Posts Tagged ‘Tom Sands’

Tax Roundup, 1/15/2013: Branstad not leading on income tax reform. And: Cage Fight! CPAs vs. RTRPs!

Tuesday, January 15th, 2013 by Joe Kristan
Via Wikipedia

Via Wikipedia

Might the Iowa legislature lead on income tax reform?  If it’s going to happen, they will have to, as Governor Branstad only wants to talk about property taxes this year.  O. Kay Henderson reports:

During a recent interview with Radio Iowa, Governor Branstad made it clear he is focused on cutting property taxes.

“Sure, I’d like to see the income tax reduced, too, but in terms of my priority — and I’ve been working on this for a couple of years and we’re really trying to perfect it — our focus is going to be on significant property tax reduction and replacement,” Branstad said a month ago.

Some legislators are more ambitious, reports Henderson:

Representative Tom Sands, a Republican from Wapello, is the chairman of the House Ways and Means Committee that writes tax policy.

“I think there is some pressure building from Iowans to cut both income taxes — look at some reform as well as a cut to the individual income tax,” Sands says. “We’re hearing from corporations as well, on the income side.”

I doubt anything good will happen with income taxes this session.  The Iowa Chamber Alliance even wants to to go the wrong way, pushing more tax credits for the well-connected.  No organization seems to be pushing for the rest of us.  But The Quick and Dirty Iowa Tax Reform Plan is ready to go if the legislature needs some ideas.

 

Russ Fox, Estimated Tax Payment Deadline Is January 15th.  For 1040 and 1041 filers. Kay Bell has more.

 

Nick Kasprak, Monday Map: State Gasoline Tax Rates, 2013 (Tax Policy Blog):

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Robert D. Flach, CHOOSING A TAX PREPARER.  I suppose I should be upset by this:

Contrary to the popular “urban tax myth” perpetuated by uninformed journalists, just because a person has the initials “CPA” after his/her name does not mean that he/she knows his arse from a hole in the ground when it comes to preparing 1040s.

But I’m not.  It’s true, if roughly stated.

Robert goes astray in his next paragraph:

Only those individuals who possess the “EA” (Enrolled Agent) or “RTRP” (Registered Tax Return Preparer) designations have demonstrated competency in 1040 preparation by taking an IRS-sponsored test, and are required to remain current in 1040 law by taking a minimum number of hours in continuing professional education (CPE) in federal income taxes each year.

False.  The RTRP test is open book.  It demonstrates that somebody can read.  It’s a literacy test, an empty exercise to justify the IRS power grab over the preparer industry.  It’s different with Enrolled Agents, like Jason Dinesen and Russ Fox,  who have to meet much stricter standards than RTRPs.    One of the underreported nasty consequences of the RTRP designation is that it damages the EA brand.

I also disagree with the implied conclusion that CPAs who prepare returns are less competent as a group than EAs or RTRPs.  Some are incompetent, no doubt, but many tax CPAs are highly-skilled.    I think the competency curve for non EA preparers vs. CPAs would look something like this:

http://www.rothcpa.com/misc/20110118-2.png

Substitute “RTRP” for “unenrolled preparer.”

There are excellent non-CPAs and there are incompetent CPAs.   Still, I think as a group the CPAs who do tax for a living will tend to be more competent.

My rule of thumb for choosing a preparer: buy as much preparer as you need, but no more.  Many taxpayers who only have wage and investment income and routine itemized deductions will do fine with an RTRP (and would have done fine with an unenrolled preparer without the new IRS preparer regulations).  If you have business income, a multistate return, or a complicated financial life, your needs go up; you need a high-end RTRP like Robert, or an EA, or a CPA. As your business gets bigger, you are more likely to want to hire a good CPA.  And when Robert gets to the bottom line of his post, I think he agrees.

But be careful which one you hire: Lawyer, Accountant Implicated in Estate Fraud Case (Brian Mahany)

 

Trish McIntire, Preparer Conflict of Interest

 

Jack Townsend, The Big Boys Get Better Treatment in Our Tax System Than Do Minnows.

I speak again on the basic relative unfairness of the treatment of many, if not most, in the IRS’s offshore voluntary disclosure initiatives.

They have to shoot the jaywalkers so they can slap the real offenders on the wrist.

 

You pay more in taxes this year than last year.  How do you like your tax cut? At Tax.com, Jeremy Scott tries to convince us that we just got a tax cut:

 The income tax rates, the estate tax, and the alternative minimum tax  patch are all here to stay.  And, according to the Tax Policy Center’s (TPC’s) preliminary study on distributional effects, the act essentially provided a big tax cut for almost everyone.

Funny, everybody’s taking home less.  How does that work? My emphasis:

Using the Congressional Budget Office’s old baseline (which assumed that  the Bush tax cuts would expire for everyone) and looking at the effects of the tax cut in 2018, the TPC says that the average taxpayer will receive a $2,335 tax cut under ATRA

I see.  Because the tax increase could have been bigger, we got a tax cut.  I’ll see if I can cut staff accountant pay and convince them they got a raise because we didn’t cut more.

Janet Novack, Obama Vows Republicans Won’t Collect ‘Ransom’ For Raising Debt Limit.  No, they’ll ultimately let the President continue the insane spending pace.

 

Paul Neiffer, We Wonder What the Investment Income Tax Form Will Look Like

Avoiding Excess Credit Card Interest Should Not Be A Taxable Event.  But it can be, if you get the bank to forgive unpaid interest that would be non-deductible.

IRS Releases Additional Inflation-Adjusted Figures for 2013

Robert Goulder, Taxes & Corruption: Another Greek Tragedy (Tax.com)

TaxGrrrl, Ask the taxgirl: IRS Delayed Tax Filing Season Applies To Everybody

Martin Sullivan, IRS: Women At Work (Tax.com):

According to the latest IRS Data Book  60,623 of the agency’s 104,402 employees in 2011 were women. That 66 percent is far more than the 44-percent figure for government’s total civilian labor force and the 47-percent figure for the overall US civilian workforce.

 

Ben Harris, Should Louisiana Dump Its Income Tax for a Bigger Sales Tax? (TaxVox)

News you can use.  FYI: Attorneys Think Auditors’ Legal Confirmation Letters Are a Giant Waste of Time (Going Concern)

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Tax Roundup, 12/13/2012: Tax preparer deadline looms. Also: why some companies are happy with a bad tax law.

Thursday, December 13th, 2012 by Joe Kristan

As Year-End Deadline Looms, Independent Tax Preparers Continue Fight Against IRS Power Grab. (Institute for Justice).  IJ has prepared a two-minute video about their suit to stop the inane and futile preparer regulation program.

I wish IJ luck; if you are looking to make a last-minute charitable contribution, IJ is certainly a worthy cause.

 

TaxProf,   Fleischer: Not All Companies Would Welcome a Lower Tax Rate

Reaching an agreement to cut the corporate tax rate should be easy. Major figures from both political parties have expressed interest in reducing the tax from 35%, which is the highest rate among the country’s main trading partners. Corporations would generally benefit from paying less tax and having more cash to reinvest in new projects or pay in dividends to shareholders.

The 35% rate is more of a “sticker price” than a reflection of the average tax burden. Corporations can pay a lower rate by lobbying for special deductions and credits, employing aggressive transfer pricing strategies to shift profits offshore and structuring operations to minimize how much they pay in taxes in the United States.

You can see the same dynamic in Iowa, with its highest-in-the-nation corporation tax rate.  That’s just fine for the lucky and the well-lobbied, some of whom actually make money from the Iowa tax law through refundable tax credits, especially the Research Credit.  For a little guy without connections or lobbyists, it’s a great reason to set up in South Dakota.

Speaking of which:   Key Iowa senator questions tax-incentive programs (Quad City Times):

An influential state senator said lawmakers will have to take a harder look at the state’s tax-credit programs this session, including the economic development credits used to entice companies to build in Iowa.

Sen. Joe Bolkcom, D-Iowa City, who was reappointed to chair the Senate Appropriations Committee on Wednesday, held a Statehouse hearing on tax-credit programs Wednesday. He has been a vocal critic of the how the state uses incentive programs to compete against other states for economic development.

That will be a lot easier if it is accompanied by a drastic lowering of rates — or better yet, a repeal of the Iowa corporation income tax.  Yet there’s always a voice for breaks for those with connections — in this case Tom Sands (R-Wapello), Chairman of the Iowa House Appropriations Committee. From the story:

Sands said the people in Lee County and Woodbury County — for the most part — aren’t complaining about the incentives offered to the companies and are looking forward to the jobs they’ll bring.

That’s why it’s hard to get rid of these things.  Politicians point to the jobs they “create” by bribing companies to do what they would probably do anyway.  They don’t have to call press conferences for all of the anonymous businesses that never come to Iowa, or that never get started to begin with, because of Iowa’s expensive and byzantine tax law.

There is a better way:  The Tax Update’s Quick and Dirty Iowa Tax Reform Plan

 

Fiscal Cliff Notes:

Roberton Williams,  Paying 2013 Dividends in 2012 May Save on Taxes but Not for Everyone:

For instance, that extra dividend income could throw some shareholders onto the alternative minimum tax. Some retirees could see more of their Social Security benefits subject to income tax. Some families with children will pay more tax as their child credits phase out.

While some investors would be hurt by the accelerated dividend payouts, many low- and middle-income taxpayers could benefit.

Christopher Bergin,  More Cliffs (Tax.com)

Cara Griffith,  Despite Revenue Growth, States Must Plan for the Fiscal Cliff (Tax.com)

TaxGrrrl,  Senate Can’t Nail Down Budget, Does Have Time For Fruitcake

Patrick Temple-West,   Corporate taxes on table in cliff talks, and more.  I don’t get a good feeling about these guys trying to rewrite the corporate tax in two weeks.

Paul Neiffer,   How Much Would A Gas Tax Raise?

Anthony Nitti,   While The Fiscal Cliff Keeps You Distracted, The AMT Will Rob You Blind

 

Russ Fox,  Ref Fouls Out:  “As always, it’s far, far easier to just pay the tax you owe…but that thought rarely occurs to the Bozo mind.”

Joseph Henchman,  Study: Toll Collection Cheaper Than Conventionally Thought (Tax Policy Blog).  If electronic tolling is cheap enough to run, it could supplement or replace gas taxes.

Tax Trials:  Tax Question May Determine Supreme Court’s Position on Same-Sex Marriage

Missouri Tax Guy,   Some Easy & Effective Ways to manage Personal Finance

Trish McIntire,  Saving Electronic Records:

Download and save your electronic pay statement to your computer every payday. Save a copy of the invoice anytime you order online. The same goes for all credit card and bank statements that aren’t paper. Once you have a system started, you can start duplicating the paper documents. A home scanner can be inexpensive and a lifesaver.

Once you’ve created a tax documentation system that works for you, don’t forget to back it up and to safely get rid of the paper documents.

If it’s worth backing up, it’s worth backing up twice.

Jack Townsend,   Reasonable Doubt – Explaining It to a Jury.  Best not to have to.

Kay Bell,   French actor Gerard Depardieu moves to Belgian tax haven.  Belgium has a top income tax rate of 50%.  When that becomes a “tax haven,” that tells you how bad France is.

Ungentlemanly:  Fourth Circuit Upholds Conviction of Gentlemen’s Club Owner (Peter Reilly)

Russ Fox,  Ref Fouls Out.  A group of rec-league refs set up an identity theft-based tax fraud scheme.  It worked great, until suddenly it didn’t.    Russ wisely points out:

All told, the four individuals involved in the scheme must make restitution totaling $200,000.  As always, it’s far, far easier to just pay the tax you owe…but that thought rarely occurs to the Bozo mind.

These guys ran their scheme for 12 years before it blew up.  The longer you do something like this, the closer your chance of getting caught approaches 100%.

 

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Mike, me and Film Credits

Friday, September 25th, 2009 by Joe Kristan

So many questions, so little time.
I shared a podium this week with Mike Gronstal, the Iowa Senate Majority Leader, at the Iowa Bankers Association convention. Also on the panel were Jeff Robinson from the state Legislative Services agency and Republican State Rep. Tom Sands of Muscatine.
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Me, Jeff Robinson, Mike Gronstal, Tom Sands
It was a strange experience. The panel was supposed to talk about the deductibility of federal taxes on Iowa returns, a hot topic in the last legislative session. The guy from Legislative Services talked too long, so I hurried through my piece (short version: federeral deductibility is bad, but higher effective rates are worse). Senator Gronstal pooh-poohed the notion that increasing rates would be bad for Iowa businesses, and Rep. Sands defended deductibility.
Weirdly, the two never even mentioned film credits, the $363 million elephant in the room. It was like being at a funeral without anybody noticing the dead guy. When the time for questions started – and there was only time for one question, I had to say something, so I stole the question time. I asked (approximately): “We spend over $400 million on economic development tax credits. The Iowa corporation tax will net about $186 million this year. Wouldn’t Iowa be better off, and millions of dollars ahead, repealing the corporate tax and the credits together?”
I might as well have asked if Spiderman could beat up Batman in a fair fight. Sen. Gronstal acknowledged that the corporation tax is a minor component of state finances, but he likes how the film credit brings in an industry we never have had in Iowa. If I had time for a followup, I would have suggested we subsidize banana farms too, becauses we’ve never had them. I don’t even remember what Rep. Sands had to say. Neither seem to really get the idea of why “no corporation income tax” might be better for the Iowa economy than targeted tax credits.
I got the distinct impression that the legislature doesn’t yet realize how bad the film credit makes them look. I think Iowans are really unhappy with the looting of the state treasury by the film companies and with the film credit system that invited them in. They don’t seem worried about it yet. Either they are misjudging how this scandal is going over, or I am. Judging from what it seems to be doing to Governor Culver’s poll ratings, they should be worried.

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