Posts Tagged ‘Wasendorf’

Tax Roundup, 2/1/2013: What’s Iowa’s 2012 tax law? And you thought 50 years was bad? How about 351?

Friday, February 1st, 2013 by Joe Kristan

20130117-1Iowa legislature goes 0-for-January.  The Iowa General Assembly has been completed the first three weeks of its 2013 session without settling what Iowa’s tax law is for last year.  The legislation needed to update Iowa’s 2012 tax law for the retroactive federal changes enacted in the Fiscal Cliff bill at the beginning of this year hasn’t cleared either house of the legislature.  The Senate Ways and Means Committee at least moved its bill (SF 106) out of committee Wednesday, while House Ways and Means hasn’t even done that much with its bill (HF 110)

Many Iowans were affected by the retroactive changes, including educators and people who made energy-saving home improvements.  Almost all businesses are affected by the Federal extension of $500,000 Section 179 expensing of depreciable property for 2012.  Yet these taxpayers can’t complete their Iowa 2012 tax returns until the legislature decides what parts of the federal changes to accept.

The silliest part: we pretty much know what the bill will look like.  It’s almost certain that it will adopt federal Section 179 rules and the other “extender” rules, without adopting federal “bonus depreciation.”  That means there’s no reason to dawdle.  But dawdle they do.

50 years for Wasendorf.  The Wasll Street Journal reports:

Russell Wasendorf Sr., was sentenced to the maximum 50 years in jail after admitting to orchestrating a fraud at his futures brokerage and misleading regulators for almost 20 years.

Mr. Wasendorf, 64 years old, pleaded guilty last September to the fraud at Peregrine Financial Group Inc. that federal prosecutors said had cost clients $215.5 million and masked a business that never was profitable.  He also was ordered to pay the full amount of missing funds in restitution.

Mr. Wasendorf got away with it by forging paper bank statements for the regulators and auditors.  The scam blew up when Peregrine was forced to move to electronic account verification.  Sadly, the chances of full restitution being paid to his victims are less than the chances he will walk out of prison at the end of his sentence.

 

But it could be worse.  Florida woman faces potential 351 years in prison for tax fraud (CPA Practice Advisor)

 

Kay Bell, Congressman wants answers from IRS regarding tax preparer registration

 

TaxGrrrl,  Wrong Side Of An Audit: Memo Argues IRS Inflated Numbers, Exaggerated Figures.  My favorite part (my emphasis):

The IRS also claimed that it would suffer unspecified “costs associated with . . . finding other positions for the 167 Service employees currently working on the return preparer project.” [Institute for Justice attorney Dan] Alban noted, in response, that just over two weeks ago, the IRS complained about understaffing, since “[o]verall full-time staffing has declined by more than 8% over the last two years, and staffing for key enforcement occupations fell nearly 6% in the past year.” You’d think that the IRS would welcome, not rue, the idea of having nearly 200 employees available for other tasks – like answering the phone (at current staff levels, they only do that about 70% of the time).

The preparer regulation program has always seemed a frivolous use of IRS resources when tax complexity and identity-theft fraud are making the tax law almost impossible to administer.

That time already?  It’s Time for Independent Certification for Tax Preparers (Robert D. Flach in Accounting Today)




David Cay Johnston, Tax To Defend a Tax Haven (Tax.com)

Ben Harris,  Deficits After ATRA (TaxVox)

Patrick Temple-West,  U.S. is preparing more tax-evasion cases, and more.  Bad news for Swiss bank account holders who haven’t come forward.



Jim Maule,  Another “Flat Tax” Proposal That Falls Flat.  The professor slays more straw men.

I hate extra apostrophes.  Careful Tax Update readers know that I have a terrible habit of inserting extra apostrophes, creating an unintended possessive.  I know the rules, but my fingers betray me when typing.  Fortunately I can easily change a blog post to turn “it’s” to “its.”  Not everybody is so fortunate.

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Unless, of course, Steven owns “Steven’s” building.
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Tax Roundup, 1/7/2013: Economist says Iowa’s problem is income tax, not property tax. And: thieves don’t report all of their income?

Monday, January 7th, 2013 by Joe Kristan

O. Kay Henderson reports that maybe the Branstad focus on property taxes is misplaced in Economist: Iowa income taxes not competitive:

A Midwestern economist says Iowa policymakers should focus on cutting income taxes rather than property taxes. Ernie Goss, an economist at Creighton University in Omaha, says Iowa’s income tax rates are fifth highest in the country.

“In terms of what Iowa needs to look at, in my judgement, given what’s going on in Kansas, what’s about to go on in Nebraska — Iowa’s neighbors — you need to look at income taxes, in terms of being more competitive,” Goss says.

Iowa property taxes are too high, but income taxes  matter more for many taxpayers.  While property taxes are a big deal to companies that own real estate, like a manufacturer or a big insurance company, income taxes can mean a lot more to a start-up or a tech company.  Fortunately the Tax Update’s Quick and Dirty Iowa Tax Reform Plan is ready to go!

 

Making a dent in the deficit!  A chart shows how much the tax increases on “The Rich” will reduce the $1.2 trillion federal deficit (new taxes in green, deficit in red)

Fiscal cliff taxes vs deficit

Either the government spends a lot less, or taxes go up a lot for everyone. The rich guy isn’t buying

 

The IRS isn’t buying, either.   Tax Analysts reports Better IRS Enforcement Could Net $1 Billion More a Year, Says GAO ($link).   $1 billion is less than 1/1000 of the deficit.  They won’t audit their way to solvency.

 

Breaking tax news from the Eisenhower administration:

Amity Shlaes,   Think Obama’s Tax Hikes Are Low Compared With Rates Of The 1950s? Think Again.  (Via Instapundit)

Andrew Biggs,  Were taxes really higher in the 1950s?

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It’s Monday.  Do you know if your payroll taxes have been remitted?  Another sad story of a payroll service provider who decided he needed taxes withheld from his clients more than the IRS did.  Digtriad.com reports that Arthur Weiss of Winston-Salem, North Carolina is going away for 15 years:

Case documents show Weiss operated professional employer organizations (PEOs), which provided payroll-related services to client companies. For his client companies, Weiss agreed to pay the employees, withhold and remit federal and state taxes, prepare and file the federal and state employment tax returns  and provide workers compensation insurance (WCI).

Weiss did pay the employees and withhold the employment taxes, but he failed to remit the employment taxes, keeping them for his personal use.

PEOs that file taxes under their own names and ID numbers have a hidden danger: their clients can’t verify that the IRS has received their payments via the Electronic Federal Tax Payment System (EFTPS).  Employers can use EFTPS to monitor payments when they use a payroll service that reports employee taxes under the employer’s own name and Tax ID number.  This makes it necessary for taxpayers to investigate PEO-type providers very carefully before trusting them with payroll services.  If your payroll taxes are stolen by your payroll provider, the IRS will come after you to collect.  Not many employers can afford to pay payroll taxes twice.

Russ Fox has more.

 

Few thieves report their income honestly.  From WHOTV.com:

Disgraced former Peregrine Financial CEO Russell Wasendorf Sr. is in jail awaiting sentencing for embezzling over $200-million in customer funds, fraud, and lying to federal regulators.

Now the state says he may have also cheated on his taxes.

Records show the [Iowa Department of Revenue] filed an assessment in November against Russ  and Connie seeking $14.1-million in unpaid taxes and penalties to Iowa.

Good luck collecting anything.

 

Fiscal Cliff Notes:

TaxProf,  WSJ: The Stealth Tax Hike — Why the New $450,000 Income Threshold Is a Political Fiction

Elected representatives at work.  Tim Carney: Baucus rewards ex-staffers with tax breaks for their clients:

Tax breaks for Hollywood, NASCAR, windmills, algae and multinational corporations ended up in the “fiscal cliff” bill thanks to President Obama, according to Senate Republican sources. But they were spawned by a web of lobbyists, donors and staffers surrounding Democratic Sen. Max Baucus of Montana.

Baucus’ Finance Committee passed a bill in August extending 50 expiring deductions and credits for favored industries. At Obama’s insistence, the Baucus bill was cut and pasted word for word into the cliff legislation.

But it’s all for our own good, I’m sure.

William Perez, President Signs the American Taxpayer Relief Act into Law

The ‘fiscal cliff’ bill and Iowa entrepreneursMy new post at IowaBiz.com, the Des Moines Business Record blog for entrepreneurs.

Paul Neiffer,  Up to Ten Capital Gains Tax Rates for 2013!

Janet Novack,  The Forbes Guide To The Fiscal Cliff Tax Deal

TaxGrrrl,  10 Things You Should Know About The Fiscal Cliff Deal

 

Kay Bell,  Ravens, Redskins and tax revenue

Brian Strahle,  Minimize Restructuring Costs with State Tax Due Diligence

Peter Reilly,  War Tax Resisters – Don’t Call Them Frivolous.

Patrick Temple-West,  Inquiry into tech giants’ tax strategies nears end, and more (Tax Break)

Kaye A. Thomas,  American Taxpayer Relief Act

Tax Trials,  Senate Confirms Two New Tax Court Judges

Robert D. Flach ponders whether he should rename his Buzz roundup of tax news.  Don’t do it, Robert!

 

Make up your minds!

Tax Analysts, New Congress’s Partisanship, Inexperience May Hurt Chances for Tax Reform 

The Hill:  Tax reform more likely after ‘fiscal cliff’ agreement, say House Republicans. (Via Instapundit)

 

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Tax Roundup, September 18, 2012: 47% frenzy! And New Jersey tries to rival Iowa.

Tuesday, September 18th, 2012 by Joe Kristan

Do 47% of taxpayers really pay no federal taxes? Close enough for government work.

Mitt Romney’s “Secret Tape” has stirred up talk about the “47%.”   Let’s look at a newly-issued table from the center-left Tax Policy Center for 2012 figures:

 

The lowest 20% would be at zero without counting their share of the corporate tax burden, borne in the form of lost investment income and wages.  The next 20% get to positive territory on the basis of payroll taxes, but I think Robert D. Flach gets this right:

In my opinion, the FICA tax is not a tax.  It is a contribution to a retirement plan (Social Security) and a payment for future health insurance (Medicare). 
Payments of Social Security “tax” allow the individual to collect a pension at retirement, and payments of Medicare “tax” allow the individual to receive extensive health care coverage at a very cheap rate (less than $100 per month) at age 65.

Of course, both Medicare and Social Security are actuarially insolvent, so these taxes don’t even cover their own costs.  The shortfall falls on those who actually pay a positive income tax.  So while this table doesn’t tell us exactly where the cut-off is, 47% can’t be too far off, with the only debate being over counting the payroll taxes that are already inadequate for their purposes.

Focusing only on income taxes also ignores benefits.  When welfare benefits and subsidies are taken into account, the 47% number Mitt Romney used seems low.   2004 figures from The Heritage Foundation showed that the bottom 60% of households receive more in benefis than they pay in taxes.   I will post more current figures if I find them, but I suspect that this “dependency ratio” has only worsened since 2004.

So while Mitt Romney’s “secret tape” statements might be politically awkward, it’s only because they are pretty much true.  The cost of government has shifted more and more to “the rich.”

This can’t continue forever because the math doesn’t work.  The rich guy isn’t buying because he can’t.

Related coverage:

Janet Novack, Memo To Mitt Romney: The 47% Pay Taxes Too

Kay Bell,  47 percent don’t pay federal income taxes, but do hand over payroll, other taxes

Tax Policy Center, Who doesn’t pay federal taxes

Robert D. Flach,  THE AMERICAN TAX NON-PAYER

Ramesh Ponnuri, Makers and Takers

Reason.com:  Will Americans Think They’re Romney’s “47 Percent”? Or One of the “53 Percent”?Romney’s 47 Percent Line Is a Common GOP Trope, and it’s Wrong*Secret Romney Tape Means We Can Finally Stop Talking About Obama’s Failed Foreign & Domestic Policy!Forget Romney: Should We Be Concerned That 49 Percent of Households Get Government Money?

Update: the TaxProf rounds up the frenzy.


CRS: Nothing Affects Economic Growth (William McBride):

A study by the Congressional Research Service (CRS) is getting a lot of attention, because it finds that tax cuts are not associated with economic growth.   Although less reported, the study also finds nothing is associated with economic growth, including all the standard factors such as education, population growth, and government spending. 

So close the schools, stop spending money, and raise taxes to 100%!

 

He probably wants to get his sentence out of the way so he can get on with his life.  When he’s 109.  Wasendorf kept in jail after court appearance  (Des Moines Register).  The 64 year-old, who has pleaded guilty to looting the Peregrine Financial Group, can expect to serve at least 90 percent of his expected 50-year sentence.

 

David Brunori,  Cowardly New Jersey Cronyism:

The not so courageous New Jersey’s Economic Development Authority approved a $40 million tax credit for Honeywell International to keep it from moving its headquarters to Pennsylvania.  Then the authority not so courageously approved a $40 million Grow New Jersey tax credit for Dotcom Distribution, an e-commerce warehousing and fulfillment company, so that it can build a facility and not move to Pennsylvania. Then the authority not so courageously approved a $50 million tax credit for developers to build a supermarket in Camden!  Where is the outrage? Where are the political leaders who have the courage to say that this is the worst kind of economic policy?

Not in Iowa, for sure.

 

TaxProf,  CRS: Corporate Tax Rate Could Drop to 29.4% in Revenue-Neutral Tax Reform.   I think the current  35% rate could go significantly lower than 29.5% if they really tried, without lowering revenues.  Of course, they won’t really try.

 

Russ Fox,  Is the IRS Time-Barred From Imposing a Penalty on a Frivolous Amended Return?  Short answer: no.

Jack Townsend,  Credit Suisse Continues Ratting on It Own and Expects Deposit Outflow.  Yes, that will do it.

Paul Neiffer,  Mistakes to Avoid in Lifetime Giving – Final

Timing is everything: capital investments for the last quarter of 2012. My new post at IowaBiz.com, the Des Moines Business Record blog for entrepreneurs.

News you can use:  The Tax Court Doesn’t Believe That You’re Not a Person (Anthony Nitti)

 

 

 

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