Saturday, December 31, 2005
Nancy A. McLaughlin (Utah)
- B.S. 1987, University of Massachusetts
- J.D. 1990, University of Virginia
After graduating from the University of Massachusetts with an honors degree in psychology and having been elected to Phi Beta Kappa and appointed a Phi Kappa Phi math scholar, I left my home state to attend law school in lovely Charlottesville, Virginia. It was there that I met my husband (a Virginia native, whose family was alarmed at the prospect of his marrying a Yankee) and discovered my affinity for tax law.
Interesting article in the Boston Globe, describing the practice in New Hampshire of increasing the value of property tax assessments by the value of the property's "view, A Tax Bill as Big as the View; Assessors in N.H. Add More for Beauty:
John Bouzoun's hilltop home here has two bedrooms, two bathrooms, and a barn. The retiree thought the place was fairly modest, but according to a recent assessment by the town, his ''little dream house" is worth a half-million dollars.
Assessors valued his property and land at $300,000 and then slapped on an extra $200,000 for the panoramic view of Mount Cube and Smarts Mountain. Bouzoun, who received his property tax bill this month, was shocked to learn he owes the town more than $8,000....>
While locals acknowledge that the views add some value to property, many say they have been hit hard by what they call ''view taxes" as a result of a reassessment last summer. Assessors have unfairly overvalued the views from their homes, and no one has been able to explain why some views are worth more than others, some angry residents said. Their demands for a more transparent system have reached the State House....
Views have long been factored into property values, assessors say, because they affect the prices buyers are willing to pay. As buyers have paid more for hilltop houses and land in western New Hampshire in recent years, the assessments of neighboring properties have jumped, driving more property owners to question the spiraling values. To gauge the value of specific views, assessors study recent sales of nearby properties with similar views, explained Gary Roberge, chief executive of Avitar Associates, a company that assesses properties in 110 New Hampshire towns, including Orford. Assessors start with the total price paid for each property, then subtract the assessed value of land and buildings. The sum left over is considered the sale price for the view....[T]he richest mountain view assessed by Avitar is worth about $450,000, Roberge said. Still, inland values lag behind the coast. Ocean views run as high as $750,000....
Critics of this method of assessment say there is no way to know how much of a sale price was paid for the view.
Mark A. Muntean (Robert W. Wood, P.C., San Francisco) has published Preserving the Saints: IRS vs. All Saints Church, 109 Tax Notes 1691 (Dec. 26, 2005), also available on the Tax Analysts web site as Doc 2005-25292, 2005 TNT 248-13. Here is the opening:
Newspapers across the country, from The New York Times to the Los Angeles Times, have published a number of stories in connection with an antiwar and antipoverty sermon delivered by a minister in Pasadena, Calif., before the last presidential election. Letters to the Editor, The New York Times, Nov. 22, 2005; "Antiwar Sermon Brings Warning," Los Angeles Times, Nov. 7, 2005; "Sermon Gets Church in Trouble with IRS," Chicago Sun Times, Nov. 9, 2005. The sermon delivered at All Saints Church was originally reported in the L.A. Times and that was controversial enough. More recently, the IRS spawned its own related debate when it began an inquiry into whether the church should be allowed to keep its tax-exempt status. And this isn't the only church facing a kind of IRS judgment day. According to The Washington Times, the IRS is probing 20 churches in connection with improper political activities related to the 2004 election. "Probe Continues of 60 Tax-Exempt Groups, IRS Says," The Washington Times, Nov. 10, 2005.
The New York Times has published an interesting editorial, The New Year in Taxes:
A surprise awaits the nation's highest earners when they file their 2006 tax returns. Their taxes are going down again - whether or not Congress passes the investor tax cuts the lawmakers have been promising. On New Year's Day, two additional tax cuts will kick in, allowing people who earn upward of $200,000 a year to claim bigger write-offs for a spouse, their children and other expenses, like mortgage interest on a vacation home. The bolstered write-offs were enacted in 2001, but with a delayed start date because of their high cost: according to Congressional estimates, the new breaks will cost $27 billion over the short term, exploding to $146 billion from 2010 through 2019. By then, most of the benefits would flow to taxpayers who make more than $1 million a year.
LMSB is headquartered in Washington, DC and has five Area Counsels located in New Jersey, Manhattan, Chicago, Houston, and San Francisco. Each Area Counsel is responsible for legal work within a defined geographic area and for developing specialized knowledge of one of the industries served nationally by the IRS including: financial services; heavy manufacturing & transportation; food, mass retailers, pharmaceuticals & healthcare; natural resources & construction; & communications, technology & media.
Major Duties: Large and Mid-Size Business attorneys typically provide a full range of legal services on all issues including legal advice and handling litigation in the U.S. Tax Court as well as referrals and recommendations to the Department of Justice in refund litigation. LMSB attorneys work primarily on cases involving complex and/or sensitive corporate, partnership, and "S" corportion tax issues in a global environment.
Salary: $60,576 - 110,662.
Application Deadline: January 13, 2006.
For more information or to apply, see here.
Brianne J. Gorod (Yale Class of 2005) has published an interesting student comment, Limiting the Federal Forum: The Dangers of an Expansive Interpretation of the Tax Injunction Act 115 Yale L.J. 727 (2005). Here is the abstract:
In Henderson v. Stalder, [407 F.3d 351 (5th Cir. 2005)], the Court of Appeals for the Fifth Circuit held that the Tax Injunction Act (TIA) of 1937 prevents the federal courts from exercising jurisdiction over any case in which a victory for the plaintiff might reduce state revenues. In reaching this result, the Fifth Circuit did more than diminish its own power: It gave state legislatures a potentially powerful tool to insulate their actions from constitutional review in the federal courts. The Fifth Circuit’s holding is troubling because it threatens the ability of the federal courts to fulfill their historic role in safeguarding rights created under federal law.
This Comment argues that Henderson was wrongly decided. By holding that the court lacked jurisdiction to hear the plaintiffs’ claims, the Fifth Circuit needlessly limited the power of the federal courts vis-à-vis state legislatures and opened a door to state legislatures intentionally crafting legislation so that it will be immune from review in the federal courts. Part I describes the legislative program the plaintiffs challenged in Henderson. Part II argues that in reaching its decision, the Fifth Circuit not only critically misinterpreted existing Supreme Court precedent, but also gave the TIA a construction that is at odds with the enacting Congress’s intent. Part III discusses the dangerous possibility that the Fifth Circuit’s abdication of jurisdiction will spur states to structure legislative programs as “taxes” specifically to insulate them from constitutional review in the federal courts.
Friday, December 30, 2005
I feel like a piker next to Jim Maule: he reports that he has just completed teaching Partnership Tax for the 46th time at Villanova! How has he done so despite not having yet hit 55 years of age? He notes that he began his law school teaching career in his 20's. I guess he is the Doogie Howser of the tax professoriate!
Joe Kristan has published an excellent checklist of year-end tax planning moves, including:
- Go online and make a charitable gift to a worthy cause with your credit card.
- If you won't pay alternative minimum tax for 2005, you can still prepay 2005 state and local taxes due next year.
- If you have a calendar-year S corporation with a loss, you can still make sure you have enough basis to deduct the loss.
- You can still close out long positions in loser stocks today and deduct the losses in 2005 (to the extent of 2005 capital gains + $3,000). For losses on short positions, though, it's too late for this year, as those aren't counted as tax losses until the settlement date.
- If you are a cash-basis taxpayer, you can write checks today for business expenses and deduct them this year.
- [If you have children, you can deduct in many states a portion of contributions made to an existing or newly-created § 529 college savings plan.]
For Joe's very helpful series of posts on year-end tax planning strategies, see here.
Rachel Emma Silverman published a helpful listing of Online Charity Evaluators in the Wall Street Journal for those contemplating year-end charitable gifts:
- Charity Navigator
- Charity Watch (American Institute of Philanthropy)
- Give (Better Business Bureau's Wise Giving Alliance)
Interesting Wall Street Journal article, Bartering to Avoid Taxes; Popular Real-Estate Strategy Is Increasingly Used to Defer Capital Gains on Other Assets, by Rachel Emma Silverman:
In recent years, 1031 exchanges have soared in popularity, mostly with real estate, as investors have flocked into the real-estate market and prices have skyrocketed, leading to big capital gains that investors have been eager to put off. But as people grow familiar with the tactic, and are diversifying into a wider variety of investment assets, some are now doing trades with other types of property, including art, collectibles, private jets, collector cars, yachts, copyrights, race horses, even Web site addresses.
The total value of all property involved in 1031 exchanges jumped to $175 billion in 2003, the latest figures available, compared with roughly $90 billion in 1999, according to estimates from Deloitte Tax LLP, a unit of Deloitte & Touche USA LLP....
One such trade happened in early November, when bond investor Bill Gross traded a block of four rare 1918 stamps for another very unusual stamp, an 1868 "Z-grill" stamp depicting Benjamin Franklin. Mr. Gross had bought his block of four stamps, which depicted an upside-down biplane, only two weeks before the trade for $2.97 million. The Z-grill, meanwhile was owned by Donald Sundman, president of Mystic Stamp Co., Camden, N.Y., who had purchased the stamp in 1998 for $935,000 as an investment; the stamp's value had now climbed to nearly $3 million with the trade. The swap was structured to comply with the 1031 rules, say individuals familiar with the transaction.
Interesting article on law.com this morning, Judge Delivers Order to FedEx: Pay Misclassified Drivers:
In a decision expected to spur wage-and-hour suits in the courier industry, a judge earlier this month ordered FedEx to pay $5.3 million to a group of drivers he found had been improperly classified as independent contractors. He also ordered FedEx to end the practice, instructing the company to provide drivers with a copy of his Dec. 19 order.
Inside Higher Ed has a funny column today about pickup lines overheard at the annual meeting of the Modern Language Association (Pickup Lines at the MLA). My favorites:
- He went to a costume party dressed as Jonathan Edwards, sauntered up to the woman he was after, and said, “I led the Great Awakening. Wouldn’t it be great awakening next to me?”
- [P]rofessors don’t just lust for one another, but for being recognized for their work. So the line that can be effective is “Aren’t you the person who wrote that really important paper?”
- “I was standing next to a lady, and she mentioned she was nervous about her orals.... [insert joke here]
- She would endow a chair, the “T. Brylowe chair of absolute awesomeness,” and that would be the ultimate chick magnet for whoever had that chair. [insert joke about endowed chair here]
Attorney's Willful Failure to Pay Income Taxes Is Not a "Serious Crime"and Thus Does Not Justify Disbarment
From Howard Bashman:
Attorney's willful failure to pay income taxes did not justify order disbarring him from practice in the U.S. District Court for the Eastern District of Virginia, Fourth Circuit panel rules: Today's ruling of the U.S. Court of Appeals for the Fourth Circuit -- holding that willful failure to pay income taxes is not a "serious crime" -- can be accessed here [In Re: John Ashton Wray, No. 05-1106 (4th Cir. Dec. 29, 2005)].
Volume 3, Issue 2 of the eJournal of Tax Research, published by Atax (Australian Taxation Studies Program), University of New South Wales, Sydney, Australia, and edited by Binh Tran-Nam & Michael Walpole, is available (with a free subscription) on its web site with these articles:
- Patrick Gallagher, Obituary - The Honorable Justice D. Graham Hill (pp. 147-150)
- Fabrizio Bulckaen & Marco Stampini, Commodity Tax Reforms in a Many Consumers Economy: A Viable Decision-Making Procedure (pp. 151-169):
This paper deals with efficiency and distributional effects of marginal commodity tax reforms in economies with heterogeneous individuals. It contributes to the literature in three ways. First, a decision rule based on revenue potentialities - the ratio between marginal revenue and the tax base - is originally developed with reference to a many consumers economy. The relevance lies in the fact that these indicators do not depend on measures of utility. Second, the connection with former literature is analyzed. Third, a comprehensive and progressive decision-making procedure relying on revenue potentialities is defined. Overall, all that policy makers need to know - in order to look for improvements in efficiency and/or distribution through revenue-neutral marginal commodity tax reforms - is the revenue potentiality of each tax and the share of expenditure by poor families. An example with reference to Italian data is provided.
- David G. Dunbar, Trans-Tasman Tax Reform: The Real Story (pp. 170-205):
In 2003 the Australian and NZ governments enacted legislation to permit trans-Tasman companies to allocate to their shareholders franking credits and imputation credits. This legislation is known as the pro rata allocation method, and was heralded as a major improvement in trans-Tasman taxation. This paper critically evaluates the claims which have been made by the Australian and NZ governments about the reduction in personal income tax which the pro rata allocation solution will deliver to individual share holders in a typical trans-Tasman company. The paper concludes that the benefits have been significantly over stated and that a more effective legislative solution would have been the streaming model. Accordingly the pro rata allocation solution is unlikely to discourage trans-Tasman companies from engaging in profit repatriation strategies to overcome the inherent tax inefficiency associated with the pro rata allocation solution.
- Nor Aziah Abdul Manaf, John Hasseldine & Ron Hodges, The Determinants of Malaysian Land Taxpayers' Compliance Attitudes (pp. 206-221):
This article analyzes the determinants of Malaysian land taxpayers' compliance attitudes. While income taxpayers often have the structural opportunity to underreport income/overstate deductions, it is more difficult to hide land ownership. Despite this, there are high levels of uncollected land tax revenue in Malaysia. We document the factors associated with land taxpayers' compliance attitudes and our results should be useful to policy makers in Malaysia and elsewhere, as we find that independent variables significant in prior income tax compliance research also extend to the field of property and land tax compliance.
- Ken Devos, The Attitudes of Tertiary Students on Tax Evasion and the Penalties for Tax Evasion - A Pilot Study and Demographic Analysis (pp. 222-273):
The tax compliance behavioural literature indicates that among other factors, demographic variables play an important role in the compliance behaviour of taxpayers. This pilot study investigates the relationship that exists between demographic and other major tax compliance variables and the attitudes of students towards tax evasion and the penalties for tax evasion. A survey of 470 tertiary taxation students was recently conducted. The findings revealed that the demographic variables analysed including, gender, age, nationality, education/qualifications, occupation, and income level in most cases held statistically significant relationships with the incidence of tax evasion and the penalties for evasion. These results provide useful information for revenue collecting authorities and have implications for tax policy development.
- Elaine Abery, Taxing Non-Fixed Trusts (pp. 274-287):
Tax policy is evaluated according to three criteria: equity, efficiency and simplicity. This paper looks at the history of the withdrawn New Business Tax System (Entity Taxation) Bill 2000, which proposed to tax non-fixed trusts in a manner stated to be comparable to the taxation of companies. The Bill attracted almost universal criticism. The three criteria for evaluating tax policy are applied to the Non-Fixed Trust Regime to understand why the Regime was not implemented. The Non-Fixed Trust Regime did not succeed because it sought to apply a regime to non-fixed trusts that would have been much more onerous than that applying to other corporate entities. The Non-Fixed Trust Regime would have been less efficient, less equitable and less simple than the prevailing trusts taxation regime.
- Chris Evans, Shirley Carlon & Darren Massey, Record Keeping Practices and Tax Compliance of SMEs (pp. 288-334)
This paper reports upon a research project which was designed to explore the relationship between the record keeping practices of small businesses and their potential exposure to tax and related business compliance problems. It was hypothesised that these problems might include increased tax audit exposure (combined with the potential for adverse tax audit outcomes where record-keeping practices are poor), higher tax compliance costs, and greater liquidity and cash flow problems that cause difficulties in remitting taxes collected on behalf of the Australian Taxation Office (ATO) which can lead to business failure. The paper examines these issues and suggests that although there are a number of links between small business record keeping practices and tax compliance issues, these links are neither as straightforward nor as strong as the initial hypotheses might have suggested. The research used a mixture of qualitative (focus group) and quantitative (survey) methodologies and involved more than 500 small business owners and managers, over 300 tax practitioners , and a small number of ATO auditors.....
- Dale Pinto, Book Review - Global Challenges in Tax Administration (pp 335-336)
Robert W. Wood (Robert W. Wood, P.C., San Francisco) has published Tax Deductions for Damage Payments: What, Me Worry?, also available on the Tax Analysts web site as Doc 2006-7, 2005 TNT 250-28. The article discusses recent developments regarding the deductibility of damage payments.
As Professor Maule says, his blog features "more than occasional commentary on tax law, legal education, the First Amendment, religion, and law generally, with sporadic attempts to connect all of this to genealogy, theology, music, model trains, and chocolate chip cookies." His blog also shows that you can write engaging and helpful commentary about the U.S. tax system. Mauled Again is a great read on any topic I really enjoy the writing. Two other law prof blogs earn an honorable mention from me because I enjoy reading them so much: Paul Caron's TaxProf Blog and Tun Ying's The Yin Blog (among other things, we like some of the same TV shows).
Perhaps the most amazing aspect is that the winner, and one of the two honorable mentions, for "Best Law Professor Blogs" are tax blogs!
Thursday, December 29, 2005
The IRS began mailing tax forms to taxpayers on Wednesday. From press reports:
Taxpayers who e-filed last year or who prepared their tax return on a computer and mailed it to the IRS will not get a tax package in the mail. Instead, they will get a postcard that encourages them to e-file this year but gives them the opportunity to order tax forms if they want.desire.
The number of paper tax booklets being mailed continues to decline as more people opt for electronic filing. This saves the IRS money in printing costs; those who e-file get the benefits of a much faster refund, a virtually error-free return, and confirmation that the IRS has received the tax return.
China's legislature voted to repeal the country's 2,600 year-old agriculture tax. From press reports:
Agricultural tax, China's most ancient tax category, started to be collected in 594 BC. From that time, agricultural tax has existed for 2,600 years in China with dominant rural economy. During the more than 2,000 years, agricultural tax was always the main source of the country's coffer. Since the founding of the People’s Republic of China in 1949, agriculture has made great contribution to the country's economic development.
(I doubt the Internal Revenue Code will make it to year 4554! (Thanks to Michael Knoll (Pennsylvania) for the tip.)
As a key member of the executive staff of the Chief Counsel, the incumbent serves as the Large and Mid-Size Business (LMSB) Division Counsel, providing legal services for the Internal Revenue Service (IRS) Large and Mid-Size Business Division.
Major Duties: The Division Counsel (LMSB) guides the LMSB executive leadership team by providing legal advice and assistance in determining strategies, plans, and designs for a comprehensive and customer-oriented tax administration program to achieve taxpayer service and compliance goals. The incumbent works closely with the LMSB Division Commissioner and Deputy Commissioner and with other Division Counsel and Associate Chief Counsel on program matters. The incumbent provides strategic leadership and focus in the development and management of organizational activities, capital budgeting, and financial management and forecasting.
Salary: $107,550 - 162,100.
Application Deadline: January 20, 2006.
For more information or to apply, see here.
There is much consternation in the tax blogosphere about the IRS's decision to crack down on the common practice of taxpayers and their preparers entering summary totals of capital gains and losses on Schedule D, with attached detailed schedules. The Instructions to the 2005 Schedule D indicate that the IRS will insist that each individual stock trade be listed on Schedule D:
You must enter the details of each transaction on a separate line. If you have more than five transactions to report on line 1 or line 8, report the additional transactions on Schedule D-1. Use as many Schedules D-1 as you need. Enter on Schedule D, lines 2 and 9, the combined totals from all your Schedules D-1.
Do not enter “see attached” and summary totals from an attachment in lieu of reporting the details of each transaction directly on Schedule D or D-1.
For discussion of this change, see:
- BNA Daily Tax Report (12/29)
- The Tax Guru (12/29)
- Ed Zollar's podcast on Schedule D and accompanying materials (12/24)
May ministers preach on the great issues of the day during election season and keep their churches' tax-exempt status? Yes. But in the wake of recent media reports about an Internal Revenue Service investigation of All Saints Church in Pasadena, Calif., the IRS should give congregations more specific guidance about how to avoid its scrutiny and demonstrate that it enforces its rules uniformly.
Howard Bashman reports today:
Back in September 2004, "TaxProf Blog" had a post titled "District Court Stops Sale of 'Tax Toolbox.'" Today the "Tax Toolbox" is one step closer to death as the U.S. Court of Appeals for the Sixth Circuit has issued a ruling affirming the permanent injunction that prohibits its creator from promoting, marketing or selling the program. Some additional information is available in this USDOJ press release from September 2004.
I commend Judge Merritt's seven-page opinion to you in its entirety. Here are the opening five paragraphs:
“Every day can be a new deduction if you structure your life right,” defendant Daniel J. Gleason promised potential customers of his “Tax Toolbox.” Mr. Gleason’s aggressive tax strategies attracted the attention of the Internal Revenue Service (IRS) and prompted the District Court to enjoin him, pursuant to 26 U.S.C. § 6700 and 26 U.S.C. § 7408, from selling the Tax Toolbox, a collection of pamphlets, record-keeping aids, a CD-Rom, and other information, and from providing services to Tax Toolbox customers. Mr. Gleason appeals that permanent injunction on two grounds. First, he claims that the materials comprising the Tax Toolbox were never introduced into evidence at the hearing on the injunction. Second, he argues that the bar on providing services to Tax Toolbox customers unduly restricts his ability to earn a living. Because the record reflects more than ample evidence to support the District Court’s findings, including relevant portions and descriptions of the Tax Toolbox, and because the injunction’s scope is appropriately tailored and does not unduly burden his livelihood, we affirm.
For over fifteen years, Mr. Gleason has provided tax preparation and representation services individually and through Tax Toolbox, Inc., and My Tax Man, Inc. In 2000, Mr. Gleason, the President and CEO of My Tax Man, Inc., created the Tax Toolbox that, in the charitable words of the District Court, “aggressively promoted tax saving through home-based businesses.”
In “no more than a couple of minutes a day,” Mr. Gleason’s materials asserted, “you transform your non-deductible personal expenses into legal and audit-proof business deductions” by following his tax strategies. A new business can “magically” erase taxes by purportedly creating deductions for weddings, college, “travel, meals, and golf, and cars and medical expenses, kids [sic] allowances, every day household expenses and much more.”
According to Mr. Gleason, executing the Tax Toolbox’s employment agreement between spouses and children eliminates many of life’s more expensive costs. To deduct medical expenses, “[a]ll it takes is a business that you have, or can start, and a spouse who can become an employee . . . . Medical expenses that are usually subject to a 7.5% of income floor limitation are moved over to your business returns and become 100% deductible!” Get a head start on a college or wedding fund by turning a child’s “weekly allowance into a pay check and it’s a business deduction for you.” With the Tax Toolbox’s promissory agreement form, the children “loan” the money back to their parents without money actually changing hands. Mr. Gleason called his methods “audit-proof” and provided a “100% Accuracy Guarantee” that promised to pay any “penalties or interest from our mistake,” but not the underlying tax resulting from using the Tax Toolbox.
Mr. Gleason’s misrepresentations about tax deductions rival his generous resume embellishments to induce purchases of the Tax Toolbox. His promotional materials boasted that he was an attorney when he was neither licensed to practice in any state nor a graduate of an accredited law school, that he was an enrolled agent with the IRS when that status had lapsed, and that he was an adjunct professor of business law and federal taxation when he could not provide one name of a person to corroborate his claim. The District Court found further fabrications from the self-proclaimed tax expert:
- falsely claiming to be . . . an editor and a reviewer of articles for Newsweek . . . ;
- falsely claiming that all of his tax coaches were CPAs and IRS Enrolled Agents;
- falsely claiming that he is such a good attorney that the government pays his fees, when he is not an attorney and has been awarded fees in only one case, for the relatively minor sum of $318.75;
- falsely claiming that he has never “lost a case in tax court” when Gleason admits that he has never even tried a case in Tax Court;
- disingenuously claiming that he has “never lost a tax court dispute to date” and that he “has a 100% success record in tax court” when Gleason is referring to cases he has conceded and defines “loss” to mean that he has never had a client receive a decision that they did not agree to;
- falsely claiming that over 50% of his audits result in refunds, when this figure includes audits resulting in “no changes” to the taxpayer’s return;
- falsely claiming that customers would have “free Form 1040 preparation,” when in reality the cost to Gleason’s customers varies based on the number of schedules attached to the return;
- falsely presenting “customer testimonials” in promotional materials, including that of “A.M.,” who was not a customer but one of Gleason’s own salespersons, Alexander Mandossian;
- misleading customers by referring them to only certain IRS publications, but not IRS Publication 4035, which expressly warns taxpayers of the potential dangers of home-based business scams, claiming he need not do so on the specious ground that this publication was not “relevant” to his home-based business customers.
Judge Merritt concludes:
Through the Tax Toolbox, Mr. Gleason systematically overstated the tax benefits of a homebased business without warning of well-established limitations in the tax code. Although, as Judge Learned Hand wrote, an individual “is not bound to choose that pattern which will best pay the Treasury,” Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934), the tax code does not grant deductions for sham home-based businesses and a few minutes of daily paperwork. Nor does the tax code tolerate Mr. Gleason’s outright lies to induce purchases of his tax preparation product. For the foregoing reasons, we affirm the decision of the District Court.
The Marguerite Casey Foundation has published The Earned Income Tax Credit: Analysis and Proposals for Reform, 109 Tax Notes 1669 (Dec. 26, 2005), also available on the Tax Analysts web site as Doc 2005-24676, 2005 TNT 248-12. Here is the abstract:
This report provides a conceptual framework by analyzing the policy rationales for the earned income tax credit and reviewing the pros and cons of reform, including conclusions and recommendations.
The report begins by providing a history of the EITC, from its inception in the wake of President Nixon's family assistance plan to recent changes designed to increase compliance and outreach. Then it describes the current operation of the EITC, and the three main concerns about its operation: the lack of participation, noncompliance, and the uneven effect on taxpayers with different family structures. The report then describes several proposed reforms, including a dramatic simplification of the EITC; improvements to its structure and levels; targeted reforms such as providing greater benefits to families with more than two children, increasing benefits for childless workers and reducing the marriage penalty; targeted simplifications; improved outreach and, potentially, reforms regarding the related issue of refund anticipation loans.
Since this report was initially released (in September 2005), the President's Advisory Panel on Federal Tax Reform has released its report recommending comprehensive changes to the tax code, including a proposal to replace the EITC and the refundable portion of the child credit with a new work credit, which would be coordinated with a new family credit. The new credits are designed to provide benefits equivalent to the current system, but provide them in a way that is simpler and more efficient.
Craig M. Boise (Case Western) has published Playing with "Monopoly Money": Phony Profits, Fraud Penalties and Equity, 90 Minn. L. Rev. 144 (2005). Here is the abstract:
Although most U.S. corporations don't pay Federal income taxes, over the last several years some corporations have been willing to report, and shell out to the Treasury, hundreds of millions of dollars in taxes that they didn't owe. They did so to conceal the fact that they were playing with Monopoly money - fabricating profits as phony as the pastel-colored money used in the classic Parker Brothers board game. Of course, once the game was up, these corporations wanted to raid the Community Chest to get their tax money back. But is it appropriate to refund taxes in such circumstances? This Article traces the history of tax refund suits and concludes that such suits are in essence claims in equity. This means that claimants are subject to well-established equitable defenses like the doctrine of unclean hands and equitable estoppel. This Article argues that given the potentially corrosive effects of tax fraud on the U.S. tax system, the assertion by the Internal Revenue Service of equitable defenses to earnings inflation-related refund claims would provide a more effective penalty regime than the current statutory system. In making this argument, this Article necessarily traverses several areas of law, including corporate fraud, the history and development of equity, the rules versus standards debate, law and economics, risk management, optimal penalty theory and even a bit of tax policy.
Wednesday, December 28, 2005
The Daily Kos has an interesting post, Feeding the Minimum Wage Debate: Some Graphs on Income Inequality:
Once upon a time, the US economy grew and everybody shared the fruits of that growth...That changed around the time an actor got elected to the White House and unleashed a wave of "freedom" to make more money. Some did. The tax system, which might have been used to redistribute that wealth around somewhat, only makes things worse nowadays. In recent years, median income (i.e. half earn more and half earn less; in an unequal economy, median wages are lower than the average) has stagnated (because of inflation), except in the boom years of the second Clinton mandate. And ever since, the situation has been really bad, with the Bush recession being by far the worst on record as far as income and wages are concerned. Inequality has been rising for the past 25 years, and is getting worse. It's time to take care of the lower incomes and not of the higher income groups. An increase in the minimum wage would be a reasonable start.
Among the graphs used to ilustrate the post is this one:
(Hat Tip: Stuart Levine.)
As director of the Congressional Budget Office, Douglas Holtz-Eakin has been Congress's top economist, handpicked by the Republican leadership. Recently, he had some advice for lawmakers - mostly Republicans - who insist that more tax cuts will foster economic growth and raise tax revenue: "Don't even think about it."...
Mr. Holtz-Eakin ... is retiring this week after three years as the director. In those years, he has delivered nonpartisan, data-driven research on some of the most controversial issues. Often, what Mr. Holtz-Eakin said wasn't what his bosses wanted to hear....
By going where the facts and figures led, Mr. Holtz-Eakin also protected his agency, which may be the last bastion of neutral government analysis in Washington. To succeed him, Congressional leaders need a top economist who has a reputation to protect and is a superb number cruncher, fluent communicator of complex issues and good manager.
For other coverage of Mr. Holtz-Eaton's departure, see:
Interesting article in today's Wall Street Journal: KPMG Probe Raise Concerns Over Conflicts; While Involved in Federal Inquiry, 2 People Still Serve as Directors at Accounting Firm's Audit Clients, by Jonathan Weil:
Should people entangled in the government's investigation of KPMG LLP's tax shelters serve on the boards of public companies audited by the accounting firm? That's a question that arises from the involvement of two people in the KPMG saga, one a bit and perhaps unwitting player, the other a more central figure.
The bit player is Edward Lampert, a prominent hedge-fund manager who bought a KPMG tax shelter that federal prosecutors say was used to declare a bogus $52 million loss on his 1999 income-tax return. Though the government has moved to recoup unpaid taxes related to KPMG shelters, there is no indication that prosecutors think Mr. Lampert, who also is chairman of Sears Holdings Corp., or other KPMG clients intended to do anything wrong. Mr. Lampert also serves on the board of AutoNation Inc., a KPMG audit client based in Fort Lauderdale, Fla.
The more central figure is former KPMG tax partner Douglas Ammerman. Prosecutors have identified him as an unindicted co-conspirator in their criminal case against 17 other former KPMG tax professionals and two others accused of tax evasion and conspiracy for hawking allegedly fraudulent shelters to wealthy individuals like Mr. Lampert.
Ernest S. Christian (Executive Director, Center for Strategic Tax Reform) & Gary Robbins (Visiting Fellow. The Heritage Foundation) have posted How Tax Reform Will Supersize Economy, originally published in Investor's Business Daily (Dec. 12, 2005), on the Center for Strategic Tax Reform web site:
Only the president can get the attention of the American people and explain to them what tax reform is really about. It is most importantly about having a super-sized economy that creates more and better jobs and higher incomes for everyone.
Interesting editorial in today's Wall Street Journal, Let's Make a Deal:
When Ronald Reagan started his revolution in tax policy almost 25 years ago, he set off a benign chain reaction as tax rates fell around the world. OECD data show that the industrialized nations followed the U.S. lead and have cut their most punitive tax rates by about 30% on average since 1985.
We mention this history because two reports -- by the Congressional Budget Office [blogged here] and the nonpartisan Tax Foundation [blogged here] -- have sobering news about America's current tax standing in the world. Bluntly: Many countries not only have caught up with the U.S. in lowering taxes, in some areas they are beating us at our own game. America now imposes the highest corporate income tax rate among the 30 wealthiest countries. Once the Michael Jordan of tax cutting, we're now the Chris Rock, a joke. As the nearby table shows, the U.S. combined state and federal corporate tax rate of 39.3% is 10 percentage points higher than the OECD average.
We wonder if there isn't a left-right deal to be made here: Broaden the base by eliminating special-interest preferences, but lower the rate to make America's companies that do pay the tax more competitive....
There has been a great hullabaloo in recent years about so-called "Benedict Arnold" companies (in John Kerry's phrase) that move facilities offshore to Bermuda, the Cayman Islands and other international tax havens to avoid paying U.S. taxes. That happens because a company incorporated in the U.S. is automatically obliged to make Uncle Sam a one-third shareholder by paying the first 35% of all profits in taxes....Ironically, those in Congress who moan about offshore investing and "out-sourcing jobs" are the biggest defenders of America's highest-in-the-world corporate tax rates. Instead, Congress should be doing more corporate tax cutting. The clear beneficiaries would be U.S. firms and their American workforce.
The Association of Research Libraries (ARL) has published its annual compilation of law library statistics, the ARL Academic Law Library Statistics 2003–04. The publication presents compilations and rankings of data that describe collections, expenditures, personnel, and services in 77 (out of 113) law libraries at ARL member institutions throughout North America. ARL cautions:
The tables presented in this publication are not indicative of performance and outcomes and should not be used as measures of library quality. In comparing any individual library to ARL medians or to other ARL members, one must be careful to make such comparisons within the context of differing institutional and local goals and characteristics.
Here are some of the rankings, which favor large law schools:
Law Library Rank, by Total Volumes
Volumes in Law Library
Law Library Rank, by Current Serials
Serials in Law Library
Law Library Rank, by Electronic Materials
E-Material in Law Library
Law Library Rank, by Total Library Expenditures
Law Library Expenditures
Reuven S. Avi-Yonah (Michigan) has published Passport to Toledo: Cuno, the World Trade Organization, and the European Court of Justice, 109 Tax Notes 1661 (Dec. 26, 2005), also available on the Tax Analysts web site as Doc 2005-24235, 2005 TNT 248-11. Here is the abstract:
The purpose of this article is to try to place the debate about Cuno v. DaimlerChrysler in a broader perspective by connecting it with the overall discussion of harmful tax competition. It discusses two hypothetical scenarios under which the city of Toledo, Ohio, is (a) a separate country and (b) a member state of the European Union. If the first hypothetical were true, the tax incentives offered by Toledo would violate the rules of the World Trade Organization; if the second hypothetical were true, the tax incentives would also violate the Treaty of Rome, as interpreted by the European Court of Justice. The reason for those outcomes is that tax incentives like those at issue in Cuno violate well established policies of both the WTO and the ECJ designed to prevent harmful tax competition from skewing trade and investment patterns. Thus, consideration of the two hypotheticals may shed some light on the policy issues at stake in Cuno, as well as on the desirable outcome if the Supreme Court were to decide Cuno on the merits.
In Baranowicz v. Commissioner, No. 04-71327 (9th Cir. 12/23/05), the Ninth Circuit held that an ex-husband lacked standing to appeal his former wife's grant of innocent spouse relief:
In Estate of Ravetti, [37 F.3d 1393, 1394 (9th Cir. 1994),] we held that a non-requesting spouse did not have standing to challenge the tax court’s determination that his spouse was entitled to relief under § 6013(e). We explained that the petitioner suffered no injury that could be redressed on appeal because he was liable for the full deficiency regardless of whether his spouse was granted relief under the “innocent spouse” provision. Id. We reasoned that the nature of joint and several liability was such that our determination would not affect the petitioner’s tax liability, and “the only harm would be to the IRS, in depriving it of an additional source from which to recover.” Id. at 1395....
The Internal Revenue Service Restructuring and Reform Act of 1998 (the “Restructuring Act”), however, specifically added a provision to I.R.C. § 6015 requiring that the non-requesting spouse be given “adequate notice and an opportunity to become a party to [innocent spouse] proceeding[s].” I.R.C. § 6015(e)(4). Therefore, we must re-examine the question presented in Estate of Ravetti in light of this statutory change made by the Restructuring Act....
Here, there is no evidence that Congress intended to create a new right granting a non-requesting spouse standing to appeal from the Tax Court’s adverse innocent spouse determination....Baranowicz cannot show that he has a sufficient tangible interest to support Article III standing because his tax liability would remain the same whether or not we were to affirm or reverse the Tax Court’s determination.
Absent a showing of some concrete harm, we must reject Baranowicz’s argument that the mere grant of participation rights in the Tax Court under § 6015(e)(4) is sufficient to confer on him standing to appeal.
275 Rutgers students who accompanied the football team to the Insight Bowl in Phoenix for last night's game against Arizona State may have a tax headache next April 15. From the Philadelphia Inquirer:
In a new twist on financial aid, acting Gov. Dick Codey pledged $25,000 in taxpayer funds to send Rutgers University students to a bowl game. Within days, Codey's act of governmental generosity prompted Rutgers, and private donors, to kick in an additional $60,000 and a slew of free tickets. All for the worthy cause of helping college kids get drunk and sunburned and scream themselves silly at the Insight Bowl in Phoenix over the holidays.
"Gov. Codey wants to make the cost a little more palatable to students," Jason Kroll, Rutgers' associate athletic director for development, told me. So does Rutgers, which matched the state money and hit up boosters for more. Within days, the "Insight Bowl or Bust" fund stood at $85,000. Deputy athletic director Kevin MacConnell said any student who asked would get a free ticket - face value $52 - to the bowl game. A lucky 275 will be randomly selected for $300 travel stipends.
Hat Tip to Jim Maule, who first flagged the tax issue implicated in this story: "Do the students who receive the $300 'stipends' have gross income for federal and New Jersey state income tax purposes?"
For our Christmas Eve edition of the podcast we look at the controversy that has arisen about a modification the IRS made to this year's Schedule D instructions. In the 2005 edition of the instructions, the IRS specifically indicates that taxpayers may not enter "See Attached" and reference a schedule of detailed transactions for Schedule D, but rather must fill the details on Schedule D-1.
This week we look at adequate disclosure under Revenue Procedure 2005-75 for purposes of escaping the substantial understatement penalty under Section 6662(a).
This week we look at the issue of legal fees and settlement, and the tax status of such. We'll look at the result in the Hauge case where a taxpayer and the partnership she owned virtually all of the interests in settled the same legal dispute with quite different tax consequences.
Tuesday, December 27, 2005
Interesting article in today's Inside Higher Ed: What You Do All Day, which reports on a new study released by the U.S. Department of Education, 2004 National Study of Postsecondary Faculty (NSOPF:04): Background Characteristics, Work Activities, and Compensation of Instructional Faculty and Staff: Fall 2003 (Dec. 21, 2005). Among the 29 interesting tables are these:
Table 18 reports that the average number of hours worked by full-time faculty in Fall 2003 ranged from 50 - 55 hours. Table 19 reports on the breakdown of these hours:
Table 19: Use of Time by Full-Time Faculty, by Sector
Public Community College
Table 19: Use of Time by Full-Time Faculty, by Discipline
Table 21: Average Weekly Hours Spent Teaching by Full-Time Faculty, by Sector
Public Community College
Table 21: Average Weekly Hours Spent Teaching by Full-Time Faculty, by Discipline
[Contact Hours = Classroom Time x Number of Students]
Table 23: Average Number of Publications & Presentations Last 2 Years, by Sector
Public Community College
Table 23: Average Number of Publications & Presentations Last 2 Years, by Discipline
Articles = Articles or Creative Works Published in Refereed and Non-refereed Jurnals & Media
Reviews = Reviews of Books, Articles, or Creative Works Chapters
Books = Textbooks, Other Books, Monographs, and Client Reports
Press reports abound over U.N. Secretary-General Kofi Annan's eruption in anger at his year-end press conference when questioned about a tax angle in the Iraq oil-for-food scandal. A central element of the investigation is the role of Annan's son Kojo in the award of a U.N. contract to a Swiss firm (Cotecna Inspection SA). Times of London reporter James Bonne asked Kofi Annan about press reports that Kojo Annan had used his father's name in importing a Mercedes into his native Ghana in order to obtain a diplomatic discount and tax exemption totalling more than $20,000. Here is the exchange from the U.N. transcript:
- Question: [C]ould you use your time now to clear up the many questions people keep asking about this Mercedes? Did you use your offices to give, and authorize, a diplomatic discount for your son in this matter?
- Annan: [On the car,] it is part of the report. I know you are all obsessed about the car. My son and his lawyers are dealing with it. If you want to know more about it, please direct the questions to his lawyer or to him. I am neither his spokesman nor his lawyer....
- Question: It had the word “Mercedes” in, but I took it out. Just to comment on the Mercedes before I ask my question. The Volcker report says that the Mercedes was bought in your name, so as the owner of the car, can you tell us what happened to it and where it is now? Now, my question is that, it’s true that we missed a lot of stories in the oil-for-food scandal, and the UN hasn’t made it easy. And even your answer today on the Mercedes so far hasn’t made it easy. Some of your own stories -- your own version of events -- don’t really make sense. I’d like to ask you particularly --
- Annan: I think you are being very cheeky here.
- Question: Well, let me -- Sir, let me ask my question.
- The Secretary-General: No, hold on. Hold on. Listen, James Bone. You have been behaving like an overgrown schoolboy in this room for many, many months and years. You are an embarrassment to your colleagues and to your profession. Please stop misbehaving, and please let’s move on to a more serious subject.
- Question: (inaudible) my question.
- Annan: No, move on to a serious –
- Question: There are inconsistencies --
- Annan: No, move on to serious journalists.
For press coverage, see:
See James Bonne's op-ed in today's Wall Street Journal, Where Is the Car? Why Kofi Annan Said I'm Not a "Serious Journalist":
The Mercedes was purchased by Kojo Annan in his father's name four days before the Hotel de Crillon meeting--and about two weeks before Cotecna won the U.N. contract. The use of the U.N. chief's diplomatic status qualified the car for a $6,541 discount on the purchase price and a $14,103 tax exemption when it was imported to his native Ghana. Mr. Volcker's investigators found a memo on the computer of Mr. Annan's personal assistant asking him to authorize a letter to Mercedes. "Sir, Kojo asked me to send the attached letter re: the car he is trying to purchase under your name. The company is requesting a letter be sent from the U.N. Kojo said it could be signed by anyone from your office. May I ask Lamin to sign it?" the assistant wrote.
Neither Kofi Annan, his aide Lamin Sise, nor his assistant, Wagaye Assebe, can recall what happened, and the original documents have disappeared--but somehow the Mercedes was purchased with the diplomatic discount anyway. Abdoulie Janneh, the U.N. official who arranged the tax exemption in Ghana was recently promoted to U.N. under-secretary-general, in charge of the Economic Commission for Africa.
Amid the clutter of unanswered questions, one query has the virtue of simplicity: Where is the car? I have been asking this for weeks at the U.N.'s daily briefing. It was this question that triggered Kofi Annan's outburst. He clearly wants me to shut up. I'm afraid, Mr. Secretary-General, that would be the wrong thing for me to do. Every schoolboy knows that.
Andrew Mitchel blogs the tax consequences of the recent Survivor episode in which a contestent was given the choice of winning a new car for herself or letting the four other contestents win a new car:
On the December 8th episode of Survivor, Cindy Hall, one of the last five competitors, won a reward challenge. The prize for winning the challenge was a new car. Immediately after the challenge, the show’s host, Jeff Probst, announced that she had won the car, and he presented her with the keys. The car drove up to the scene and was available for Cindy to take possession of at that moment.
Immediately after telling Cindy that she won the car, Jeff presented her with a proposition: keep the car and risk losing the game, presumably from the other players’ resentment that she won the car (dubbed the "car curse"), or give up the wheels and the other four competitors would each win their own automobiles. Cindy chose to keep the car. Consistent with the car curse, she was voted off at the next tribal council.
A number of interesting tax questions arise if she had chosen to forego the car. She still would have been taxed on the receipt of the car.
The Statistics of Income Division has released Tax Stats Dispatch 2005-29 with three items:
- Estate Tax Returns Filed in 2004: A table containing data from Estate Tax Returns filed in Calendar Year 2004 is now available. The table shows the amount of gross estate, types of property, deductions, taxable estate, estate tax, and tax credits. The table shows these data by size of gross estate, for both taxable and nontaxable returns. (November 2005)
- Microdata Records for Nonprofit Charities: Microdata records of all Forms 990 and 990-EZ sampled for the annual SOI study of tax-exempt organizations. The samples include Internal Revenue Code section 501(c)(3) organizations and section 501(c)(4)-(9) organizations. Sampling rates ranged from 1 percent for small-asset classes to 100 percent for large-asset classes. Microdata records contain information on balance sheets and income statements, as well as weights (to estimate the population), for each organization.
- Microdata Records for Private Foundations and Trusts: Microdata records of all Forms 990-PF sampled for the annual SOI study covering private foundations and Internal Revenue Code section 4947 (a)(1) charitable trusts. The file contains both operating and nonoperating foundations and trusts. Sampling rates ranged from 0.2 percent for small asset classes to 100 percent for large-asset classes. Microdata records contain information on revenue, expenses, assets, and distributions, as well as weights, for each foundation or trust.
Lee A. Sheppard (Contributing Editor, Tax Analysts) has published Dowdy Retailer Prevails, European Corporate Tax Lives Another Day, 109 Tax Notes 1630 (Dec. 26, 2005), also available on the Tax Analysts web site as Doc 2005-25625, 2005 TNT 247-2. The article discusses the recent European Court of Justice verdict in Marks & Spencer Plc v. Halsey (previously blogged here and here).
Kudos to our sister blog -- Doug Berman's Sentencing Law & Policy -- for winning the 2005 Blawg Review Award for "Best Blawg by a Law Professor." Although we were shut out in the awards, one of the winners -- Patent Baristas for Best Blawg Theme -- noted: "We'd like to see a nod to Paul Caron's TaxProf Blog as Best Attempt to Make Tax Law Bearable Award."
Mass. Lt. Gov. Pays $700k for Vermont Vacation Home, Court Reduces Assessed Value 3 Years Later to $370k
Interesting article in yesterday's Boston Globe, Tax Challenge Rewards Healey -- in Vermont; Lieutenant Governor, Spouse Fought Bill on Vacation Home. The Massachusetts Lieutenant Governor and her husband paid $700,000 for a Vermont vacation home in 1998. Three years later, the town valued the property at $727,900. The Lt. Gov. and her husband joined four other homeowners in challenging their assessments. Despite a booming real estate market, the Vermont Supreme Court upheld the state appraiser's reduction in the assessed value of the home to $370,444 because the town had not assessed other homes at their fair market value. Allen v. Town of West Windsor, 2004 VT 51 (May 28, 2004):
Vermont law requires that property appraisals for tax assessment purposes reflect a property's fair market value. Under § 3481(2), the listed value used for assessing taxes should be equal to the property's fair market value. We have long acknowledged, however, that listing all property at fair market value is not practically feasible every year, particularly in a rising real estate market. Thus, a difference often exists between listed and fair market values of real property, and that difference is permissible so long as the ratio between listed and fair market values is consistent among properties. The need for uniformity derives from the constitutional command that no taxpayer pays a disproportionate share of the public tax burden. Accordingly, in property tax appeals arising under § 4467 of Title 32, the Legislature has directed the state appraiser to list the property subject to appeal at a value that corresponds to the listed values of comparable properties in the town.
In the five appeals consolidated here, the state appraiser reduced the listed value of each property to ensure tax equity....
The town challenges the state appraiser's decision to reduce the listed value of taxpayers' properties to achieve tax uniformity. The town claims that it properly listed taxpayers' properties at 100% of fair market value just as it did for all other properties in West Windsor....
In each of the five cases on appeal, the state appraiser had ample evidence before him to conclude that the town did not, in fact, list other properties in West Windsor at 100% of their fair market value as the town claims....
The Globe story notes:
The assessors came up with the values based on recent sales, so the homeowners did not challenge the legitimacy of those figures. Instead, the owners asserted that in the townwide revaluation, assessors had raised values for properties that had sold recently but had not adjusted as much for those that hadn't changed hands. The result of that imbalance, the Healeys and the others asserted, was that the newer homeowners were being ordered to pay disproportionately higher taxes.
''The basis of our appeal was tax equity, not that the value was wrong," said Thomas Hayes, a Woodstock attorney who represented the Healeys and three of the other property owners. ''Most were valued at what they were worth in the market."
- The Role of Taxes in the Birth of Christ
- Top 5 Tax Paper Downloads
- Britney Spears, Secret Sex Tapes, and Estate Planning Lawyers
- SOI Releases New Statistics of Income Bulletin
- Tax Analysts: Cohen on "Too Good to Be True" Penalty Standard
- Ettredge, Sun, Lee & Anandarajan on Using Deferred Tax Data to Detect Fraud
- Bridging the Book-Tax Accounting Gap
- Latest Tax Tool: "Internet Shaming"
- More on Repatriation of Foreign Profits
- Tax Analysts: Sheppard on Do-It-Yourself Interest Deductions March On
- Survivor: Tax Evasion
- Arrested Development and Law Blogs
Monday, December 26, 2005
The book-tax accounting gap allows corporations to minimize their earnings for tax purposes while maximizing them in reports to investors, all within the letter of the law. Although the U.S. Treasury has reported the rising divergence between book and taxable income with alarm, scholars and policymakers have yet to consider fundamental reform. This Note proposes eliminating the book-tax divide by moving to a book-conformed system. Implementing this proposal will both cut down on rampant corporate tax sheltering and help restore the integrity of the financial accounting system.
Interesting article in USA Today: Latest Tax Tool: "Internet Shaming," by Ben Jones:
Tax scofflaws, beware. State governments are combining new technology with old-fashioned shame to goad delinquent taxpayers to pay up. At least 18 states have launched websites to post the names of people and businesses that owe back taxes. Maryland calls its website "Caught in the Web." In South Carolina, it's "Debtor's Corner." Wisconsin on Jan. 3 will launch "website of Shame." Advocates of so-called Internet shaming say it's an inexpensive way to capture millions of dollars at a time when many states have tight budgets and seek politically viable ways to find more revenue.
For more coverage, see:
- TaxProf Blog, Tax Hall of Shame
More interesting reports on the one-time provision for the repatriation of foreign profits:
- Linda Beale, More on the Poorly Conceived Jobs Act Repatriation Provision
- Linda Beale, Jobs Act, or Is It?
- Kathryn Reynolds Lewis, Job Benefits From Overseas Tax Breaks Hard to Find
For prior TaxProf Blog coverage, see:
- AP on Repatriation of Foreign Profits
- Repatriation of Profits and Stock Buybacks
- Gravelle on The 2004 Corporate Tax Revisions as a Spaghetti Western: Good, Bad, and Ugly
- Clausing on Tax Holidays (and Other Escapes) in the American Jobs Creation Act
- Sheppard on The Repatriation Endgame
- Sheppard on More Bugs in the Repatriation Statute
- Sheppard on Dividend Repatriation Merger Notice
- Giegerich on One-Time Tax Break for Repatriation of Foreign Earnings
- Rollinson, Mundaca & Murillo on Notice 2005-10 and the New Repatriation Provisions
Lee A. Sheppard (Contributing Editor, Tax Analysts) has published Do-It-Yourself Interest Deductions March On, also available on the Tax Analysts web site as Doc 2005-24792, 2005 TNT 238-6. Here is part of the Introduction:
This week's subject is what Investment Dealers Digest calls "the next big thing in hybrid capital" -- enhanced capital advantaged preferred securities (Ecaps). Ecaps, like MIPS (monthly income preferred securities), are designed to give the issuer equity capital and debt treatment for tax purposes. Their creator, Lehman Brothers, argues that they give more equity capital than trust preferreds like MIPS.
That was last August. Since then, other investment banks have reverse-engineered Ecaps, given their ideas new names, and poked each other in the eye about whose version is better. Goldman Sachs calls its product Apex, JPMorgan calls its high equity credit securities (HECS), while UBS sticks with the more subtle "capital notes" for its simpler 60-year security. Banks expect to issue $5 billion to $10 billion worth of Ecap-type securities over the next two years -- the deals take a while to put together. The other banks are trying to achieve an equity credit result in slightly different ways than the product discussed in this article.
So there will be more on this subject. And yes, we'd often like to ask the IRS what the hell is going on.
It isn’t shaping up to be a happy new year for original Survivor winner Richard Hatch, who is currently being prosecuted for charges stemming from his alleged failure to pay taxes on his million-dollar prize and other income, plus supposedly taking donations directed to a charity and putting them to personal use.
Earlier this month, Hatch requested the court grant him access to a copy of the IRS’s master file about him and also a copy of a statement made by one of his accountants to the agency. The judge rejected that request. Then, last week, he lost again when the court refused to delay his trial, as he had requested. In fact, Chief U.S. District Court Judge Ernest Torres denied all three motions Hatch had filed, including the above, one asking for a separation of the counts against Hatch, and one that would have forced the IRS to fully detail just how much Hatch supposedly owes. This puts Hatch in position for a January trial date. Jury selection is scheduled to begin January 10.
For prior TaxProf Blog coverage, see:
(Hat Tip: The Tax Guru.)
Last [week's] episode of Arrested Development featured an appearance by Scott Baio as attorney Bob Loblaw. In the episode, we learned that Mr. Loblaw also has his own website, known as (what else?) The Bob Loblaw Law Blog.
It turns out that a "Bob Loblaw" runs the new Decision of the Day blog, which provides "a daily summary of the best (and worst) of federal appellate decisions."
For more on Bob Loblaw's real-life law blog, see:
Sunday, December 25, 2005
And it came to pass in those days, that there went out a decree from Caesar Augustus that all the world should be taxed. (And this taxing was first made when Cyrenius was governor of Syria.) And all went to be taxed, every one into his own city. And Joseph also went up from Galilee, out of the city of Nazareth, into Judaea, unto the city of David, which is called Bethlehem; (because he was of the house and lineage of David:) To be taxed with Mary his espoused wife, being great with child. And so it was, that, while they were there, the days were accomplished that she should be delivered. And she brought forth her firstborn son, and wrapped him in swaddling clothes, and laid him in a manger; because there was no room for them in the inn.
Luke 2:1-7 (KJV).