August 31, 2005
Washington Post Disses PowerPoint
Interesting article in yesterday's Washington Post: PowerPoint: Killer App?. Here is a sample of the antiPowerPoint theme:
Like all forms of torture, though, PowerPoint degrades its practitioners as well as its victims. Yes, boring slides were plentiful in the pre-PowerPoint era -- remember the overhead projector? Yes, it can help the intellectually inept organize their thoughts. But the seductive availability of PowerPoint and the built-in drive to reduce all subjects to a series of short-handed bullet points eliminates nuances and enables, even encourages, the absence of serious thinking. Really, why think at all when the auto-content wizard can do it for you?
The article uses two great examples of "the soul-sapping essence of PowerPoint":
- One parody: PowerPoint Presentation of Abraham Lincoln's Gettysburg Address.
- One (unfortunately) real: PowerPoint Presentation of the Columbia Space Shuttle, presented to NASA senior managers in January 2003 while Columbia was in the air and NASA was weighing the risk posed by tile damage on the shuttle wings
In our recent article, Taking Back the Law School Classroom: Using Technology to Foster Active Student Learning, 54 J. Legal Educ. 551 (2004), Rafael Gely and I chronicle the criticism of the use of PowerPoint in law school teaching by Ian Ayres, Doug Leslie, and others. We explain how we use old and new technologies to increase student engagement in the law school classroom (previously blogged here).
Ventry Named to Visiting Tax Position at UCLA
Dennis J. Ventry, Jr., has been appointed a Visiting Scholar in Taxation at UCLA for the 2005-06 academic year. He will pursue academic research and writing in the field of taxation and present his research at the UCLA Tax Policy and Public Finance Colloquium. From the UCLA press release:
"I am delighted that Dennis will be joining our Program in Business Law and Policy," said Program Faculty Director Professor Steven Bank. "He is one of the most talented up-and-coming scholars in taxation generally and tax history in particular. Dennis' presence at UCLA this year will only serve to enrich our already vibrant community of scholars in this area."
Will New Orleans Law Schools Shut Down for Fall Semester?
I believe that Tulane will announce a plan for making up the lost time within the next week. This may involve classes on weekends and during what would otherwise be vacations, but we will of course do everything possible to minimize dislocation for our students. I believe that the worst-case scenario is that we will lose the entire semester, but given the communications difficulties, I have no definitive information at this moment.
Our sister Clinical Law Prof Blog, edited by Tulane faculty members Pam Metzger and Katherine Maris Mattes, is serving as an information hub for Tulane and other affected law schools. For more on the devastation at Tulane University, see today's Chronicle of Higher Education here.
Cincinnati Seeks Director of Center for Corporate Law
The University of Cincinnati College of Law invites applications and nominations for the position of Director of the Center for Corporate Law beginning August 2006. The Center for Corporate Law is an endowed institute within the College devoted to research, teaching, and education in the fields of corporate law, securities law, and related areas. Cincinnati is seeking applicants who would join our tenure-track or tenured faculty and assume administrative direction of the Center. Suitably qualified candidates will also be considered for an endowed professorship. (See our AALS ad here.)
IRS Grants Tax Relief for Hurricane Katrina Victims
The IRS yesterday announced (IR-2005-84) special relief for taxpayers in the Presidential Disaster Areas struck by Hurricane Katrina. These taxpayers generally will have until Oct. 31, 2005, to file tax returns and submit tax payments. The IRS will abate interest and any late filing or late payment penalties that would otherwise apply. This relief includes the Sept. 15 due date for estimated taxes and for calendar-year corporate returns with automatic extensions.
- For a list of the affected Louisiana, Mississippi, and Alabama areas, see here.
- For a fuller description of the tax relief available to residents in Presidentially Declared Disaster Areas, see here.
Dellinger on Circular 230: Reason for Paranoia
Kip Dellinger (Kallman & Co., Los Angeles) has published OPR, Circ. 230, & Teleconference Outline: Reason for Paranoia?, 108 Tax Notes 1053 (Aug. 29, 2005), also available on the Tax Analysts web site as Doc 2005-17119, 2005 TNT 167-34. Here is part of the Conclusion:
The foregoing analysis is an attempt to take that common- sense approach to the written advice standards. Clearly, the interpretation given in the above analysis is open to debate and discussion. But, importantly, it is a debate that has not occurred in the broader practitioner community and deserves to be undertaken for the benefit of both the everyday tax practitioner community that does not operate in the stratosphere of U.S. tax practice or with IRS personnel that interact with that type of practitioner. We can hope that, for the thousands of "smaller" practitioners and their clients, some broad relief will be forthcoming. Surely it was not the intention of either Treasury or the IRS to expose those practitioners to discipline for technical violations of, or perhaps worse, to expose them to malpractice claims for failure to adhere to highly technical interpretations of, the Circular 230 written advice standards. Simply saying "use common sense" may not be anywhere near enough to prevent harm, and they deserve more.
August 30, 2005
Expanded Trove of KPMG Settlement Documents
Documents from the KPMG tax shelter settlement:
- U.S. District Court for the Southern District of New York:
- Press Conference Transcript (AG Gonzales, Commissioner Everson & U.S. Attorney Kelly)
District Court Upholds Check-the-Box Regs, Rejects Polsky's Position in Law Review Article
Kudos to Gregg D. Polsky (Minnesota), whose article on the validity of the check-the-box regulations (Can Treasury Overrule the Supreme Court?, 84 B.U. L.Rev. 185 (2004)) was the focal point in a recent district court case.
We previously blogged (here and here) the U.S. District Court for the Western District of Kentucky's decision upholding the validity of the check-the-box regs (§ 301.7701-1 through 3). Littriello v. United States, No. 3:04CV-143-H (W.D. KY, May 18, 2005).
The taxpayer subsequently moved to reconsider the court's opinion on the ground that "the check-the-box regulations are invalid under Morrissey v. Commissioner, 296 U.S. 344 (1935), as argued in a Law Review article by Professor Gregg D. Polsky of the University of Minnesota Law School. Polsky, “Can Treasury Overrule the Supreme Court?”, 84 BU.L.Rev. 185 (2004)."
The district court, in a recent order (No. 3:04CV-143-H (W.D. KY, Aug. 3, 2005)) denied the taxpayer's motion:
When confronted with the question posed by Professor Polsky’s title, one would naturally answer, “No.” However, that is not precisely the question before this Court nor can it be fairly said that Treasury’s check-the-box regulations have such an effect. The Court has reviewed Morrissey in its proper context and does not find that it requires invalidating the checkthe- box regulations.
Certainly, the check-the-box regulations are the subject of academic and theoretical questioning. Professor Polsky has proposed that the Treasury has gone too far in adoptingregulations concerning corporations and other associations. However, it is a theory only that the check-the-box regulations violate the Internal Revenue Code definitions because those definitions were made in effect permanent by Morrissey. The Court does not believe that Morrissey forever incorporated in all future Treasury regulations a particular definition of an “association.” In support of this conclusion, the Court would adopt the discussion contained in the response of the United States.
Tax Provisions of Iraq Constitution
Here are the tax provisions of the new Constitution of Iraq:
- Article 19, 9th: Laws do not apply retroactively unless otherwise has been legislated, and this exception does not include laws of taxes and duties.
- Article 28:
- 1st - Taxes and fees shall not be imposed, amended, collected or eliminated except by law.
- 2nd - Low-income people should be exempted from taxes in a way that guarantees maintaining the minimum level necessary for a living. This shall be regulated by law.
Law Professor Blogs Network Launches New Family Law Blog
We are delighted to announce the launch of Family Law Prof Blog, edited by by Barbara Glesner Fines (Missouri-Kansas City), Robert E. Oliphant (William Mitchell), and Nancy Ver Steegh (William Mitchell), as part of our Law Professor Blogs Network. Like the other blogs in our network, Family Law Prof Blog combines combine both (1) permanent resources and links, and (2) daily news and information. Our editors are leading scholars and teachers who are committed to providing the web destination for law professors in their fields.
Family Law Prof Blog joins our growing stable of law professor blogs:
- AntitrustProf Blog (Shubha Ghosh (SUNY Buffalo))
- Business Law Prof Blog (Dale Oesterle (Ohio State))
- Chinese Law Prof Blog (Donald Clarke (George Washington))
- Clinical Law Prof Blog (Pamela Metzger (Tulane) & Katherine Maris Mattes (Tulane))
- ContractsProf Blog (Carol Chomsky (Minnesota) & Frank Snyder (Texas-Wesleyan))
- Corporate Compliance Prof Blog (Paul E. McGreal (South Texas))
- CrimProf Blog (Jack Chin (Arizona) & Mark Godsey (Cincinnati))
- Elder Law Prof (Kim Dayton (William Mitchell))
- Environmental Law Prof Blog (Susan Smith (Willamette)
- Health Law Prof Blog (Betsy Malloy (Cincinnati) & Tom Mayo (SMU))
- LaborProf Blog (Rafael Gely (Cincinnati))
- Law Librarian Blog (Joe Hodnicki (Cincinnati))
- Law School Academic Support Blog (Dennis Tonsing (Roger WIlliams))
- Leiter's Law School Reports (Brian Leiter (Texas))
- Media Law Prof Blog (Cristina Corcos (LSU))
- Sentencing Law & Policy Blog (Douglas Berman (Ohio State))
- TaxProf Blog (Paul Caron (Cincinnati))
- Tech Law Prof Blog (Jonathan Ezor (Touro) & Michelle Zakarin (Touro))
- White Collar Crime Prof Blog (Peter Henning (Wayne State) & Ellen Podgor (Georgia State))
- Wills, Trusts & Estates Prof Blog (Gerry Beyer (Texas Tech))
LexisNexis is supporting our effort to expand the network into other areas of law. Please email us if you would be interested in finding out more about starting a blog as part of our network.
Kennedy on Pension Funding Reform
Kathryn J. Kennedy (John Marshall) has published Pension Funding Reform: It's Time to Get the Rules Right (Part 2), 108 Tax Notes 1039 (Aug. 29, 2005), also available on the Tax Analysts web site as Doc 2005-17379, 2005 TNT 167-37. Here is the abstract:
The author addresses the issue of pension funding reforms in two separate articles. Part one previously explained ERISA's historical funding and plan termination rules in order to show why plan sponsors, such as United Airlines' parent UAL Corporation, were permitted to create and maintain unfunded pension plans and why the Pension Benefit Guaranty Corporation assumed some of those unfunded liabilities. Part two discusses the need for reform in ERISA's funding and plan termination rules. This article will examine various legislative and industry proposals and the policy considerations relevant to such proposals, in light of historical mistakes that should be avoided with subsequent legislation. The article's conclusion makes recommendations in support of preserving the defined benefit system.
Yet More Tax Songs for Your iPod
Doran Joins Virginia Faculty
Virgina has issued a press release announcing the arrival of new Tax Prof Michael Doran, who will be featured shortly as part of our Saturday spotlight series profiling new Tax Profs. The first two installments featured:
August 29, 2005
KPMG Settlement Documents
Here are the documents from the KPMG settlement released by the U.S. District Court for the Southern District of New York:
- Deferred Prosecution Agreement (28 pages)
- Information (34 pages)
- Statement of Facts (10 pages)
- Proposed Order (3 pages)
- Indictment (45 pages)
Wayne State Looking to Hire Tax Prof
Wayne State University Law School seeks experienced and entry-level candidates for several law teaching positions. Areas of particular interest include taxation. For more informataion or to apply for the position, please contact Professor Gregory H. Fox, Chair, Faculty Appointments Committee either via email (email@example.com) or snail mail (Wayne State University Law School, 471 West Palmer, Detroit, MI 48202).
The Tax Implications of Sodomy?
As one who often taps scholarly tax veins in unlikely places (e.g., The Federal Tax Implications of Bush v. Gore, 79 Wash. U. L.Q. 749 (2001)), I was struck by this week's issue of SmartCLIP (the wonderful service provided by the University of Washington Law Library in emailing to subscribers each week a customized list of recently published law review articles in designated subject areas (along with links to the articles on Lexis and Westlaw)). The editors placed Readings of Lawrence v. Texas,11 Widener L. Rev. i-ii, 171-329 (2005), in the "Federal Income Tax" subject category. I eagerly scanned the list of articles in the symposium, ready to tip my hat to whoever found the tax issues lurking in the Court's opinion finding a constitutional right to sodomy. But none of the articles contain a whit of tax discussion. So how did the symposium end up classified in the tax category? My guess: someone mistook "Texas" for "Taxes"!
More on Presidential Lawyers
Following up on Friday's post pointing out that more U.S. Presidents dropped out of law school (6) than graduated (5): Milbarge at Begging the Question correctly points out that a number of presidents (e,g, Lincoln, J.Q. Adams) became lawyers before the advent of the modern American law school.
Thoughts and Prayers for Louisiana Tax Faculty
- Louisiana State:
- Loyola-New Orleans:
Swain & Hellerstein on Recent Amendments to the Streamlined Sales and Use Tax Agreement
John A. Swain (Arizona) & Walter Hellerstein (Georgia) have published Recent Amendments to the Streamlined Sales and Use Tax Agreement: Third-Party Reimbursements and Bundled Transactions, 37 State Tax Notes 659 (Aug. 29, 2005), also available on the Tax Analysts web site as Doc 2005-17234, 2005 STT 166-1. The article examines the treatment of coupons, rebates, and similar third-party payments, and bundled transactions, in the Streamlined Sales and Use Tax Agreement.
IRS to Increase Business Mileage Rate?
Since the IRS set 2005's mileage rate for the business use of a car at 40.5 cents per mile back on November 17, 2004 (Rev. Proc. 2004-64), the retail price of a gallon of gasoline (regular grade) has increased 36% -- from $1.91 to today's $2.61. Because the cost of gas is such a large component of the per mile cost of operating a car, the Tax Guru speculates that the IRS will soon increase the 2005 mileage rate, perhaps by October 1.
Frank on Progressive Consumption Taxation as a Remedy for the U.S. Savings Shortfall
Robert H. Frank (Cornell University, The Johnson School) has published Progressive Consumption Taxation as a Remedy for the U.S. Savings Shortfall, The Economists Voice, Vol. 2: No. 3, Article 2 (Aug. 26, 2005) (Berkeley Electronic Press). Here is the abstract:
The American savings rate, always low by international standards, has fallen sharply in recent decades. In this essay, I argue that a large part of the savings shortfall results from pressures to keep pace with community spending standards, pressures that have been exacerbated by rising income and wealth inequality. The progressive consumption tax is one possible remedy.
- Top 5 Tax Paper Downloads
- Employee Pricing Benefits Tax Man
- Tax Court Allows S Corp Shareholder to Pump Up Basis with Year-End Loan Repaid 3 Days Later
- Tax Analysts: VanDenburgh & Harmelink on Individual Accountability for Tax Shelters
August 28, 2005
Top 5 Tax Paper Downloads
2. Ranking Law Schools: Using SSRN to Measure Scholarly Performance, by Bernard S. Black (Texas) & Paul L. Caron (Cincinnati) [blogged here]
5. The Superiority of an Ideal Consumption Tax over an Ideal Income Tax, by Joseph Bankman (Stanford) & David A. Weisbach (Chicago) [blogged here]
Employee Pricing Benefits Tax Man
Interesting article in Friday's Washington Post: Auto Rebates Don't Help Tax Bite D.C. and Many States Base Their Take on Full Vehicle Price:
The recent explosion of cash-back coupons and rebates on the sale of cars and trucks has done great things for automobile manufacturers, for consumers, and -- largely unnoticed -- for many state tax collectors. Edmunds.com, which tracks the automobile industry, put total cash rebates last year at more than $28 billion nationwide. And lots of states are collecting sales or excise taxes on that amount, even though it is ultimately returned to customers.
Tax Court Allows S Corp Shareholder to Pump Up Basis with Year-End Loan Repaid 3 Days Later
S corporation shareholders have to have "basis" in either their stock or in loans they have personally made (not just guaranteed!) in their S corporation. The Tax Court [on Thursday] allowed S corporation owners to take losses for year-end loans made to their corporation, even though they took the money back out only a few days later.
The two shareholders each advanced $800k to the S Corp on 12/31/99. which was repaid three days later and followed by additional $1.1m loans on 12/29/00. The S Corp had losses of $883k in 1999 and $828k in 2000, which the Tax Court held were fully supported by the shareholder loans. Joe cautions us not to read too much into the Tax Court's decision:
Notwithstanding the taxpayer victory here, we normally wouldn't advise taxpayers to put large amounts of cash into an S corporation right before year-end to take losses and then withdraw it right after year-end. The IRS has other tools they could use to attack such short loans, and those attacks might succeed under other circumstances. They might attack the loan as lacking substance, for example, especially if the check didn't clear before it was repaid; this would be a twist on the Oren case. Or they might say the taxpayer wasn't really "at-risk" for the loan over such a short period, especially if the lent funds were borrowed from a related party as in Van Wyk. If a deduction for the losses is important, you should at least let the money you put into your S corporation at year-end cool down for a few weeks before you take it back out. Even if you win ultimately, it's easier to win if the IRS isn't tempted to come after you in the first place. While the taxpayers won [on Thursday], they'd have been happier if they didn't have to go to Tax Court at all.
VanDenburgh & Harmelink on Individual Accountability for Tax Shelters
William M. VanDenburgh (University of New Orleans, College of Business Administration) & Philip J. Harmelink (University of New Orleans, College of Business Administration) have published Individual Accountability for Tax Shelters, 108 Tax Notes 933 (Aug. 22, 2005), also available on the Tax Analysts web site as Doc 2005-16326, 2005 TNT 162-31. Here is the Conclusion:
If the accounting firms are unwilling or unable to hold those individuals who signed returns employing son-of-BOSS tax shelters and similar schemes responsible, then regulators should hold them accountable (for example, as part of any settlement agreements, deferred prosecution agreements, or by IRS enforcement action). Importantly, the recommendation is equally applicable for lawyers and investment bankers. Those who signed the abusive tax shelter returns need to be held individually accountable. Preferably, accountability will occur from internal forces, rather than through external forces.
Already the accounting profession has seen honorable persons step forth. For example, the original source of PwC's BOSS greatly facilitated the government's response that led to son-of-BOSS agreements. There are tax professionals who refused to participate in those schemes. Now is the time for the accounting profession to dismiss those who did not act honorably. This is one of many steps needed to restore the public's confidence in the profession.
Importantly, employing that individual accountability strategy would allow the remaining members of those firms to make a clean and highly public break from past practices and to avoid the fate of Arthur Andersen, Enron, WorldCom, and so on. Unless accountants admit and effectively handle their past mistakes of pushing the bounds of acceptable behavior, the public will not have the confidence in the accounting profession that is so critical in our society.
August 27, 2005
Tax Prof Profile, New Professor Edition: Andrea Monroe
This week's Tax Prof Spotlight continues our series of profiles of folks starting their careers this fall as tax professors at American law schools. We hope the profiles will help introduce our newest colleagues to the tax community. [If you are, or know of someone who is, a beginning tax professor, please email me here to be included in the series.]
Andrea Monroe (Temple)
- B.A., Michigan
- J.D., Michigan
- LL.M. (Taxation), NYU
My story is pretty boring and, apart from the baseball fixation, not too unique (and that may not even be particularly unique). For most of my life, I planned on becoming the Commissioner of Major League Baseball. Plan B, if necessary (which, of course, it wouldn't be), was always teaching high school history.
So how did I get from that to here? The short answer is incredible people and the silly idea that law school would lead me to the Commissioner's office.
But I'll try a longer answer . . . I spent my undergraduate and law school years in Ann Arbor at the University of Michigan. I had the great fortune of having three dynamic tax professors during law school, and it was impossible not to get hooked on tax when taught with such care and exuberance. In particular, I had the pleasure of taking several classes with Doug Kahn who was the most wonderful teacher I had in all my years in school. Despite compelling me to speak more that I would have preferred, his passion for the subject and for teaching was infectious.
After law school, I practiced at Winston & Strawn in Chicago. Again, I was incredibly fortunate and found myself working with a great group of lawyers. My practice involved leasing and structured finance transactions. As luck would have it, these deals allowed me to combine one of my other great fixations -- airplanes -- with my work life. After two and a half years in Chicago, I moved to New York. I continued to work for Winston, and I enrolled in NYU's LL.M. program. Juggling a full-time job and life as a full-time student was quite a challenge, but the year was fabulous. For good or bad, the leasing world was experiencing a period of dramatic change and each deal presented novel and challenging predicaments for the tax lawyers. Every day was a learning experience, and it was a delight to work in such an environment.
I stayed in New York for two more years. My practice remained challenging, but some of the luster wore off. With the support and encouragement of my friends, family and one extraordinarily patient tax professor in Ann Arbor, I decided to quit my job, move back home to Wisconsin and pursue a job teaching tax.
I've spent the last two years at Northwestern University as a Visiting Assistant Professor, and the experience was invaluable. I learned so much about teaching, scholarship, reality television and life in a university from my colleagues in Chicago.
And now, I'm in Philadelphia at Temple University. Once again, I find myself feeling incredibly fortunate to have an opportunity to spend my days with such a vibrant group of people (who don't seem -- at least not yet -- to view "tax" as a dirty word). I'll be teaching Partnership Tax and Basic Tax this year, and I couldn't be more delighted. In terms of research, my primary interests center around tax shelters and the world of partnerships, which seems to confuse and intrigue me more and more as the days pass.
Otherwise, I tend to be a bit of a baseball nut. I'm an obsessive fantasy baseball player, and I try to catch as many games as I can in as many places as I can. I grew up outside of Milwaukee, which effectively means that my life as a baseball fan has been somewhat of a curse. However, I'm hopeful that my new hometown will provide me with my first October baseball experience since 1982.
Each Saturday, TaxProf Blog shines the spotlight on one of the 700+ tax professors in America's law schools. We hope to help bring the many individual stories of scholarly achievements, teaching innovations, public service, and career moves within the tax professorate to the attention of the broader tax community. Please email me suggestions for future Tax Prof Profiles. For prior Tax Prof Profiles, see here.
KPMG Settles with Government for $456m
The New York Times reports today that KPMG has reached a settlement with the government:
KPMG, the accounting firm under investigation for selling questionable tax shelters, will pay $456 million and accept an outside monitor of its operations under terms of an agreement with prosecutors that heads off an indictment of the firm, people briefed on the deal said yesterday.
For other press coverage, see:
(Thanks to Allison Christians (Wisconsin) for the tip.)
Congressional Staffers Continue AMT Debate
John Buckley (Chief Tax Counsel, House Ways and Means Committee Democratic Staff) resumes his AMT debate with Mark Prater (Chief Tax Counsel, Senate Finance Committee Republican Staff) and Christy Mistr (Tax Counsel, Senate Finance Committee Republican Staff) in AMT Explosion Causation: A Surrebuttal, 108 Tax Notes 958 (Aug. 22, 2005), also available on the Tax Analysts web site as Doc 2005-17414, 2005 TNT 162-37.
For prior coverage of this debate, see:
- Mark Prater & Christy Mistr, Untangling the Web of the Individual AMT: A Priority of the Highest Order, 108 Tax Notes 699 (Aug. 8, 2005)
- John Buckley, The Tangled Web of the Individual AMT, 108 Tax Notes 347 (July 18, 2005)
The Fair Tax Book
In the face of the outlandish American tax burden, talk-radio firebrand Neal Boortz and Congressman John Linder are leading the charge to phase out our current, unfair system and enact the FairTax Plan, replacing the federal income tax and withholding system with a simple 23% retail sales tax on new goods and services. This dramatic revision of the current system, which would eliminate the reviled IRS, has already caught fire in the American heartland, with more than six hundred thousand taxpayers signing on in support of the plan.
As Boortz and Linder reveal in this first book on the FairTax, this radical but eminently sensible plan would end the annual national nightmare of filing income tax returns, while at the same time enlarging the federal tax base by collecting sales tax from every retail consumer in the country. The FairTax, they argue, would transform the fearsome bureaucracy of the IRS into a more transparent, accountable, and equitable tax collection system. Among other benefits, it will:
- Make America's tax code truly voluntary, without reducing revenue
- Replace today's indecipherable tax code with one simple sales tax
- Protect lower-income Americans by covering the tax on basic necessities
- Eliminate billions of dollars in embedded taxes we don't even know we're paying
- Bring offshore corporate dollars back into the U.S. economy
For blogosphere commentary, see:
GAO Releases Report on State and Federal Government Debt Collection Through Reciprocal Agreements
The Government Accountability Office has released Financial Management: State and Federal Governments Are Not Taking Action to Collect Unpaid Debt through Reciprocal Agreements (GAO-05-697R) (19 pages). Here is the abstract:
The Debt Collection Improvement Act of 1996 (DCIA) allows the federal government to collect state debts from federal payments to contractors. However, before a state can participate in this program, DCIA requires that the state enter into a reciprocal agreement with the Department of the Treasury that would require the state to collect unpaid federal debt from state payments if Treasury collects unpaid state debt from federal payments. In February 2004, we reported that Department of Defense (DOD) and Internal Revenue Service (IRS) records showed that over 27,000 DOD contractors had nearly $3 billion in unpaid federal taxes as of September 30, 2002. In a hearing before the Senate Permanent Subcommittee on Investigations on February 12, 2004, we noted that many of those contractors also had unpaid state taxes. Based on the issues raised in that hearing, Congress requested that we determine (1) the extent to which Financial Management Service (FMS) and the states have entered into reciprocal agreements to collect unpaid state and federal debt from their payments to contractors and (2) whether additional opportunities may exist for the Department of the Treasury's FMS to collect unpaid state taxes from federal contractors. This report responds to that request by providing information on (1) the extent of states' participation in FMS's debt collection levy and offset programs, (2) the potential benefits to states of participation in those programs, and (3) the level of state participation in, and the benefits states derive from, the collection of state tax debt from federal income tax refunds.
Neither the federal government nor the states have as yet pursued potentially beneficial reciprocal agreements authorizing the collection of debt from nontax payments, including payments to contractors. According to FMS officials, no state has expressed interest in such agreements, and FMS has not actively pursued avenues to encourage state participation. None of the officials in the 17 states we contacted said they were aware of the reciprocal agreement provision in DCIA, and all expressed interest in pursuing this debt collection opportunity. Our comparison of FMS disbursements with the database of state income tax debt that FMS maintains found that thousands of federal contractors paid through FMS have unpaid state tax debt. In fiscal year 2004, FMS disbursed a total of about $1.8 billion to over 4,600 federal contractors that had approximately $17 million in state tax debt owed primarily by individuals. According to our analysis, if states had participated in FMS's program that collects debt from nontax payments to contractors, they could have collected over half of the outstanding state tax debt from these federal contractors in fiscal year 2004. On the other hand, the experiences of the federal government and the states in working together to collect unpaid tax debt from state and federal tax refunds demonstrate that reciprocal agreements to collect tax debt from nontax payments, including contractor payments, have had a significant impact. The federal government and most of the states with income taxes collect tax debt on behalf of one another through the offset of income tax refunds, which has resulted in millions of dollars in collections. In fiscal year 2004, although most states submit only personal income tax debt and not business income tax debt to FMS for collection, FMS still collected over $217 million on behalf of various states through offsets of federal income tax refunds to pay state income tax debt. Conversely, IRS received over $77 million from states' levy of state income tax refunds to pay delinquent federal taxes.
August 26, 2005
Presidential Law School Dropouts
According to this site, more U.S. Presidents dropped out of law school (6) than graduated (5):
Presidents who dropped out of law school:
- Lyndon Johnson (Georgetown)
- William McKinley (Albany)
- Franklin Roosevelt (Columbia)
- Theodore Roosevelt (Columbia)
- Harry Truman (Missouri-Kansas City)
- Woodrow Wilson (Virginia)
Presidents who graduated from law school:
- Bill Clinton (Yale)
- Gerald Ford (Yale)
- Rutherford Hayes (Harvard)
- Richard Nixon (Duke)
- William Howard Taft (Cincinnati)
Wills and Grace, Part 2
A follow up on Tuesday's post (Wills and Grace) about the tax consequences of the lawyer who prepared wills for members of his church congregation in return for a $50 contribution to the church: Christopher R. Hoyt (Missouri-Kansas City) notes that the case also raises a serious ethics issue:
In 2004, the Maryland State Bar Association held that it was an ethics violation for an attorney to prepare free wills for fellow church members. Maryland State Bar Association, Committee on Ethics, Ethics Docket 2003-08; "Ethics Opinion: Attorney Can't Draft Free Will for Donors," Charitable Gift Planning News, Vol. 22, No. 2, Feb. 2004, at. 1. Here is a summary from Jerry McCoy in Washington D.C.:
A lawyer who served as volunteer chairman of his church's "Legacy Committee" proposed to prepare estate planning documents free of charge for parishioners who did not have an attorney. The Maryland State Bar Association Committee on Ethics held that the attorney's participation in this proposed program would pose an irreconcilable conflict of interest - one that could not be resolved by a simple waiver.
Of course, this sent shock waives through the non-profit community. Many attorneys work with non-profits. What are the ethics of encouraging charitable gifts to the non-profit, even among the "converted." Does charging $65 solve it? Probably not. On the other hand, very few people are aware of the opinion. A lot of this sort of stuff must be going on.
The tax issues raised by the Wills and Grace case are discussed in detail by Jim Maule (Villanova) here.
Houston Business and Tax Law Journal Is Seeking Tax Articles
The Houston Business and Tax Law Journal is seeking articles for its 2005-2006 volumes:
The HBTLJ is a scholarly journal operated, published and distributed by students of the Law Center. As the name indicates, the HBTLJ covers a diverse range of legal issues related to business and tax. Some, but not all, of these issues include mergers and acquisitions, labor and employment, intellectual property, banking, finance, securities, antitrust, and tax.
Students founded the HBTLJ in 2000 to take advantage of advances in technology and communication. The HBTLJ is comprised of both an electronic-Internet version (the e-Journal) and printed editions. In 2005-2006 the journal will publish two printed editions.
The e-Journal is structured as a "rolling publication." Articles are continuously published online as they become available through various sources. The major advantage of a rolling publication is the rapid rate at which an article or comment can be accessed for viewing. The rate of publication is only limited by the time it takes to ensure that all articles are reviewed and edited properly. Individuals with access to the Internet may view these articles as they please without any charges. Subscription to the e-Journal is for e-mail updates only. This free access ensures that the ideas, thoughts and theories in those articles reach as many readers as possible.
The bi-annual printed editions consist of all the articles and comments by scholars and professionals published by the HBTLJ on the e-Journal. The printed edition is available to paid subscribers.
Smith on The Tax Exclusion for Adopting Children with Special Needs
Sheldon R. Smith (Utah Valley State College, School of Business ) has published The Tax Exclusion for Adopting Children with Special Needs, 108 Tax Notes 925 (Aug. 22, 2005), also available on the Tax Analysts web site as Doc 2005-16325, 2005 TNT 162-35. Here is the abstract:
In this article, he discusses the evolution of the exclusion for employer adoption assistance payments for adoptions of children with special needs. He shows how some ambiguities in the law were partially clarified but how confusion still exists. He gives suggestions for further clarification of the law.
Johnson Publishes Righteous Anger at the Wicked StatesCalvin Johnson (Texas) has published Righteous Anger at the Wicked States: The Meaning of the Founders' Constitution (Cambridge University Press, 2005):
Righteous Anger at the Wicked States is a history of why the U.S. Constitution was adopted. The most pressing need was to allow the federal government to tax to pay off the debts of the common defense. The Constitution went far beyond the immediate fiscal needs to create a supreme, three-part national government. The book argues that the Founders' anger at the states for their recurring breaches of duty to the united cause explains both critical steps and the driving impetus for the revolution.
See here for some of the glowing reviews of the book.
Domsky on A Guide to Disinheriting a Spouse
Ronald Z. Domsky (John Marshall) has published 'Til Death Do Us Part ... After That, My Dear, You're on Your Own: A Practitioner's Guide to Disinheriting a Spouse in Illinois, 29 S. Ill. U. L.J. 207 (2005). Here is the Conclusion:
There are many legitimate reasons for a client to disinherit a spouse. As practitioners, we cannot judge the client's goals, but merely fulfill them within the bounds of the law. Fortunately, for practitioners practicing in Illinois, it is relatively easy to assist a client in disinheriting a spouse. This article addressed the marital agreement and inter vivos trust simply because these are the devices with which most practitioners are most comfortable and familiar. There are many devices that can be employed that would be just as, if not more, effective than the ones discussed in this article. However, hopefully this article has explained why employing more elaborate and expensive devices, such as the offshore trust, when representing a client in Illinois, is truly unnecessary.
August 25, 2005
The Wall Street Journal has an interesting article on Bowie Bonds -- securities which carve out future royalties owed to musicians and are sold to wealthy investors (named after the first such securities sale in 1997 based on the royalties on the music of David Bowie, which fetched $55 million). This got me to thinking: why not sell securities backed by the future royalty streams from law professors' books -- Kingsfield Bonds (named after the fictional law professor Charles W. Kingsfield, Jr. (memorably played by John Houseman) in The Paper Chase)? I got the idea when a royalty check arrived from LexisNexis for the sales of one of my books. Of course, a Caron Bond might fetch a bit less than the original Bowie Bond -- the LexisNexis check was for $5.60, representing the royalty on the sale of two books! (If you would like to cause a 50% increase in my royalty stream (and increase my microscopic Amazon sales ranking), you can buy the book here (LexisNexis has plenty of copies left!). My other books, which thankfully sell a bit better, are available here.)
Auerbach's Consumption Tax Quiz
Take Alan's Auerbach's 7-Question Consumption Tax Quiz (from today's Wall Street Journal). For further discussion. see Dan Shaviro's blog (Start Making Sense, which is back up and running after a bit of a summer hiatus.)
Nguyen on Tax Avoidance Through Intellectual Property Holding Companies
The collapse of WorldCom, Inc., exposed a complex web of accounting irregularities. Within that web, recent filings by Dick Thornburgh, WorldCom's Bankruptcy Court Examiner, reveal a different type of scheme that involves the holding of intellectual property. Further scrutinizing the scheme reveals that WorldCom and its tax advisors, KPMG Peat Marwick LLP (KPMG), devised a tax avoidance scheme through the creation of an intellectual property holding company (IP holding company). This type of scheme has been widely and quietly utilized in the last twenty years by many corporations with substantial intellectual property.
Indeed, as state taxing authorities have become more aggressive in their auditing process, the spotlight is now on the IP holding company scheme. Due to numerous states' slow recovery from the economic downturn and the shrinkage of state tax revenues in the last few years, more and more states have directed their attention to intercorporate transactions and income shifting schemes. In doing so, many states unearthed handsome amounts of royalty income generated by the licensing of intellectual property that had never been taxed. Utilizing this taxing power, states are eager to reach the royalty income accumulated by companies holding intellectual property, but in taxing such income, states may encounter a potential constitutional stumbling block.
How does intellectual property become part of a tax avoidance scheme? What is an IP holding company? What are the tax and nontax reasons that facilitate the creation of this scheme? What are the constitutional challenges states may face in their efforts to tax royalty income? What are their alternatives?
This Article will address these questions and argue that the IP holding company scheme is a complex tax avoidance program requiring states to devise an approach to taxation that reflects an understanding of intellectual property rights and of the interests of intellectual property rights holders. In and of itself, a scheme that results in tax avoidance is not illegal. There are considerable business reasons behind the creation of an IP holding company for a major corporation's intellectual property assets. Part I discusses the transformation of intellectual property into valuable corporate assets.
Part II identifies and analyzes the IP holding company scheme. Notable examples illustrate the widespread use of this scheme by major U.S. corporations.
Part III focuses on the constitutional reach of state taxing power to royalty income received by out-of-state holding companies in light of the U.S. Supreme Court's decision in Quill Corp. v. North Dakota.
Part IV discusses how states attempted to evade constitutional requirements in their eagerness to tax the royalty income of out-of-state holding companies. This section analyzes the business situs approach to intellectual property rights as employed by states to justify their fulfillment of the constitutional requirements post-Quill. This section critiques the business situs approach by providing illustrative examples of how the approach reaches beyond constitutional limits.
Part V advocates balancing the interests between states and holders of intellectual property. This section highlights some fundamental aspects of intellectual property rights that may assist states in their efforts to reach royalty income received by out-of-state holding companies that license intellectual property rights for use within states. This section also provides alternative approaches states may consider that pose less risk of constitutional challenges.
This Article concludes that as long as intellectual property assets are valuable corporate assets and holders of intellectual property continue to seek ways to maximize their return on such assets, uncertainties regarding states' power to tax an IP holding company's income reflect a need for guidance from Congress and a need for uniformity of state tax treatments. Regardless of these uncertainties, the potential migration of intellectual property assets offshore poses yet another problem.
Fogel on The "Effective Tax Administration" Offer in Compromise
David M. Fogel (McDonough Holland & Allen, Sacramento) has published The "Effective Tax Administration" Offer in Compromise, also available on the Tax Analysts web site as Doc 2005-17723, 2005 TNT 163-34. Here is the abstract:
Despite a provision of the IRS Restructuring and Reform Act of 1998 that authorized the IRS to accept offers in compromise based on equity, hardship, and public policy to promote effective tax administration, the IRS has not widely embraced the concept. Less than 1% of the total offers that the IRS has accepted are "effective tax administration" offers. What are the conditions for accepting those offers? Why is the IRS so reluctant to accept them? Have the courts decided any cases involving that type of offer? This article explores those issues and others.
Tax Lawyer from Non-Accredited Law School Loses Out on Big Firm Job
I was approached by a partner of a fairly large law firm (220+ lawyers) for an unadvertised position they had at their firm. I have a rather unique expertise in a specific area of tax law which is exactly where they needed a senior level lawyer and this partner who approached me has known me for a number of years and we had done various presentations together, etc. I had many interviews and discussions with various other partners at the firm, they reviewed my existing client base, education, experience, writing samples, drafts of various documents, etc. etc. Everyone whom I met was very eager to have me at their firm, however when the partners took their recommendation to the firm administration I found out they have from what I assume a very strict policy about hiring from non-ABA schools.
For the name of the non-accredited law school attended by the tax lawyer, see below the fold.
I love the education I received at Concord, and firmly believe the quality is the same if not better than any other law school, but without the ABA accredidation there are many closed doors. As I mentioned in an earlier post I tried to get a reserve position with the US army JAG but was rejected solely because of the ABA requirement, and now I find possibly that big law firms I suppose are cool to the non-ABA deal unless this one is an exception. It is a shame something can't be done for Concord to get this all important holy grail of recognitions.
Kesselman on Reform U.S. Capital Gains Taxation à la Canada
Jonathan R. Kesselman (Simon Fraser University, Vancouver) has published Reform U.S. Capital Gains Taxation à la Canada, The Economists' Voice, Vol. 2: No. 3, Article 1 (2005) (Berkeley Electronic Press). Here is the abstract:
Reformed taxation of capital gains could play an important role in a broader policy package to improve the simplicity, equity, and efficiency of the federal tax system. Constructive reforms for the United States would draw on Canadian provisions for taxing capital gains: a) eliminate the distinction between short-term and long-term gains, taxing both equally; b) use an average-cost basis for computing capital gains on all holdings of a security; c) apply a fixed tax inclusion rate for net capital gains; d) eliminate the $3,000 offset of taxable income for net capital losses; and e) adopt “deemed realization” of capital gains on death to facilitate quick abolition of the estate tax.
August 24, 2005
Can Law Profs Deduct Flat-Screen TVs?
Paul Horwitz has a great post on PrawfsBlawg: Toward a General Theory of Writing Off the Purchase of a Flat-Screen TV as a Job-Related Expense. Here is the opening:
I am always humbled and awed by the breadth of law school subjects for which television shows serve as a vital pedagogical resource.
As one who regularly shows clips from The Daily Show, Oprah Winfrey, West Wing, etc. in class, my heart skipped a beat when I saw the headline. Unfortunately, Paul's tongue is planted firmly in his cheek, and as a non-tax professor he does not offer any way around §§ 262 & 280F. But I have opened the comment section in case any readers can offer creative tax planning strategies so I can file an amended return to deduct my new Sony.
More KPMG News
- Reuters (8/24): KPMG Tax Shelter Pact, Indictments Imminent:
Eight former KPMG (KPMG.UL: Quote, Profile, Research) executives are expected to be indicted within days by U.S. authorities over past sales of tax shelters by the Big Four accounting firm, which itself has reached a settlement agreement, a lawyer involved in the case said on Wednesday.
- Globe and Mail (8/24): Accounting Firms Vow Not to Kick Hobbled KPMG (8/24):
The world's top three accounting firms -- which acted like frenzied sharks when Arthur Andersen LLP was bleeding three years ago -- are taking a much more benign approach to their wounded rival KPMG LLP. Industry sources said yesterday that the three -- Deloitte & Touche LLP, Ernst & Young LLP, and PricewaterhouseCoopers LLP -- have told their partners not to poach clients or personnel from KPMG while it struggles with potentially crippling legal problems.
- Washington Post: KPMG Nears Agreement On Tax-Shelter Abuses (8/23):
KPMG LLP is nearing agreement on a deal with federal prosecutors that would avert an indictment against the nation's fourth-largest accounting firm for its sale of abusive tax shelters, according to sources familiar with the pact. The agreement calls for KPMG to pay between $300 million and $500 million and to open its operations to independent review as a condition for avoiding prosecution, according to people briefed on the deal
- New York Times: KPMG, Prosecutors Near Settlement (8/22):
KPMG and U.S. authorities are close to finalizing a legal settlement over past sales of tax shelters by the Big Four accounting firm, the Financial Times reported on its Web site on Monday.
Brooks on Learning to Live with an Imperfect Tax: A Defence of the Corporate Tax
Kimberley Brooks (University of British Columbia) has posted Learning to Live with an Imperfect Tax: A Defence of the Corporate Tax on SSRN. Here is the abstract:
Following an introduction, the paper is divided into two parts followed by a conclusion. Part II reviews a number of objectives of the corporate tax, arguing that they should carry more weight as arguments in favour of the corporate tax than they are often attributed. Furthermore, while it is conceded that the corporate tax is a second or even an nth best tax for achieving these objectives, there are simply no administratively feasible or politically acceptable alternatives to it. The arguments reviewed in the paper are as follows.
First, by taxing income from capital, the corporate tax increases the comprehensiveness, progressivity, and fairness of the income tax. Second, since it falls, at least in part, on pure economic profits, the corporate tax, at least to this extent, raises revenue efficiently. Third, the corporate tax is a necessary support for the individual income tax since without it corporate - source income could accumulate tax - free. Of course, this familiar withholding function of the corporate tax would suggest that the corporate tax should then be refunded when corporate retained earnings are distributed and taxed in the hands of individual shareholders; however, the additional economic inefficiencies and administrative complexities created by all apparently politically acceptable systems of refunding the corporate tax make the effort not worth the costs. Fourth, the corporate tax is a justifiable, widely accepted and efficient method for source countries to levy tax on the business income earned by non - residents. Fifth, the tax serves as a benefit tax, requiring corporations to bear part of the cost of the government services from which their business operations clearly benefit. Sixth, the tax serves the pragmatic purpose of collecting a good deal of revenue in an administratively efficient and politically acceptable way. Seventh, since the corporate tax is in place, and the economy has adjusted to it, any changes in the tax will cause inequities and windfall gains. Economists and other critics have a long litany of complaints about the corporate tax. These arguments can be grouped under the traditional tax policy criteria of equity, efficiency, and administrative practicality.
Part III of the paper argues that these arguments against the corporate tax are not as compelling as they might appear. The arguments addressed in this part of the paper are as follows. First, critics argue that the corporate tax amounts to double tax and therefore is inequitable. Second, they argue that the tax creates three types of distortions: distortions in corporate payout policies in favour of the retention of corporate earnings is compared with its distributions; distortions in the debt/equity ratios in favour of debt and against new share issues; and distortions in the legal forms of business organization in favour of non - corporate as compared with corporate forms. Third, they argue that the corporate tax is difficult to administer because it requires inherently arbitrary line drawing between legal concepts such as corporate and non - corporate business enterprises, and debt and equity.
The conclusion reviews and dismisses the arguments made in favour of adopting the American proposal to exempt dividends from taxation, or some variation of that proposal. Also, it presents an optimistic prediction about the future role of the corporate tax. Some critics of the separate corporate tax have maintained that even if policy makers do not abandon the tax because they are not persuaded by the tax policy arguments in favour of its abolition, increasing globalization will force its demise. Instead of this pessimistic diagnosis of the future role of the corporate tax, the paper concludes by suggesting that the same factors that are relied upon to predict its ultimate rejection may in fact be the factors that dictate the survival of the corporate tax.
Ranking Law Schools by "Service to Society"?
Washington Monthly has published a ranking of colleges based on "service to society":
While other guides ask what colleges can do for students, we ask what colleges are doing for the country....
The first question we asked was, what does America need from its universities? From this starting point, we came up with three central criteria: Universities should be engines of social mobility, they should produce the academic minds and scientific research that advance knowledge and drive economic growth, and they should inculcate and encourage an ethic of service. We designed our evaluation system accordingly. [The methodology is explained in detail here.]
Here is Washington Monthly's ranking of the Top 30 National Universities, and how it compares with U.S. News' ranking:
In his contribution to our Indiana symposium on The Next Generation of Law School Rankings, Harnessing the Positive Power of Rankings, 81 Ind. L.J. __ (forthcoming 2005), and in an earlier article, In Praise of Law School Rankings: Solutions to Coordination and Collective Action Problems, 77 Tex. L. Rev. 403 (1998), Russell Korobkin has argued that rankings should encourage the production of public goods that law school are uniquely competent to produce. Although he concludes that the production of legal scholarship best meets this criteria, he also discusses the role that the public interest can serve in law school rankings:
The practice of public interest law is arguably a public good, and it is arguably within the special competence of law schools to either provide this good directly or to encourage its production by law school graduates. Consequently, either the number of public interest clients served by a law school's clinic, or its faculty, or the percentage of a school's graduates who pursue careers in public interest law might be appropriate for consideration in law school rankings
For press coverage of the Washington Monthly rankings, see:
(Thanks to Verna Williams for the tip.)
Kennedy on Pension Funding Reform
Kathryn J. Kennedy (John Marshall) has published Pension Funding Reform: It's Time to Get the Rules Right (Part 1), 108 Tax Notes 907 (Aug. 22, 2005), also available on the Tax Analysts web site as Doc 2005-16324, 2005 TNT 162-34. Here is the abstract:
In this two-part article, the author explains how and why ERISA's historical pension funding rules -- although well-intentioned -- nevertheless led employers, such as United Airlines' parent UAL Corp., to have seriously underfunded pension plans, and the Pension Benefit Guaranty Corp. to assume billions of dollars of those unfunded liabilities. Before future pension reform measures should be considered, Kennedy believes that we should learn from the past. Mistakes created through legislative rules should not be repeated, but instead their lessons should help forge effective pension funding reforms. The second part of the article will discuss various legislative proposals pending before Congress and the policy considerations relevant to those proposals, in light of the historical mistakes that should be avoided in impending legislation.
Wall Street Journal Tax Pieces
Interesting recent Wall Street Journal tax pieces:
- Deducting Losses From Side Ventures May Be Allowed (Tom Herman) (8/24):
Taxpayers recently won two separate courtroom battles with the Internal Revenue Service over the deductibility of hefty losses from ventures the IRS argued weren't being run to make a profit. The Tax Court ruled in favor of a banker who had run up years of losses from his automobile drag-racing activities. The IRS disallowed those losses, saying he wasn't really trying to make a profit. Another case involved two Californians in the women's apparel business who had deducted losses from a jet-chartering side business that had lost money for many years. While the two cases have important differences, the decisions are attracting interest among lawyers and accountants because taxpayers often lose similar struggles. These two decisions offer a fresh reminder that even if you have a side business that loses money year after year, you may be allowed to deduct the losses as long as you can demonstrate that you really were trying to make money.
China will cut income taxes on its poorest workers, the government said, amid official concern that the country's growing gap between rich and poor could fuel unrest. Chinese who earn less than 1,500 yuan ($185) a month no longer will need to pay income tax, up from the previous cutoff point of 800 yuan, the official Xinhua news agency reported.
- Tax Evasion (8/24):
Just yesterday, these columns reported that even the change-averse Germans are now contemplating the flat tax. Imagine our surprise to learn that meanwhile in Britain -- still considered one of Europe's more advanced economies thanks to the lasting work of the Iron Lady -- the Treasury seems to have suppressed evidence in support of a flat tax. The government may thus have inadvertently sparked the kind of debate it may perhaps have tried to bury.
- Flirting With a Flat Tax (8/23):
Name a country with more than 100 tax laws, 90,000 tax rules, 418 tax exemptions -- a system so Byzantine that huge chunks of tax revenue are needed just to run the system. If you guessed the U.S. or maybe Italy you guessed wrong. We're talking about Germany. But as the German election campaign heats up, a revolutionary idea has been inserted into the political debate. Europe's biggest economy has a glimmer of hope that its progressive income tax code might be scrapped and replaced by a simple, transparent flat tax.
- Death and Taxes Are Certain. Are Death Taxes? (Sen. Frank Lautenberg) (8/22)
Sen. Bill Frist ought to be studying the big picture before devoting so much energy to fighting for America's wealthiest families ("No More Hiding," op-ed, Aug. 11). The fact is that the only people who pay any significant amount of estate tax are already leaving millions of dollars to their children.
I'm one of the lucky ones Sen. Frist is talking about. With two of my friends, I founded a company, ADP, and with hard work, we grew it into one of the most successful companies in America. I made out very well. Because I was successful, I was able to give my kids and grandkids every advantage in life, and they have done very well. When I pass on, I'll be able to leave them $1.5 million without having to pay a dime in taxes.
Don't you feel sorry for me? Sen. Frist does. He feels so sorry for me that he thinks we should raise taxes on the middle class, or stop providing healthcare for poor children, so my kids who have had every advantage in life can inherit $10 million or $100 million tax free instead of just $1.5 million. I don't need Sen. Frist's sympathy, and neither do my kids and grandkids.
KPMG's sales of questionable tax shelters to wealthy Americans couldn't have happened without the participation of UBS and at least two German banks -- Deutsche Bank AG and HVB Group -- that provided billions of dollars in credit lines to KPMG clients. As the U.S. government prepares to bring its first shelter-related indictments against a number of former KPMG partners, federal prosecutors in New York are examining the roles that the banks played in the transactions, according to lawyers involved in the case.
August 23, 2005
California Film Commission Report Backs Tax Credit for Movie Industry
The California Film Commission has released a 25-page study, What Is the Cost of Run-Away Production? Jobs, Wages, Economic Output and State Tax Revenue at Risk When Motion Picture Productions Leave California, in support of proposed legislation to provide a California tax credit of 12% on wages and other production costs for movies and TV shows. The report lists the various tax incentives currently available to the movie industry in seven states (Georgia, Illinois, Louisiana, Maryland, New Mexico, New York, and Pennsylvania) and in Canada and other foreign countries (Australia, Fiji, Ireland, New Zealand, South Africa, and the United Kingdom). The report chronicles movie industry tax incentives pending in eight states (Arizona, Florida, Hawaii, Illinois, Kansas, Rhode Island, South Carolina, and Texas).
The New York Times reports that actor-turned governor Arnold Schwarzenegger supports the proposed California legislation.