, and he assumes that regulation will fix the problem. That’s not necessarily so. It’s hard to imagine the perfunctory examination and CPE requirements of the old RTRP program would improved preparation. You can make somebody take a test, but you can’t make them competent.

Mr. Camp also ignores the unintended but predictable effects of the inevitably-increased price of preparation on the quality of tax returns received by IRS. If prep price goes up, more taxpayers will do their own returns, almost certainly at a higher error rate than from paid-for preparation. Other taxpayers will drop out of the system rather than pay higher prep costs.

In short, regulation advocates assume regulation will solve the problems of inaccurate returns. That’s unproven but unlikely. It is likely, though, that it will increase taxpayer costs and push customers away from paid preparers, which creates a new set of problems.

Related: Leslie Book, AICPA Defends CPA Turf and Challenges IRS Efforts to Regulate Unenrolled Preparers (Procedurally Taxing)


buzz20140909Robert D. Flach has fresh Buzz today, with links ranging from silly tax proposals to silly home office deductions.

Paul Neiffer, What About Those AFRs? “Periodically I will get a question from a client asking me ‘How much interest they have to charge on a loan to their child or some other related party?’. ”

Kay Bell, Meet Obamacare deadlines or pay the higher tax price. “If you don’t file last year’s return, you won’t be able to claim an advance premium tax credit to help you pay for your 2016 Obamacare coverage.”

William Perez, What Tax Documents to Bring to Your Accountant?


Tony Nitti, Tax Geek Tuesday: Making Sense Of Partnership Book-Ups. A primer on adjusting capital accounts to reflect the price paid when partners enter or leave a partnership.

Russ Fox, We Don’t Need No Stinkin’ Phone Calls.

So let’s translate this into reality. In the 2013 fiscal year, 22,363,345 phone calls were attempted to various IRS toll-free lines; 15,609,615 were answered (69.8%). In the 2015 fiscal year, 22,013,468 phone calls were attempted to various IRS toll-free lines; 8,277,064 were answered (37.6%). As for the time on hold allegedly decreasing to 23.5 minutes, perhaps that’s after excluding all the time some of the 7 million people who called but whose calls were dropped or who hung up spent on the phone.

I think the IRS cuts in customer service are a sort of “Washington Monument Strategy” of cutting the most visible and useful aspects of taxpayer service to pressure Congress into providing more funds. I’ll believe the IRS is serious about its customer service issues when the IRS takes its 200 employees who spend all of their time doing Treasury Employee Union work and puts them on the phones.

Robert Wood, Let’s Tax Churches. I’m sure that won’t be controversial…

Peter Reilly, The Tax Code Explained & Why It Matters In This Presidential Race (No, It’s Not 70K Pages)

Jack Townsend, Wyly Brothers Seek Bankruptcy Relief from Disgorgement Order from Offshore Shenanigans




TaxProf, The IRS Scandal, Day 866

Martin Sullivan, Donald Buffett? (Tax Analysts Blog). Looking for tax wisdom in all the wrong places.

Renu Zaretsky, Inversions, Schools, and Supermarkets. Today’s TaxVox roundup covers the ground from tax increases in Chicago to tax favors for supermarkets in Baltimore.


Sebastian Johnson, Progressive Era Reform Can Be Anything But Progressive (Tax Justice Blog). “Supermajority requirements and tax and spending limits, two frequently proposed ballot measures, are not designed to promote the well-being of states.”

The point isn’t the well being of the state; it’s the well-being of the citizens.


News from the Profession. Accountant Hiding on the Appalachian Trail Has the Mugshot to Prove It (Caleb Newquist, Going Concern). “If you were an accountant accused of making off with about $9 million of your employer’s money, I can think of few places better to hide than the wilderness.”



Tax Roundup, 9/21/15: If you step away from the Iowa business, Iowa rules say sell within five years.

Monday, September 21st, 2015 by Joe Kristan

20150811-1When you get out of the business, Iowa wants you to really get out.  Iowa has a tough tax environment for business, consistently ranking in the bottom 20% in the Tax Foundation’s Business Tax Climate Index. But there’s a pot of gold at the end of the road for entrepreneurs tough enough to stick it out for at least ten years.

The Iowa Capital Gain Deduction excludes from Iowa tax the capital gains on the sale of the assets of a business, or on real estate used in a business, if the business was held for at least ten years and the taxpayer “materially participated” in the business for ten years at the time of sale. And that’s the catch.

This rule tripped up a Johnson County, Iowa couple this month in the Iowa Court of Appeals. The couple ran a rooming house in Iowa city and ran it full-time from 1981 to 1994 — safely longer than ten years. In 1994 they contracted out the daily operation of the business. The couple continued to pay bills, approve major expenditures and renovations, and perform some maintenance activities. They sold out in 2005.

The “material participation” rules are the same as the federal “passive loss” rules under Section 469. Most of these rules are based on time spent in the business during the year. For example, if you spend 500 hours working in a non-rental business during a year, that means you materially participate.

Several material participation rules apply when a taxpayer retires from the business. One applies only to farmers: if you retire at the time you start collecting social security, and you have materially participated otherwise in at least five of the prior eight years, you are considered to materially participate for the rest of your life. Once you participate in a “personal service” business for three years, your material participation is set for life.

For all other businesses, you are considered to materially participate if you have met one of the hour-based requirements in five of the prior ten years. As a practical matter, that means a retiring entrepreneur who continues to own the business is still materially participating for five years after stepping down.

That’s where the taxpayers here failed the material participation tests. While they easily met the requirement to hold the property for ten years, they were not material participants at the time of the sale. The court held that they failed to prove material participation after 1994. That would mean they would have until 1999 to sell and still be material participants. After that, they failed the five-of-the-last-ten-years test.

The Moral: Taxpayers who step back from an Iowa business shouldn’t wait too long to sell if they want to avoid Iowa capital gains tax. If you meet the ten-year holding period and material participation requirement, you have five years to find a buyer.

Cite: Lance, Iowa Court of Appeals No. 14-1144 (9/10/2015).

Roger McEowen has an excellent discussion of this case for Tax Place subscribers. If you practice Iowa tax regularly, the $150 annual subscription is a great bargain.


Iowa Capital Gain Deduction: an illustration





Hank Stern of Insureblog discusses some Dubious 105 Tricks:

Here’s the concept in a nutshell (emphasis on “nut”):

My employer claims that signing up for this “105 Classic Plan” will allow me to make %30+ of my income tax free. The jist [sic] of it is that they will take $560 per (bi-weekly) pay period out of my check, somehow “make it tax free” and refund most of it back through some vague “loan” that I apparently don’t have to pay back.

This will reduce my income taxes pretty massively… but not only that, the company making my money untaxable claims it will pay 75% of all my out of pocket medical expenses up to $12,000.

It’s sort of an underpants gnome tax plan:

  1. Take money out.
  2. ?
  3. Tax free!

It of course doesn’t work. There is no Tax Fairy.


Russ Fox, A 0% Chance of Success Didn’t Deter Him! “Well, one fact that I’ve mentioned in the past is that IRS Criminal Investigations looks at all allegations of employment tax fraud. The reason is obvious: The IRS doesn’t like the idea of people stealing from them.”

Kay Bell, How do fantasy sports differ from gambling? As far as I can tell, gambling takes less time.

Robert D. Flach, REQUIRED NEW YORK STATE CONTINUING EDUCATION FOR TAX PREPARERS. “To be perfectly honest all of the four-hours of sessions were a total waste of my time.” Senators Hatch and Wyden want to spread the time-waste nationwide.

Peter Reilly, Presidential Race – Let’s Talk Religion Politics And The IRS.

Robert Wood, IRS Delays FATCA To Help Banks, But Offshore Account Disclosures Continue




TaxProf, The IRS Scandal, Day 863864865


TaxGrrrl, Coca-Cola Says IRS Wants $3.3 Billion In Additional Tax Following Audit

Caleb Newquist, Coca-Cola Can’t Beat the Feeling That Its Taxes Are Just Fine (Going Concern). “Coca-Cola Co. is learning that the IRS side of life includes a challenge to its transfer pricing method.”



Tax Roundup, 9/17/15: Senators say preparer reg provision killed ID-theft markup. And: Transporation industry per-diem rates issued.

Thursday, September 17th, 2015 by Joe Kristan

20150917-1And we’d have gotten away with it, if it hadn’t been for those meddling kids! Tax Notes comes through this morning with confirmation ($ link) that opposition to the preparer regulation provision caused the Senate Finance Committee leadership to postpone the markup of the ID-theft bill scheduled for yesterday.

“I think there’s probably a way in which that [bill] could get back on track,” said Senate Finance Committee member John Thune, R-S.D. The pending legislation’s proposal to grant Treasury and the IRS authority to regulate paid tax return preparers “was probably the principal concern” of some senators, Thune said.

“I think more of it, the whole issue, was whether or not to give the IRS more authority — more power, more people, more resources, all that,” Thune added.

20130121-2Apparently both Chairman Hatch and ranking minority member Wyden favor reviving the preparer regulation power grab, derailed by the courts in 2013. So does the head of the National Association of Enrolled Agents. A petulant Senate staffer blames the CPAs:

A Senate staff member, speaking on condition of anonymity, told Tax Analysts that the “AICPA once supported common-sense efforts to regulate unenrolled paid preparers — an important effort, given that unregulated tax preparers are largely responsible for a wide range of tax filing mistakes that occur at the expense of taxpayers.”

“But now,” the staffer continued, “it seems the group has now lobbied hard in opposition to the bill, ostensibly on the grounds that the bill should be changed to impose limitations on IRS’s authority to require preparers to obtain” preparer tax identification numbers.

I would argue that the AICPA is serving the interests of its members and the general public. I would  also say they are serving the EA’s interest better than their own organization. I think another IRS-approved preparer designation could be fatal to the already-struggling Enrolled Agent brand.

I also hate when people invoke “common sense” when pushing through a bad idea. It’s another way of saying “shut up, peasant.” Unless, of course, it’s “common sense” to give an IRS that is failing at its job while abusing its power more to do.




IRS issues special per-diem rates for the year starting 10/1/15 (Notice 2015-65). The rates include the special transportation industry per-diems the incdental expenses-only rate, and the rates and lists of “high-low” localities.

Andrew Mitchel, Is the IRS Missing Names From Its Quarterly Publication of Expatriates? “It is possible that the IRS is only including the names of individuals who have renounced their U.S. citizenship. Perhaps the IRS is not including the names of individuals who have relinquished and not including the names of former long-term green card holders.”

Robert Wood, IRS Hunts Belize Accounts, Issues John Doe Summons To Citibank, BofA. If you’re tax planning is based on offshore bank secrecy, you should rethink your plans.


Robert D. Flach has issued his 2015 YEAR END TAX PLANNING GUIDE. $3 for pdf, $4.50 in print.

TaxGrrrl, 2016 Tax Rates, Brackets & Exemption Amounts May Result In Lower Bills

Scott Schumacher, Getting to Yes, Sooner (Procedurally Taxing). “Whatever the [Tax] Court can do to encourage pro se petitioners to participate in a settlement conference as early as possible will benefit all parties involved.”

Kay Bell, Ways & Means considers more tax extenders, health care bills




TaxProf, The IRS Scandal, Day 861

Roberton Williams, Despite Promises, Jeb Bush’s Tax Plan Wouldn’t Eliminate Marriage Penalties (TaxVox).

How many auditors does the Pope have? Pope Francis Weighs In on Tax Policy (Scott Greenberg, Tax Policy Blog).

Now, Pope Francis has also made a foray into tax policy, calling for churches and religious orders that conduct regular business activities to pay taxes on their income…

However, in the United States, a church that operated a hotel would likely be subject to the Unrelated Business Income Tax, which applies to tax-exempt organizations that conduct business operations that are unrelated to their tax-exempt purpose. So, the Pope would likely be satisfied with current U.S. law, which requires church-operated businesses to pay taxes on their profits (with a few notable exceptions).

Blessed be the 990-T. 


Bob McIntyre, Congress Is Working to Revive Rules That Make Corporate Tax Avoidance Easier (Tax Justice Blog). That’s Tax Justice talk for “working on extender legislation.”

Career Corner. Do Millennial Accountants Golf? (Caleb Newquist, Going Concern).



Tax Roundup, 9/15/15: Today is a big due date. Also: more on preparer regulation, and Outlaw outlawry!

Tuesday, September 15th, 2015 by Joe Kristan

e-file logoExtended corporation, partnership and trust returns are due today! E-file is the best way to be sure to timely file. If you can’t, or won’t, e-file, Certified Mail, Return Receipt Requested, does the trick; save the postmark.

If you don’t get to the post office before they take their last smoke break for the day, you can go to the Fed-Ex or UPS store and use a designated private delivery service; be sure the shipping method you select is one of the “designated” ones at the link. Make sure the shipping bill shows that you dropped it off today, and make sure it is addressed to the proper IRS service center street address, as the private services can’t use the P.O. box service center addresses.

Third quarter estimated tax payments are also due today for calendar year filers.

Related: Paul Neiffer, September 15 is Worse Than April 15, “Most people who wait to file on September 15 or October 15 are, shall we say, not quite so efficient with their record keeping and thus, it is much tougher for us to get information and to get the tax return done.” Paul is absolutely right.


20130121-2Russ Fox, The NAEA Won’t Like This Post:

I’m a member of the National Association of Enrolled Agents. Generally, I’m supportive of their policies. However, I am not a fan of mandatory preparer regulation. Other than giving the IRS more money and getting rid of the lowest hanging of the bad preparers, preparer regulation won’t accomplish many positives for the general public.

The NAEA’s support of preparer regulation is baffling. The idea of the IRS certifying all preparers strikes me as a deadly threat to the Enrolled Agent brand.

Right now, EAs are the only professionals who have to pass an IRS administered test, one much more rigorous than the one in the abortive Registered Tax Return Preparer plan under the defunct preparer regulations. EAs also have much more serious continuing education rules.

For all this the EA designation is not nearly as well-known as the CPA designation, which isn’t even a tax-specific credential. The RTRP designation threatens to further obscure the EA brand.  Both EAs and RTRPs will be “IRS approved,” and given their failure to establish the EA brand so far, it’s likely to be impossible to get clients to appreciate the superior EA credential.


buzz20150804Buzz! With Robert D. Flach, a fresh tax blog roundup with Robert’s own inimitable style. Topics include this year’s slow-walk of the extenders legislation and the Senate push to regulate preparers.


TaxGrrrl, Congress May Give IRS Authority To Regulate Tax Preparers:

It’s my feeling that the bad guys are the bad guys: forcing you to take ethics courses doesn’t change that. Incompetent and lazy preparers are incompetent and lazy: forcing someone to sit through continuing education courses (likely while text messaging, trust me, I’ve been a speaker at these things) doesn’t make that person smarter or more conscientious. 

It’s another “bootleggers and Baptists” play. Prohibition was supported by do-gooders who naively thought they were making the world a better place, and by bootleggers, who profited from prohibition. Here the Baptist elder is Taxpayer Advocate Nina Olsen, and the bootleggers are the big national tax prep franchise outfits.


Robert Wood, IRS Offshore Account Penalties Expand, More Banks Sign.

Jim Maule, A New Tax Specialty: Porn:

 According to this report, the Alabama House Ways and Means Committee, trying to deal with a budget shortfall, has approved legislation imposing a 40 percent excise tax on, well, it depends on whose explanation is accepted. Some are calling it a tax on porn.

Well, at least they won’t have trouble recruiting auditors.

Jack Townsend, Another B   S   Tax Shelter Bites the Dust. Fill in the blanks.

Kay Bell, 3 ways to navigate estimated tax penalty safe harbors


TaxProf, The IRS Scandal, Day 859

Huaqun Li, Stephen J. Entin, China to Remove Dividend Tax for Long-Term Shareholders (Tax Policy Blog)




Well, they were called the “Outlaws.” David Allen Coe was part of the “Outlaw” country music movement led by Waylon Jennings, Willie Nelson, Johnny Cash, and Hank Williams Jr. Now, like Willie, Mr. Coe has some tax problems. reports:

Country singer David Allan Coe owes the IRS nearly a half-million dollars for taxes due as far back as 1993. The singer pleaded guilty to one count of obstructing the due administration of the IRS on Monday (Sept. 14) and could face three years in prison plus a $250,000 fine.

Coe, known for his hit “Take This Job and Shove It,” owes more than $466,000, according to the Cincinnati Enquirer. This includes taxes from 2008 to 2013 when he either failed to file income tax returns or didn’t pay taxes owned. Interest and penalties are part of the figure.

Mr. Coe had a little run-in with the law at a Des Moines area casino a few years back (arrest video here), but the disorderly conduct charges were dismissed. This outlawry promises to be a little more troublesome, but now all he needs is mom, pickup trucks, trains and a drink for a perfect country and western song.



Tax Roundup, 9/14/15: Hatch, Wyden sneak preparer regulation into ID theft bill. And more!

Monday, September 14th, 2015 by Joe Kristan

No Walnut ST“Bipartisanship” means they’re ganging up on you. UtahPolicy reports: Hatch, Wyden Announce Markup of Bipartisan Bill to Prevent Identity Theft and Tax Refund Fraud. In the 20-item summary of the “Chairman’s Mark,” this is buried as item 15 (my emphasis):

In June 2011, the IRS issued final regulations that established a new class of tax practitioners known as “registered tax return preparers” that it sought to regulate for the prepared by these now unregulated tax return preparers. There is substantial evidence indicating that incompetent and unethical tax return preparers are harming both their clients and the government. Most of the tax returns that involve refundable tax credits are prepared by unregulated tax return preparers.

Since 2011, the D.C. District Court (and the D.C. Circuit affirming on appeal) has prevented the IRS from enforcing these regulations on the grounds that the IRS’ authority to regulate practitioners is insufficient to permit regulation of tax return preparers who do not practice or represent taxpayers before an office of the Treasury Department.

The provision provides the Treasury Department and the IRS with the authority to regulate all aspects of Federal tax practice, including paid tax return preparers, and overrides the court decisions described above.

Preparer regulation wouldn't have bothered Rashia.

Preparer regulation wouldn’t have bothered Rashia.

Of course, increasing preparer regulation does absolutely nothing to fight identity theft.  People don’t go to unregulated preparers to arrange to have their identities stolen. Paid preparers aren’t the people who steal identities. That nasty work is done by others. It’s done by organized crime gangs in the old Soviet Union. It’s done by semi-literate street grifters in Florida. It’s done by street gangs. It’s even done by IRS agents.

Fighting ID theft by regulating preparers is like fighting pickpockets by regulating laundromats. Making tax preparers take a competency literacy test won’t touch the ID theft problem. Nor will crooks stop claiming bad refunds because the IRS wants them to take a test.

Fortunately, a powerful senator makes an impassioned argument against giving the IRS more power over preparers:

“Protecting the private information of taxpayers at the Internal Revenue Service should be of highest importance to the agency and Congress. Unfortunately, as we learned this year, highly valuable information housed at the agency is susceptible to cybercriminals.  Since this threat will not end, Congress should take appropriate bipartisan action to implement needed legislative policies that will better protect taxpayers and shield taxpayer dollars from thieves.”

Oh, I’m sorry, that’s Senator Hatch arguing that this incompetent agency should get more power over preparers. Does he even read his own stuff?

The IRS already has tools to deal with bad preparers, as the weekly parade of injunctions and indictments of preparers attests. What the IRS wants is more power and less of that annoying due-process stuff. It’s supported in this by the large tax prep franchise outfits, one of whose executives wrote the rules that the courts struck down. The big tax prep outfits want to increase barriers to entry to grow their own market share. Big companies can spread the cost of regulatory compliance over a large base of business; a sole practitioner has to absorb the cost alone. An IRS paperwork glitch that can ruin a single preparer does nothing to H&R Block. Regulation always favors the big.

The President’s recent report on excessive occupational licensing notes:

There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing.

They certainly aren’t doing so here. They plan to mark up the bill Wednesday morning. Contact your senator and representative to oppose this IRS power grab on behalf of its friends Henry and Richard.


TaxProf, The IRS Scandal, Day 856Day 857Day 858. Yes, let’s give these people more power over preparers, they’ve shown we can trust them.




Kay Bell, Congress faces a crowded year-end legislative schedule. Not too crowded to find time to help out Henry and Richard.

William Perez, 5 Tips for the 3rd Estimated Tax Payment of 2015. It’s due tomorrow!

Robert D. Flach, MAKE YOUR LIFE EASIER AT TAX TIME BY SAVING ALL COLLEGE INFO NOW. “FYI – beginning with tax year 2016 (for returns to be prepared in 2017) you must have a Form 1098-T in order to claim an education credit or deduction on your Form 1040 (or 1040A).”

Russ Fox, Defalcations Send Randolph Scott to ClubFed. An estate tax attorney decides he needs the money more than the IRS does.

Jason Dinesen, Iowa Society of EAs to Host CPE Extravaganza. October 19 and 20, West Des Moines. “This seminar is open to any tax pro who needs CPE, so CPAs and attorneys are welcome to attend.”

Annette Nellen, Tell me – hot state tax issue of 2015?

Peter Reilly, Jeb Bush Tax Plan Could Disrupt Real Estate And Small Business. “Bush tax plan calls for elimination of business interest deductions.”

Robert Wood, Marijuana Taxes Go Up In Smoke For One Day In Colorado. Isn’t that the point?




Scott Greenberg, Yahoo Spinoff of Alibaba Sheds Light on Problems with the Corporate Tax System (Tax Policy Blog):

These three obstacles – double taxation, legal complexity, and regulatory uncertainty – are present in many areas of corporate tax law, not just Yahoo’s spinoff of Alibaba. And all three significantly hinder American business operations, slowing down economic growth. The ongoing saga of Yahoo is one more example of why fixing the corporate tax code must be a priority of the federal government.  

I would add that Yahoo also ran into a politicized IRS that was under pressure to kill the deal.

Elaine Maag, Tax Subsidies for Childcare Expenses Target Middle-Income Families, Missing Many Poor Parents. (TaxVox)


News from the Profession. This CPA’s Mugshot Will Haunt Your Dreams. (Caleb Newquist, Going Concern).




Tax Roundup, 9/11/15: The pitfalls of putting loss generators in a tax-exempt entity. And: Robert remembers a client.

Friday, September 11th, 2015 by Joe Kristan

20150911-2When the income isn’t taxable, the losses aren’t deductible. Some stockbrokers like to buy publicly-traded natural resource partnerships as IRA investments. I dislike them because those partnerships can trigger Unrelated Business Income Tax in an otherwise tax-exempt IRA.

An attorney in Virginia illustrated another problem with IRA partnership investments in Tax Court yesterday. From the opinion by Judge Haines:

Petitioner maintained a traditional IRA during 2009 and used it to buy and sell various securities, including shares of two master limited partnerships that were involved in the oil and gas pipeline and storage industry–Atlas Pipeline Partners, L.P. (Atlas), and Crosstex Energy, L.P. (Crosstex). Petitioner received a Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc., from Atlas reporting a $66,075 ordinary business loss for 2009. The Schedule K-1 indicated “Trad IRA VFTC as Custodian” and stated that the partner was an “IRA/SEP/KEOGH”. Petitioner reported this loss on the Schedule E,  Supplemental Income and Loss, attached to his 2009 Form 1040, U.S. Individual Income Tax Return. Petitioner received a Schedule K-1 from Crosstex reporting a $22,793 ordinary business loss for 2009 and stating that the partner was an “IRA/SEP/KEOGH”. Petitioner also reported this loss on the Schedule E attached to his 2009 Form 1040.

This would have been a remarkable result, if it worked. Individual owners of publicly-traded partnerships have their K-1 losses automatically disallowed under the passive loss rules. Unlike other passive losses, those from publicly-traded partnerships can’t offset other passive income; they can only offset future income from the same partnership, until the partnership is sold.

Within an IRA, though, the losses are never allowed. The tax law allows IRAs to earn income without current tax. The idea is to help taxpayers accumulate funds for retirement. Any tax is deferred until you withdraw funds from the IRA. The downside of this is that losses are also deferred. The only way to deduct a loss from IRA investments is to completely close out the IRA. That only works if you have made non-deductible contributions to the IRA, giving you basis. From, Publication 590b:

If you have a loss on your traditional IRA investment, you can recognize (include) the loss on your income tax return, but only when all the amounts in all your traditional IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis, if any.

Your basis is the total amount of the nondeductible contributions in your traditional IRAs.

You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A (Form 1040). Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax.

Our attorney was having none of that. From the Tax Court:

Petitioner argues, in part, that an IRA has “all of the attributes of a grantor trust and is therefore a pass through entity which makes all items of income, deduction and credit treated as belonging * * * [to him] and reportable on * * * [his] individual tax return”.

I’m sure he would have taken that same principled position if those K-1s generated a bunch of taxable income.

Petitioner advances various tax policy arguments which he believes support this position. For example, he contends that restricting an IRA holder’s ability to deduct a loss that occurs when an investment held by  the IRA is sold thwarts congressional intent to encourage individuals to save for retirement. He also claims that requiring retirees to completely liquidate their IRAs in order to recognize a deductible loss is “unreasonable, arbitrary, capricious and completely unworkable for savers dependent upon IRA/SEP income for their retirement.”

Unfortunately, heads-I-win, tails-you-lose only works for the IRS. Again from the Tax Court:

While petitioner may not agree with the way the law is written and may have reasons that he believes support changing the law, we cannot do that for him.

Silly lawyer. Only the Supreme Court can rewrite tax law.

The Moral: IRA investments in partnerships can give you the worst of both worlds. You can make a tax-exempt entity taxable (or much worse, if you invest in the wrong partnership), but your losses are almost never useful.

Cite: Fish, T.C. Memo 2015-176.


Jared Walczak, Liz Malm, Where Does Your State Stand on State & Local Debt Per Capita? (Tax Policy Blog):


This is one measure where Iowa looks pretty good.


MOE BARRYRobert D. Flach, NEVER FORGET. Robert remembers a client who died 14 years ago today in New York.

Kay Bell, Fantasy football payouts mean real income taxes. Don’t worry, it’s made up for by the lowered income taxes of employers resulting from lost productivity during Fantasy season.

Jim Maule, Tax Client and Tax Return Preparer Meet Up in People’s Court.  “[A] preparer ought not accommodate a client who wants a return that does not comply with the law. It’s that simple.”

Peter Reilly, Jeb Bush And The Spirit Of 1986. “Somebody should tell Jeb Bush that tax accountants don’t write the Internal Revenue Code and it is a lot shorter than he thinks it is.”

Keith Fogg, IRS Inaction in Prior Years Provides Path to Penalty Relief for Substantial Understatement Penalty – Fire and Rain (Procedurally Taxing).

Robert Wood, Marijuana Taxes Go Up In Smoke On Sept. 16. In Colorado, for one day only. Mark your calendars!

TaxGrrrl, Over 2,000 Businesses Send Letter To Congress Demanding Attention To Tax Extenders Bill. They’ll get to it when they get to it, peasants!

Russ Fox, How Should Multiple Buy-Ins for a Poker Tournament be Handled on a W-2G? I have no idea what he’s talking about, but I’m sure many of you do.

Jack Townsend, Another Swiss Bank Obtains NPA Under DOJ Swiss Bank Program. If you want to skip taxes with the help of offshore bank secrecy, it’s not likely to work.



Joseph Thorndike, Don’t Bother Fixing the Tax Code Unless You Fix the IRS Too (Tax Analysts Blog). “Because even a good tax law will fail when administered by a bad agency.”

Howard Gleckman, The Cost of the Bush Tax Cuts, and What It Might Mean (TaxVox). “My colleagues at the Tax Policy Center plan to have their own estimates of the distributional and revenue cost of his plan soon. But there is no doubt the plan is a huge tax cut.”

Bob McIntyre, Bush and Trump’s “Populist” Tax Rhetoric Is All Talk (Tax Justice Blog).


TaxProf, The IRS Scandal, Day 855

News from the Profession. AICPA Survey: College Students Overconfident, Exaggerate, Delusional, Etc. Etc. About Their Personal Finance Skills (Caleb Newquist, Going Concern)



Tax Roundup, 9/10/15: True crime edition; or, how to get the IRS to pay attention.

Thursday, September 10th, 2015 by Joe Kristan

IMG_0603How to make sure the IRS comes looking for your tax fraud. A Minnesota man will have 6 years to ponder mistakes he made diverting employment and excise taxes he owed to finance good times. From

Fifty-seven-year-old Bartolemoea Montanari, formerly of Bayport, was sentenced Wednesday. Montanari was also ordered to pay mandatory restitution of $100,000 and, additionally, to pay more than $1.5 million as a special assessment for the taxes, interest and penalties owed.

According to court documents, from 2009 until January 2012, Montanari willfully evaded the payment of employment and excise taxes owed by him and the three businesses he controlled: St. Croix Development, Emlyn Coal Processing, and Montie’s Resources.

He was convicted on the three counts of an indictment accusing him of diverting funds to a shell company from his legitimate businesses, and then withdrawing funds from the shell company to finance, well, stuff:

During sentencing, the judge noted Montanari used the money he stole to finance an “incredibly flamboyant lifestyle,” that this was “not a single error of judgment,” and that Montanari had “many chances” to correct his behavior, but did not. 

The indictment says the lifestyle included a $1.4 million home in Tennessee and “numerous personal vehicles.”

The defendant would seem to have made two mistakes to help ensure that the IRS would come snooping. First would be the “incredibly flamboyant lifestyle.” Taxgrrrl notes a Pennsylvania tax investigation apparently started when federal agents noticed a fancy house from the air. If the feds don’t notice themselves, envious or annoyed neighbors or associates might bring their questions about a flamboyant lifestyle to their attention.

More importantly, he failed to pay over employment taxes. His employees certainly  wouldn’t have failed to report their W-2 wages and claim their refunds. Despite its information processing shortcomings, the IRS can and does notice that. The main difference between committing employment tax fraud and confessing to it is the amount of work the IRS has to do before pressing charges.




Speaking of foolproof crimes: Hot Lotto rigger sentenced to 10 years (Des Moines Register). The case involved an alleged inside job by an IT professional at the Multi-State Lottery:

The case has enthralled Iowans and gained national attention since late December 2011, when a New York attorney tried to claim — just hours before it would expire — a Hot Lotto ticket worth $14.3 million on behalf of a trust incorporated in Belize. The identity of the original ticket purchaser was a mystery.

Authorities with the Iowa Division of Criminal Investigation began looking into Tipton after several people identified him as the hooded man in a video showing the ticket being purchased at a Des Moines QuikTrip. At the time, Tipton was the information security director for the Urbandale-based Multi-State Lottery Association that provides games such as Hot Lotto to lotteries nationwide.

[Assistant Attorney General] Sand told jurors at trial that Tipton installed a self-deleting software program, called a rootkit, onto lottery drawing computers to manipulate the outcome of a Dec. 29, 2010, draw. Tipton then filtered the winning ticket he bought through a friend, Robert Clark Rhodes II, from Texas in an attempt to claim the money, Sand said.

There’s a reason lottery workers aren’t allowed to play the lottery. The lawyer and Belize trust didn’t help the whole thing slip by unnoticed.


Tony Nitti, How To Talk About The Yahoo Spin-Off Without embarrassing Yourself. A walk through the mysteries of tax-free corporate separations.

Russ Fox, IRS Removes Social Security Number from Some Notices But…:

The reason for this is the problem of identity theft. And I give kudos to the IRS for this. Unfortunately, the IRS hasn’t executed this that well.

Today I opened an IRS notice that was sent to a client. The good: The social security number in the header had only the last four digits. The bad: Right below the header the IRS put in a bar code–presumably to make processing of the return mail easier. Below the bar code in relatively small print (but easily readable by me, and I wear glasses) was the deciphering of the code. Of course, it contained the social security number.

The IRS, protecting your identity since 1913.

Jason Dinesen, From the Archives: Will Obamacare Tax Your Home Sale?

Paul Neiffer, Don’t Forget Those Fuel Tax Credits. “Most farmers obtain dyed diesel without having to paying federal and in most cases state excise taxes.  However, there can be many other uses on the farm that will allow a farmer to claim a fuel tax credit on Form 4136.”

Kay Bell, Tax diplomas, computer games and soap operas. “Will informing folks about the role of taxes in their countries, especially starting at an early age, help create more tax responsible citizens?”

Jim Maule, It’s a Failure of Some Sort, But It’s Not a Tax Failure. The professor reminds us not to believe everything you read on the internet.






TaxProf, The IRS Scandal, Day 854

Howard Gleckman, Jeb Bush’s Tax Plan: High Marks for Transparency But Key Questions Remain (TaxVox). “At first glance, GOP presidential hopeful Jeb Bush’s tax reform plan is a standard lower-the-rates, broaden-the-base overhaul of the revenue code. But a closer look shows a something-for-everyone stew filled with interesting ingredients—most basic GOP fare but seasoned with a few surprising ideas.”


Well, it’s not my thing, but if it’s for the kids…  Let’s Get High for the Children (David Brunori, Tax Analysts Blog):

Every proposal, like the one in Arizona, calls for dedicating marijuana tax revenue to schools, which is a terrible idea. Perhaps everyone will be stoned and won’t care, but aren’t schools important enough to pay for with real, broad-based taxes on income, sales, or property?

Politicians might look for a way to legalize slavery if they thought it would give them more revenue.

Joseph Henchman, Colorado Suspends Marijuana Tax for One Day on September 16 (Tax Policy Blog).


News from the Profession. Rihanna and 50 Cent Need New Accountants (Going Concern)



Tax Roundup, 9/9/15: Meredith HQ stays in Iowa despite taxes. And: Walter Mitty, Chiropractor — not Ghostbuster.

Wednesday, September 9th, 2015 by Joe Kristan



A part of the Meredith campus in Downtown Des Moines.

Meredith Corporation will keep its headquarters in Des Moines, reports the Des Moines Register. The Des Moines-based media company yesterday announced its acquisition by Media General, a Virginia-based company. From the Register report:

Virginia-based Media General will acquire Meredith in a cash-and-stock sale, forming a new company — Meredith Media General — that will combine Meredith’s list of women-focused magazines and 17 local TV stations with Media General’s 71 TV stations and digital media assets.

“We have our corporate headquarters in Des Moines, my management team … we all live in Des Moines, our staff are in Des Moines. We will continue to be in Des Moines,” Lacy said. He will serve as CEO and president of the new company.

Meredith Media General will be incorporated in Virginia, but have corporate offices in both Richmond, Va., and Des Moines.

It’s an interesting compromise. With the CEO of the combined company already located in Des Moines, it’s unsurprising that he will run things from here, everything else being equal.

Yet not everything is equal. Des Moines is an expensive place tax-wise to run a corporate headquarters, according to the Tax Foundation’s Location Matters report. Iowa is the 4th most expensive state in which to locate a corporate headquarters, while Virginia is the 12th cheapest. 20150901-1

Fortunately for Des Moines, non-tax factors apparently outweighed the tax issues. These might include the in-place infrastructure for Meredith’s publishing arm, including Better Homes and Gardens and Martha Stewart Living. Still, those 900 Des Moines Meredith jobs might be more secure with a better tax environment. Quick and Dirty Iowa Tax Reform Plan, anyone?


Tony Nitti, Child’s Unauthorized Incorporation Of Father’s Business Proves Costly In Tax Court. “Raising kids comes with some well-known hazards: sleepless nights, spit-up stained clothes, and of course, the occasional flailing elbow to the genitalia. What you probably don’t anticipate upon the miracle of childbirth, however, is that one day your kid will take it upon himself to incorporate your business via the internet, costing you tens of thousands in tax deductions.”

Robert D. Flach, THE NATP TAX FORUM AND EXPO IN PHILADELPHIA – PART I. “The one thing that is missing from the NATP Tax Forum offering is the IRS perspective.”

Kay Bell, Tax scam callers now spoofing telephone numbers

TaxGrrrl, IRS To Refuse Checks Greater Than $100 Million Beginning In 2016


Scott Greenberg, The Carried Interest Debate is Mostly Overblown (Tax Policy Blog). Mostly? Almost entirely.

TaxProf, The IRS Scandal, Day 854

Career Corner. 5 Ways Accountants Can Protect Themselves from the Accountapocalypse (Chris Hooper, Going Concern)




Who knew being a Chiropractor could be so exciting? James Thurber created the character Walter Mitty, “… a meek, mild man with a vivid fantasy life: in a few dozen paragraphs he imagines himself a wartime pilot, an emergency-room surgeon, and a devil-may-care killer.”

A Minnesota chiropractor, a Mr. Laudon, seems to have reprised the Mitty role on his tax return. If his Tax Court testimony is to believed, chiropractic practice can be pretty exciting. From the Tax Court:

He said that his patients often called him a psychiatrist, chauffeur, physician, peace officer, or even a pheasant hunter.2 Some of Laudon’s stated reasons for making these trips strain credibility: for example, driving to a “schizophrenic” patient who was — on more than one occasion — “running scared of demons” down a rural Minnesota highway, or driving to a patient’s home in a Minneapolis suburb — expensing 261 miles — because he had received a call from police that she had overdosed on OxyContin prescribed by her physician. Laudon claimed to have driven hundreds of miles per day — sometimes without a valid license — to see patients, but several of these trips were for medical procedures he was not licensed to perform.

Laudon contends that the Commissioner failed to classify certain deposits as nontaxable, including insurance payments for damage to several vehicles, one of which was involved in a “high speed police chase” with a man “high on meth and cocaine.”

IMG_1583Note that footnote 2, we’ll get to that in a minute. I never knew that a chiropractor could have such an exciting life. Law enforcement, mental health, high-speed chases — even exorcism, it seems.  Is there anything he couldn’t do? Well, back to footnote 2:

But not a ghostbuster. The Commissioner rhetorically asserted that some of Laudon’s trips might have made more sense if he was claiming to be a ghostbuster. Laudon then disclaimed any employment as a ghostbuster. In his reply brief the Commissioner conceded that Laudon was not “employed or under contract to perform work as a ghostbuster during the tax years at issue in this case.” We therefore need make no finding on the existence of a market for “supernatural elimination” in west-central Minnesota. See “Ghostbusters” (Columbia Pictures 1984).

In case you couldn’t tell, this is a Judge Holmes opinion.

Walter Mitty’s dreams didn’t go well, as his fantasy life had him in front of a fantasy firing squad. Things went badly for our chiropractor too. The court found both his documentation and his credibility lacking, including this about his mileage logs:

Laudon claimed to have driven hundreds of miles per day — sometimes without a valid license — to see patients, but several of these trips were for medical procedures he was not licensed to perform. Even his testimony about multiple entries in the logs where he wrote “DUI” was not credible: He claimed that these were not references to being stopped by police while under the influence, or driving while his license was suspended, but instead were his misspellings of a patient named “Dewey” — a supposed patient of his. He testified that he took one business trip to pick up a patient left stranded due to a domestic dispute with his girlfriend. And he even testified about trips he made to test his patients’ urine:

    Absolutely we do * * * [test urine]. It’s part of the — I believe it’s Federal, you know, that they have — we have to abide by that. It’s specific gravity. You’re basically, looking for sugar, let alone height, weight, blood pressure. Make sure they’re not drunk, doing illegal drugs.

We find Laudon not credible in his testimony regarding his business mileage, and this finding affects our views of his testimony’s credibility on every other issue in the case.

The taxpayer reported taxable losses from 2007-2009 ranging from $60,000 to $84,000. That alone is a challenge to credibility. The IRS added $346,000 to his income for the three years, and the Tax Court upheld the IRS with only minor changes. Among the disallowed expenses were “a Microsoft Xbox 360, Nintendo Wii, and numerous pieces of hair-salon equipment.” So, a barber, too.

The Moral? There might be more to that mild-mannered chiropractor than you imagined. But if there is, he needs to keep good records when the IRS comes calling.

Cite: Laudon, T.C. Summ. Op. 2015-54

Russ Fox is also on the case: Ghost Hunter, Pheasant Hunter, or Deduction Hunter: No Matter, He Loses at Tax Court




Tax Roundup, 9/8/15: One Week to the 15th. And: First-world tax payment problems.

Tuesday, September 8th, 2015 by Joe Kristan

20150803-1September 15 is one week away. If you have extended partnership, corporation or trust returns, time is running short. There are many reasons to file on time:

  • Tax elections made on a late return, including automatic accounting method changes, may not count. With all of the “repair regulation” method changes this year, that could be a big deal.
  • If you owe money, late filing turns a 1/2% per month late-payment penalty into a 5% per month (up to 25%) late filing penalty.
  • If you have a pass-through entity, late-filing triggers a $195 per K-1 per month penalty.

Remember to e-file, or to document timely paper filing via Certified Mail, return receipt requested, or with a shipping bill from an authorized private delivery service.


Gretchen TegelerDART: A property tax funded amenity ( Disturbing trends on the inability of the Des Moines-area public transportation service to cover its operations through fares: does appear the service expansions are generating more ridership  However, as was noted last year, property taxes are basically covering the cost of these additional riders. Total operating revenue was 10.1 percent below projections for the year that closed June 30th, 2015; with fixed route operating revenue being 8.65% percent short of budget.

The overall trends have not changed much from a year ago. Total operating revenue is still less than it was four years ago despite substantial service expansions and improvements since that time. Basically, as it weighs future improvements for DART, the community will need to decide if it is willing to continue to raise property taxes to fund them.

The post includes this chart:


That doesn’t include the cost of the recently-completed $18 million Palace of Transit.


TaxGrrrl, Mega-Mansion Attracts Notice By Feds, Results In Criminal Charges:

According to local sources, federal agents flying in and out of Pittsburgh noticed the size and scope of a mansion belonging to Joe Nocito, Sr., and started asking questions. Those questions eventually led to a guilty plea last week from Ann E. Harris, the personal assistant, secretary and bookkeeper for Nocito, in a tax evasion scheme thought to involve as much as $250 million.

If you are a tax evader, it’s unwise to flaunt your wealth, especially to the point of attracting attention from passing aircraft. But maybe that would take the fun out of the thing.




Russ Fox, The Family that Commits Tax Evasion Together Goes to ClubFed Together. “This is yet another reminder for everyone who uses a payroll service to join EFTPS and make sure your payroll deposits are being made. Trust but verify is excellent practice in payroll.”

Kay Bell, Labor Day tax tip: Union dues might be tax deductible

Scott Greenberg, This Labor Day, How High is the Tax Burden on American Labor? (Tax Policy Blog). “In 2014, the average wage worker saw his or her labor income decrease by 31.5 percent due to federal, state, and local taxes, according to the OECD.”

Tony Nitti, Tax Geek Tuesday: Excluding Gain On Sale Of Home, And Recognizing Gain On Repossession

Jason Dinesen, From the Archives: Tax Implications of the Unlicensed Daycare Provider

Jim Maule, “Who Knows Taxes Better Than Me?” Professor Maule notes that Donald Trump’s understanding of tax law and economics might not be all that Mr. Trump thinks it is.

Peter Reilly, From Russia With Built In Losses. “There is a certain irony to the whole thing as it seems like financiers were too focused on looting the US treasury with phony shelters to see the probably larger upside of distressed Russian assets.”

Robert D. Flach, DONALD TRUMP FOR PRESIDENT IS A LOT LIKE OBAMACARE, That isn’t meant as a compliment.




Leslie Book, Tax Court Opinion Reaffirming Validity of Regulations Addressing Foreign Earned Income Exclusion Illustrates Chevron Application (Procedurally Taxing)

Robert Wood, IRS Gets Tax Data From India As Black Money Hunt Hits Americans Too

Jack Townsend, IRS and DOJ Tax Conferences Before Indictment. That doesn’t sound like fun at all.

TaxProf, The IRS Scandal, Day 849850851852


Renu Zaretsky, Deals, Dreams, and Data. Today’s TaxVox headline roundup covers the ground from A (Amazon’s sweet Illinois tax credit deal and Apple’s Irish strategy) to Zaretsky.

Cara Griffith, Why Is It So Hard to Find Information on the Sharing of Taxpayer Information? (Tax Analysts Blog). “Taxpayers are expected to blindly provide massive amounts of information to tax authorities, but are then not allowed to know the process through which one state or municipality shares information with another.”


I’ll make sure not to have this problem when I file in April:

Effective January 1, 2016, the IRS will not accept any payment greater than $99,999,999.00. Two or more checks will be required, or we recommend that the taxpayers use Fed Wire to make their payments.

If I did owe more than $100 million, I would be tempted to write one of the checks for $99,999,999.01, just to see if they are serious. Not to give away my income secrets, but I’m pretty sure my 2015 taxable income will spare me the temptation.

Cite: Announcement 2015-23.



Tax Roundup, 9/4/15: Labor day and the Earned Income Tax Credit. And more three-day weekend goodness!

Friday, September 4th, 2015 by Joe Kristan

20140711-2Happy Labor Day!  While getting ready to put in your token appearance at work today before you head for the lake, you may want to ponder the hot “labor” issue of the moment — the minimum wage and its alternatives.

In spite of claims otherwise by supporters, a minimum wage has to cause job losses for the least skilled and connected. That’s part of what it was originally meant to do. If raising the price of wages didn’t affect how much labor is purchased, you could set a $100 per hour minimum wage. That, is, of course, absurd. So advocates have to argue that somehow small increases in the minimum wage are worth the job losses because of the benefits for those who keep their jobs, or that there are no job losses.

Recognizing the weakness of these arguments, many economists argue that an increased Earned Income Tax Credit is a better way to support the working poor.   For example, in The minimum wage versus the earned income tax credit for reducing poverty, Cornell University economist Richard V. Burkhauser states:

Introducing or increasing a minimum wage is a common policy measure aimed at reducing poverty. But the minimum wage is unlikely to achieve this goal. While a minimum wage hike will increase the wage earnings of some poor families and lift them out of poverty, some workers will lose their jobs, pushing their families into poverty. In contrast, improving the earned income tax credit can provide the same income transfers to the working poor at far lower cost. Earned income tax credits effectively raise the hourly wages only of workers in low- and moderate-income families, while increasing labor force participation and employment in those families.

The argument for a perfect earned income tax credit is compelling, but the credit is far from perfect. It is estimated that around 25% of the Earned Income tax credit paid out is paid improperly, including billions in fraud. Earned income tax credit fraud is a big part of the business of corrupt preparers. Many other taxpayers who could properly claim it fail to because of its complexity.

Even if the waste and fraud problem could be solved or overlooked, a properly-functioning EITC is still a poverty trap. The credit phases out as incomes rise, creating a high effective marginal tax rate on each additional dollar earned by a low-income family. It provides help at low income levels, but it discourages improving those income levels.

eic 2014

The marginal tax rates get even worse when phase-outs of other income-based benefits are taken into account.

welfare benefits marginal rate

Chart via the Mises Institute


Arnold Kling is a proponent of a “Universal Benefit” providing everyone a basic amount of income in place of the current array of welfare benefits:

One of the advantages of a universal benefit is that you give the money to everyone. My idea is that you would then tax some of it back at a marginal rate of 20 or 25 percent. That is, for every dollar that someone earns in the market, they are lose 20 cents or 25 cents in universal benefits. Compared to a marginal tax rate of zero, 25 percent is more complex and has a disincentive. But it is much less complex and de-motivating than our current system of sharp cut-off points for benefits like food stamps and housing assistance. And having a non-zero tax rate allows you to have a higher basic benefit at lower overall budget cost.

I’m not entirely convinced that giving everyone a benefit is wise, but it may be a better idea than what we have. It deserves consideration before we concede that a fraud-ridden and complicated EITC is the best we can do for the working poor.


Jared Walczak, Location Matters: Effective Tax Rates on Call Centers by State (Tax Policy Blog). California is a surprisingly cheap place for this.




buzz20150804Robert D. Flach brings today’s Buzz roundup from the National Association of Tax Professionals Tax Forum in Philadelphia. Today he links to posts about small business survival tips and the flight of taxpayers from New York state.

Jason Dinesen, Glossary: Hobby Loss Rules, “This is important because deductions for hobbies are limited, whereas deductions are (generally) unlimited for business activities engaged in with a for-profit motive.”

William Perez, What the Recent Uber Worker Classification Ruling Means for Tax Professionals. It has tax implications that William ably discusses, but what it really means is that the government wants to protect well-connected taxi monopolies.

Kay Bell, Uncle Sam to pay $133 million to protect OPM hack victims. But at least they won’t send you a 1099 for the “value” they provide.

Robert Wood, IRS Offshore Account Penalties Increase, Hunt Continues. Offshore bank account secrecy is pining for the fjords.

Jack Townsend, Another Swiss Bank Obtains NPA Under DOJ Swiss Bank Program

Peter Reilly, Presidential Candidate Tax Plans Coming In Slow.


TaxProf, The IRS Scandal, Day 848. Today the prof links to a John Hinderaker post that includes this:

So someday–not any time soon–the IRS will finally be forced to answer the question that Koch Industries asked it five years ago, in 2010. The Obama administration’s strategy is always the same–stonewall, assert every possible theory, no matter how frivolous, and try to run out the clock. Whether an honest answer to the question will be given, years after the fact, is of course another question.

It’s worked for the IRS and the administration so far.




Howard Gleckman, Why Individual Tax Revenues Will Grow Even If Congress Doesn’t Raise Taxes (TaxVox):

Since 1985, income tax brackets have been adjusted for inflation so that someone whose annual raise tracks the Consumer Price Index is not thrown into a higher tax bracket. However, that adjustment doesn’t fully protect rising income from higher taxes.

In part, that’s because some key parts of the income tax are not indexed. They include the child tax credit, the surtax on net investment income, and the income ceiling for making contributions to Individual Retirement Accounts. But the real problem is that when income grows faster than inflation, it is pushed into higher tax brackets.

When they say the want to just soak the rich, that’s just to fool the rubes. It’s your pocket they want to pick.


Jenice Robinson, H&R Block Uses Corporate Lobbying Might to Make Sure the Poor Use Its Services. (Tax Justice Blog)Earned Income Credits are involved.


Career Corner. Please Don’t Be Like This Accountant Who Got Scammed Over Email (Caleb Newquist, Going Concern). “Yeah, it’s a little sloppy that a single email from a CEO along with a lone signature over a company seal would be enough to wire $737k.”



Tax Roundup, 9/1/15: If the taxman takes your car, recode your garage door. And: jobs, $211,111 each.

Tuesday, September 1st, 2015 by Joe Kristan
1974 mercedes

A 1974 Mercedes scheduled for IRS auction 8/31/15 at Bama Jammer Storage, Huntsville, AL.

As if having your car seized by the taxman wasn’t bad enough. The Treasury Inspector General for Tax Administration, in a report on IRS handling of property seized for tax nonpayment, notes a potential problem if the IRS takes your car:

However, during our discussions with IRS employees involved in the seizure process, we determined that there was no guidance on what actions to take if seized vehicles are equipped with installed navigation or garage door opening systems. Additionally, except for one employee, everyone we spoke with had not considered what actions to take if they seized a vehicle with one of these systems. While we do not have any examples in our case reviews of this situation occurring, it is in the taxpayers’ and Government’s best interest that employees are prepared if seizures involve these types of systems. If these systems are not reset to the original factory settings, there is a risk that the third-party purchaser of the vehicle can gain access to the taxpayer’s personal information or property. For example, the purchaser could use the vehicle navigational equipment to locate a taxpayer’s residence and then use the garage door opener to gain access to the home.

I have to admit, it wouldn’t have occurred to me either. It’s easy to forget that cars are also more and more data systems. Still, computerized data probably wasn’t an issue with the 1974 Mercedes pictured above that was scheduled for auction by the IRS yesterday in Huntsville, Alabama.


O. Kay HendersonBranstad defends state tax incentives for new Kum & Go headquarters:

Governor Terry Branstad today called the “Kum & Go” convenience store chain a “great…family-owned”, Iowa-based business and he has no objection to the nearly $19 million in state tax incentives it will get for moving the company headquarters to downtown Des Moines.

The convenience store chain is moving its headquarters about 10 miles from West Des Moines to Downtown Des Moines. It is getting $6.33 for every Iowan for its trouble. I’m sure Kum & Go is a perfectly nice company, and I don’t blame them for taking money the state is giving away, but there are lots of nice employers who don’t get $211,111 in state tax breaks for each new job they create. The unfortunate ones have to pay some of the highest business tax rates in the country to help pay for those who do benefit from tax breaks.

For perspective, check out Jared Walczak, Location Matters: Effective Tax Rates on Corporate Headquarters by State (Tax Policy Blog). “Today we’ll take a look at states’ effective tax rates on new and mature corporate headquarters.”  Have a look:


For this ranking, Iowa is the fourth worst. Giving millions to one company doesn’t fix it for everyone else.


Robert D. Flach has fresh Buzz for us today. Robert buzzes about blog posts he’s found about higher taxes, due dates, and the “Cadillac tax” on high-cost health plans — which seems to be most of them nowadays.

Russ Fox, The Hospital’s Closing; Who Will Notice the Missing Charity Money? Apparently one of the doctors, with unfortunate tax results.

TaxGrrrl asks Which State Has The Highest Property Taxes In America?

Kay Bell, IRS gets so-so rating so far on Yelp. Well, I’d never eat there.

Leslie Book, Legislative Language Directs IRS To Make Self-Prepared EITC Claims More Burdensome (Procedurally Taxing).




TaxProf, The IRS Scandal, Day 845. Today the Prof links to Robert Wood’s Court Orders IRS To Reveal White House Requests About Taxpayers. The White House will surely appeal, waiting until the last minute to file for it, and drag the process out as long as possible. This is good news, though: “Finally, though, the court ruled that the IRS cannot hide behind a law used to shield the very misconduct it was enacted to prohibit.”

The stonewalling doesn’t mean there was misconduct. By stonewalling everything, the administration makes it hard to unearth misdeeds; as an added bonus, when a painful and drawn out process finally forces the administration to yeild innocent information, it makes the investigators look silly while sapping their resources.


Jeremy Scott, Trump’s Lack of Specifics on Tax Is Hardly Unique (Tax Analysts Blog). ” There are many reasons to dislike Trump and his ill-defined platform (which seems mostly based on nativism and reality-show-style demagoguery), but his lack of policy details at this stage of the game is hardly unique.”


News from the Profession. AICPA Lays the Smackdown on Dear Abby (Greg Kyte, Going Concern)



Tax Roundup, 8/31/15: Low income taxes don’t mean high excise taxes. And: planning for President Bernie.

Monday, August 31st, 2015 by Joe Kristan


I would expect states without an income tax to have high excise taxes, but it’s not so. Liz Malm, How Much Does Your State Collect in Excise Taxes Per Capita? (Tax Policy Blog).


Minnesota, with ridiculously high tax rates, also is the third biggest excise tax collector. South Dakota, with no income tax, is only the 26th highest.


TaxProf, The IRS Scandal, Day 842843844. There is a lot about the current administration’s approach to transparency. An administration that promised to be “the most transparent in history” resists every information request, even when there is no obvious reason to do so. It is cynical and effective. If after a long fight they finally turn over information that shows no evidence of wrongdoing, they make the investigators look silly. And when wrongdoing does come out, the administration says it’s “old news” — because they did their best to make it so.

More on this from John Hinderaker, Obama’s Stonewall Tactics: A Case Study (Powerline Blog), on the ongoing effort to determine whether administration officials illegally accessed the tax information of the Koch brothers for political reasons.

Related: Russ Fox, Sergeant Schultz to the Rescue!




Peter Reilly ponders Tax Planning For The Risk Of A Bernie Sanders Win. He makes the Vermont socialist sound moderate with this:

The funniest thing about the tax proposals is that this candidate who is as far left as you can go without getting into Green Party territory is promoting a  tax package that would pretty much bring us to the second half of the Reagan administration  when it comes to income and estate tax.

So Bernie Sanders favors a maximum 28% individual rate? No evidence for this in the article. In fact, his campaign, like most of them, offers little specific in the way of tax policy. What it does offer is awful — taxing offshore earnings of U.S. companies, confiscatory estate tax rates, and a financial transactions tax that will only drive trading overseas while making markets less efficient and more costly. I started tax practice in the second half of the Reagan administration, and I’m pretty sure that a Sanders administration tax system would not dramatically lower individual tax rates.

That said, Peter’s article does offer some sound tax planning tips, many of which are worth considering regardless of who wins the White House next year.


Jason Dinesen, Due Date of Iowa Partnership and Corporate Tax Returns Unchanged. The Department of Revenue says these will be Due April 30, despite federal due date changes.

Kay Bell, Cadillac tax repeal on Senate’s post-recess to-do list.

Keith Fogg, Time Stands Still for Snow – Expanding Section 7503 on the Last Day to Timely Complete a Task. The issue in this case is interesting: whether a Tax Court petition is considered late if it is delivered late because the Tax Court is closed for weather. It also reinforces the importance of buying the correct delivery method when using an authorized private delivery service.




Robert Wood, Trump As Tax Code King And Hedge Fund Slayer. He’s a floor wax. He’s a dessert topping. He’s whatever you hallucinate him to be.

TaxGrrrl, Ho, Ho, Oh No! Santa’s Office Threatened With Closure Due To Tax Woes. Well, I never understood his business model.

Jack Townsend, Interest and Penalties Issues At Sentencing


Renu Zaretsky, Thirty Days Hath September: Stay tuned for tax plans to remember? The TaxVox headline wrapup talks about taxes in the election campaign and Brazil abandoning a planned financial transaction tax. Brazil is a leftist country with a soul-sucking business tax system. Even they realize a transaction tax is unwise, making them more sensible than Bernie Sanders.