Posts Tagged ‘Will Freeland’

Tax Roundup, September 17, 2012: non-1040 extension deadline day! Also: Iowa bluffed?

Monday, September 17th, 2012 by Joe Kristan

20080410-1ibiz.jpgToday is the extended due date for 2011 calendar year 1041, 1065, 1120 and 1120-S returns.

For pass-throughs, the penalty for late filing is $195 per K-1, per day.  E-file if you can; otherwise go with Certified Mail, Return Receipt Requested or an approved private delivery service.



Was Iowa bidding against itself for fertilizer plant?  From the Quad City Times:

When Iowa Gov. Terry Branstad pulled the trigger on the biggest incentive package in state history, he said he did so, in part, because of competition from neighboring Illinois.

But economic development officials with Illinois Gov. Pat Quinn’s administration say they wanted no part of the project after they got wind of Iowa’s “excessive” bid for the $1.4 billion fertilizer plant for which the Branstad administration offered up to $240 million in state and local tax breaks.

“To be clear — the state never put an offer on the table. We recognized early on that Iowa’s bid was excessive, and we were not going to engage in a bidding war,” Marcelyn Love, communications manager for the Illinois Department of Commerce and Economic Opportunity, wrote in an email.

True, the word of Illinois politicians isn’t the most reliable thing in the world.  Then again, neither is the word of people telling you why you should give them money:

Tina Hoffman, spokeswoman for the Iowa Economic Development Authority, said the authority relied on the word of Orascom corporate officials and news reports to determine that Illinois was making a play for the fertilizer plant.

“Company officials indicated the tax savings would be in excess of $130 million. That information was validated when an Illinois senator was quoted in several news outlets about the bill he was sponsoring to assist a project like the one Orascom was proposing,” she wrote in an email.

All right, then!   If you say so, here’s your $107 million!

Subsidizing the fertilizer plant would be unwise even if there were a bidding war  with Illinois.  It’s never wise to take money from your taxpayers to lure and subsidize people.  As I’ve pointed out, it’s like taking your wife’s purse to the bar to buy drinks for the girls.  It’s neither effective or impressive.   But apparently there was no real bidding war, and Orascom was going to come to Iowa anyway;  if so, they just bluffed Iowa into helping pay for it — and maybe also into indirectly helping finance their purchase of The Weitz Company, Iowa’s oldest and largest construction contractor.   Not exactly a shining moment for Iowa tax policy.


Holman Jenkins of the Wall Street Journal rips wealthy whistleblower Birkenfeld, Grassley:

[Birkenfeld] told Bloomberg: “I’m the most famous whistleblower in the history of the world. It’s a question of doing the right thing, and that’s what I did.”

What would have been right was not participating in tax evasion in the first place.

The author of the whistleblower law that so benefited Mr. Birkenfeld was none other than prairie populist Sen. Charles Grassley, who issued a statement this week: “An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid.”

This is the same Mr. Grassley last heard calling for AIG workers “to resign or commit suicide” during the 2009 retention bonus furor, which also saw the New York Attorney General implicitly threatening to publish the names of innocent AIG employees who didn’t “voluntarily” relinquish money they were legally entitled to.

This is the same Mr. Grassley whom Wikipedia baldly states “repeatedly introduced measures that increase the level of double taxation on American citizens living abroad, including retroactive tax hikes.”

Need we add that Mr. Grassley’s longtime aide, who actually drafted the whistleblower law, now represents Mr. Birkenfeld and stands to collect an interesting percentage of the award Mr. Grassley so obligingly applauds?

Senator Grassley has been a major play in tax policy for nearly three decades.   The state of the tax law today isn’t exactly a tribute to the senator.


I’m Barack Obama, and I approve this press release.  From a Department of Justice Press Release:

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.

OK, if it’s President Obama’s task force, it’s also President Obama’s IRS that is letting $5 billion annually go out the door to identity  thieves.  It’s President Obama’s IRS that is tormenting innocent Americans for paperwork foot-faults so that President Obama’s Justice Department can slap internationa tax criminals on the wrist.  Glad that’s cleared up.

Mike Ralston,  Iowa View: Time to stop a tax hike on all Americans’ dividends:

The current federal tax rates on investment income — dividends and long-term capital gains — expire at the end of this year. Today, the top tax rates for both dividends and capital gains are capped at 15 percent. But if Congress and the president don’t act to extend them, the top tax rate on capital gains will rise to 20 percent and the top tax rate on dividends will rise to 39.6 percent.

It’s worse than that.   With the Obamacare tax hikes set to kick in, the actual top rate for dividends will hit 43.4% — nearly tripling the old top rate of 15%.


Kay Bell,  Sequestration’s blunt and indiscriminate budget cuts.  Also, tiny.  From Veronique de Rugy:


Jim Maule,  When Tax Ignorance Meets Political Ignorance.  Yet while the good professor (rightly) bemoans voter ignorance, he insists that it is wise to put more decisions in the hands of the polticians elected by the same ignorant voters.

Paul Neiffer,  Mistakes to Avoid in Lifetime Giving – Part 2

Jack Townsend,  Whistleblowers for Swiss Banks Appear to be Live and Well

Jason Dinesen,  RTRPs, CPAs, Attorneys and Grandfathering

True:   1099s From Insurance Companies – Don’t Ignore But Don’t Take At Face Value Either (Peter Reilly)

Patrick Temple-West,  Financially troubled parts of Europe consider taxing church properties, and more

TaxGrrrl,  Are Federal Taxes Driving Smokers to Stop Lighting Up?

Will Freeland,  NYC Ban on Large Sodas Plagued by Same Problems as Soda Excise Taxes (Tax Policy Blog)

Howard Gleckman,  What Mitt Romney Didn’t Learn from Ronald Reagan (TaxVox)

Anthony Nitti: For A Rich Guy Who’s Only Been Divorced Once, R Kelly Certainly Doesn’t Seem to Have A Lot of Cash

Good question:  WHAT TO DO?  (Robert D. Flach)

News you can use:  If You Get a Tax Refund That’s Someone Else’s, Don’t Spend the Money  (Russ Fox)



Tax Roundup, 9/6/2012: Fertilizer and Iowa tax policy; supporting the arts; mythbusting!

Thursday, September 6th, 2012 by Joe Kristan

So Iowa approved the additional tribute to close the deal on the new Lee County fertilizer plant.  With all of the fertilizer generated by politicians explaining the benefits of the project, it’s hard to see how the new plant can withstand the competition.  My favorite line from the Governor’s press release — purchased with up to $107 million in tax credits, plus local breaks bringing the package to $240 million — was this:

To successfully compete for this project, Iowa had to offer incentives to overcome its current corporate income tax structure.  The governor used this project as an example of why tax reform is necessary.

So the out-of-state company gets $240 million now, while it’s jam tomorrow for everybody already here trying to “overcome” our current corporate income tax structure every day — the same taxpayers who will pay to fertilize the Lee County plant.  Some of us have been pointing out how uncompetitive Iowa’s income tax system is for a long time, but the Governor has done nothing about it in the first two years of his term  — and not much in his four previous terms, either.  But let some out-of-state company present an opportunity for a big ribbon-cutting, and $107 million in tax credits suddenly materialize.  To put that in perspective, Iowa’s entire corporate income tax receipts for fiscal 2011 came to $394.5 million.  Priorities, I guess.

Related: The Tax Update’s Quick and Dirty Iowa Tax Reform Plan, Tax Roundup, 9/5/2012: Laying it on thick for the fertilizer plant. and Celebrate corporate welfare, I mean incentives!

Update, 9/8:  Fertilizer plant deal involves largest tax incentive package in Iowa history (Bleeding Heartland)


IRS provides relief for tax filings affected by Hurricane Isaac: (IR-2012-70)

 The tax relief postpones various tax filing and payment deadlines that occurred on or after Aug. 26. As a result, affected individuals and businesses will have until Jan. 11, 2013 to file these returns and pay any taxes due. This includes corporations and businesses that previously obtained an extension until Sept. 17, 2012, to file their 2011 returns and individuals and businesses that received a similar extension until Oct. 15. It also includes the estimated tax payment for the third quarter of 2012, normally due Sept. 17.

It covers 10 Louisiana parishes and four Mississippi counties.


12-year sentence for payroll tax scamming.  From a Department of Justice press release:

Bruce Gregory Harrison III of Greensboro, N.C., was sentenced today to 144 months in prison following his December 2011 conviction for payroll tax fraud and other crimes, announced Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division; Ripley Rand, U.S. Attorney for the Middle District of North Carolina; and Richard Weber, Chief of Internal Revenue Service (IRS) – Criminal Investigation.

 Harrison was convicted on a 63-count indictment alleging large-scale payroll tax fraud and failure to file individual income tax returns. The evidence at trial and at sentencing showed that Harrison failed to pay over more than $40 million dollars in federal taxes withheld from the pay of his thousands of employees in the years 2004-2006 and 2009.

If you withhold payroll taxes and fail to remit them, the consequences can be a lot worse than late-payment penalties.


TaxGrrrl, Eleven Tax Myths Debunked.  The $600 free-money myth, among others.

Did Someone Really Steal Mitt Romney’s Tax Returns From PwC’s Franklin, Tennessee Office?  (Going Concern, Did Someone Swipe Mitt Romney’s Unpublished Tax Returns from PwC? (Anthony Nitti),and Anonymous hackers claim to have Romney’s tax returns, demand $1 million ransom to keep them private (Kay Bell).  I suppose it could happen, but that’s not the way to bet.

Will Freeland,  To Eliminate Income Tax Fraud, Simplify the Tax Code (Tax Policy Blog)

Peter Reilly hosts a guest post, In Defense Of Special Tax Treatment For Clergy

Dan Meyer,  NAEA: Bring AMT and Taxes on Social Security Received into the 21st Century.   It wouldn’t bother me if we left those taxes behind in the 20th Century, actually.

News you can use: Flying 5,400 Miles and Finding an $882,000 Shortfall in a Prizepool Isn’t a Good Thing (Russ Fox)

Support the arts! NY Court to Decide If Lap Dance Is Tax-Exempt Art (TaxProf)


Tax Roundup, 8/28/12: Feds cost Wells Fargo employee his job; an energy drink falls short.

Tuesday, August 28th, 2012 by Joe Kristan

(Because of Federal rules) Wells Fargo fires Des Moines worker for laundromat incident 49 years ago.  The Des Moines Register leads today with a sad story of a guy fired by Wells Fargo who was convicted of trying to use a cardboard slug in a laundromat in 1963.  Naturally it has spurred outrage against Wells Fargo in the comment section.  But the real story begins in the fifth paragraph:

Big banks have been firing low-level employees like Eggers since the issuance of new federal banking employment guidelines in May 2011 and new mortgage employment guidelines in February.
The tougher standards are meant to weed out executives and mid-level bank employees guilty of transactional crimes, like identity fraud or mortgage fraud, but they are being applied across-the-board thanks to $1-million-a day fines for noncompliance.

So when you have enormous fines for foot-fault violations, you naturally are going to err on the side of of strictly following the rules.  If it’s a choice between a low-level employee and a $1 million-per-day fine (plus up to five years in prison for the person employing him), that’s no choice at all.  Goodbye, employee.  Thanks, FDIC.  Ironically, the rules come from Section 710 of Public Law 109-351, hilariously-named the “Financial Services Regulatory Relief Act of 2006.”  So thank you too, Congress.


Why we’re broke (Econbrowser):


The implication of a simple look at the numbers should be obvious to any objective observer.  To return to long-run fiscal solvency, the U.S. will need both tax increases, defense cuts and significant entitlement reform.

And remember, the rich guy isn’t buying.


IRS tax credits make tempting fraud targets  (MarketWatch):

Whenever there are refundable tax credits on the table, criminals try to tap into them. Some of them even do it right from jail.
Refundable tax credits are moneys released to taxpayers over and above any taxes they might have paid through withholding or estimated tax payments. Some common tax credits include the Earned Income Credit, the Additional Child Tax Credit, part of the American Opportunity Credit, and the 2011 Adoption Credit.

Just remember that they aren’t “IRS” tax credits.  It’s Congress that enacts them, and it’s Congress that makes the multi-billion dollar industry of stealing from you via tax credit fraud possible in the first place.


Jack Townsend, Seventh Circuit Compels Production of Offshore Bank Under the Required Records Doctrine:

The Seventh Circuit today decided In Re: Special February 2011-1 Grand Jury Subpoena Dated September 12, 2011, here, holding that the required records doctrine requires a taxpayer asserting a Fifth Amendment privilege to produce the documents required to be maintained under the FBAR statute.



Will Freeland,  Romney: Increasing Taxes, or Removing Tax Subsidies? (Tax Policy Blog)

Anthony Nitti, Tax Court Tackles “Dealer Versus Investor” Issue; Flood v. Commisioner, Examined

Is there an energy drink that gives you the zip you need to file a correct tax return?   Las Vegas sports drink czar sentenced for evading taxes (Las Vegas Sun)

Roger McEowen, IRS Says Vineyard Elgible To Be Expensed In Year Placed In Service

Now at TaxGrrrl: Guest Post: Online Sales Tax

William Perez,  Americans Living Abroad Filing Late Tax Returns

Robert D. Flach fondly remembers his first time.   I have no idea, myself.  Does that make me a bad person?


Tax Roundup, 8/9/12: IRS scolded for carelessly issuing ID numbers. Plus stupid vs. criminal, hitting bottom and digging.

Thursday, August 9th, 2012 by Joe Kristan

IRS Commissioner Douglas Shulman

IRS discouraged fraud detection in ID program (Huffington Post):

The Internal Revenue Service has been looking the other way instead of rooting out fraud when people apply for taxpayer identification numbers, Treasury Department investigators said Wednesday, exposing a shortfall with both financial and national security implications.

A member of Congress who sits on the House’s tax-writing committee responded to the report by calling on IRS Commissioner Douglas Shulman to resign, claiming the IRS is helping illegal immigrants defraud the government.

He wants the Commissioner to resign for that?  Considering that the Commissioner oversees the mailing of $5 billion annually to thieves, that he has terrorized and financially ruined otherwise law abiding Americans for footfault paperwork violations, and that he has, with questionable authority, imposed an expensive and futile preparer regulation scheme, this new outrage needs to take a number.

More coverage from the Wall Street Journal, Linda Beale and the TaxProf; read the TIGTA report here and a TIGTA press release here.

Instapundit on state film tax credits:

REPEAL THE HOLLYWOOD TAX CUTS!  (LOCAL EDITION):  La. film tax break program needs limits, budget group says.   “Louisiana has spent more than $1 billion over the past decade to attract movie productions to the state, but hasn’t received much in return besides the prestige of hosting big-name Hollywood actors, according to a report released today.  The left-leaning Louisiana Budget Project suggests state lawmakers should put tighter limits on the generous film tax break program, lessening the credits offered and capping the amount of money it can cost the state each year.”  Actually, it should be abolished, as should similar programs in almost every other state.  And this is something state Tea Party groups might even make common cause with lefties on.

A sadder-but-wiser Iowa repealed its version of the film credits this year after it collapsed in scandal and disgrace and the State Auditor reported that 80% of the credits were issued improperly or lacked documentation.  But in defense of the program, two filmmakers are moving to Iowa for up to ten years thanks to the film tax credit!

It’s time to register for this year’s ISU Center for Agricultural law and Taxation Farm Tax Schools!  I will be on the Day 1 panel at all eight sessions, starting with the October 29 school in Mason City.

We’re vacationing in the mountains this year, kids. The Plot Thickens for Swiss Bankers Involved In U.S. Evasion: (Jack Townsend):

Swiss bankers whose names were delivered to the United States in April as part of the crackdown on US tax evaders face the risk of arrest while travelling in some European countries, not just on US soil.

Well, the Alps are nice…

Stupidity is no crime: Were Reid’s Remarks About Romney’s Returns Unlawful? (TaxGrrrl)

We’re just getting started!  Have We Reached the Nadir of Tax Policy Discourse? (Going Concern)

“Bipartisan” means they’re ganging up on us: Wind energy tax breaks are bipartisan in Iowa (Ames Tribune)

Kay Bell has a new Carnival of Taxes for State Fair week!

Tax Policy Blog:  Misunderstanding Tax Reform: The Case of The Olympic Tax Elimination Act