This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) reminisces about a 1970 episode of The Mary Tyler Moor Show involving an IRS audit.
The bewitching glamor of the 1970s IRS.
The Mary Tyler Moore Show was a Saturday night childhood staple in the days of three TV channels. Through the miracle of Amazon, I revisited my 10-year-old viewing habits by downloading an episode from Season 1, 1040 or Fight, in which the heroine gets examined by the IRS.
The fictional tax world of 1970 is a fabulous place. For example, the IRS does evening house calls, scheduling the exam in Mary’s bachelorette pad at 8:03 p.m. The IRS agent shows up right on time with his calculator.
Mary’s friend Rhoda teases her for being so nervous about meeting a “tin man” from IRS when she can deal coolly with a date with a “$20,000 a year engineer.” But who wouldn’t be flustered by the sharp-dressed, tousle-haired young man from IRS?
The agent falls for Mary. That seemed to happen to most young men in the show. He then strings out the exam so he can see her more. I’m sure that’s against all sorts of IRS rules now, and perhaps would be criminal stalking.
Finally the exam settles, and Mary has a very small adjustment (under $100) on, as I recall, about $8,700 of income. She is ecstatic, and agrees to see him again. It must not have worked out, because the Wikipedia episode list has her in a “budding romance” with someone else four shows later.
While the show has lots of very ’70s things — note the ferns and shag carpet – it holds up a lot better than I thought it would. Not the IRS exam part, though.
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Here’s the rest of this week’s Tax Roundup:
Monday, January 30, 2017
Annette Nellen, Fighting Tax Identity Theft. “Perhaps all taxpayers need a PIN like they have for their ATM cards, debit cards, and bank websites.”
If only there were a recent report showing how to fix this. Today’s Des Moines Register has a big story about the role of tax breaks in Iowa’s budget problems. The article explains how both the sales tax and the state income tax bases have been honeycombed with carve outs. Yet somehow the report fails to mention the best tool yet to deal with the issues of rate reduction and base broadening: The Tax Foundation’s 2016 report “Iowa Tax Reform Options: Building a Tax System for the 21st Century.
Tax Foundation personnel spent weeks in Iowa interviewing dozens of politicians, tax pros and business people and presented a menu of revenue-neutral options of improving Iowa’s income tax. This report has influenced discussions at the state house and the Department of Revenue. It seems like it would have been a good resource for the Register’s reporting. The Register report also fails to mention how Iowa’s tax system of high rates and loopholes hurts Iowa’s business climate ranking. Still, it’s a good sign that tax reform is showing up in coverage of state finance issues. Maybe it will show up in legislation one of these years.
John Cochrane, Corporate Tax. It’s long, but worth reading both for its diagnosis of the flaws of corporate taxes and his solutions.
Kay Bell, Fake CEO phishing tax scam is back. “Remember that tax scam last spring where crooks posing as company executives sent emails asking for workers’ payroll data?” Be careful out there, folks.
Leslie Book, Taxpayer Rights: Measuring IRS Performance. “One of the common critiques of taxpayer rights provisions is that in some cases an agency that violates a taxpayer’s rights may not lead to the taxpayer enjoying a specific remedy… Yet the absence of a remedy does not mean that there are no other ways to encourage good agency practice.”
Morgan Scarboro, Testimony: Reforming the Estate Tax in Minnesota (Tax Policy Blog). “Minnesota is one of only 14 states and the District of Columbia that has an estate tax. Rates vary from 9 to 16 percent in Minnesota. This is in addition to the federal estate tax of 40 percent. In total, Minnesota filers could face estate tax rates as high as 56 percent.”
Paul Neiffer, Update on Entering # of W2s. “If you know that you have tax returns that will show a wage deduction on the front page of the return, it would be good to ask for the number of W2s processed by the company up front.”
Russ Fox, 2017 Mailbag #2: The Case of the Deliberately Wrong 1099. “Congress changed the law on when 1099s for nonemployee compensation (independent contractors); those 1099s must now be filed by Tuesday, January 31st. One unforeseen consequence for tax professionals (and for recipients of 1099s) is that there will be more issues with incorrect 1099s this year.”
Hank Stern reminds us (Tick, Tock (Redux)) that today is the the last day to enroll in an ACA exchange plan to avoid a 2017 penalty for failing to have coverage. Assuming, of course, that the penalty will still apply.
Roger McEowen, Another Issue When the Definition of “Agriculture” Matters – Property Tax. “In general, the actual value of agricultural property is to be determined on the basis of productivity and net earning capacity on the basis of use for agricultural purposes. This typically results in lower valuation for real property tax purposes for agricultural property than nonagricultural property.”
David Brunori, Tax Swaps, Single Sales, Pot Taxes and More (Thomson Reuters Tax & Accounting Blog). “I have had a lot of folks ask me about the Iowa Department of Revenue declaratory order regarding Amazon Prime. Basically, the department ruled that sales of Amazon Prime were subject to Iowa sales tax.”
Paul Neiffer, We Hope This is The Final Update on # of W2s. “We now have found out that you do not need to input the number of W2s to efile business returns and we provide some guidance on the new Destination Based Cash Flow Tax proposal.”
Peter Reilly, Decision On Clergy Housing Tax Benefit Coming This Summer. “My experience with small congregation governance is that generally, the problem is people thinking things should be able to run with them dropping the same amount in the plate that their grandparents did forgetting that grandma baked nine million cookies to sell and grandpa painted the church himself.”
Andrew Mitchel, Form 8886: Section 988 Losses >50k Can Be Reportable Transactions. “Taxpayers should remember that recognition of significant currency losses can cause such transactions to be reportable transactions. A reportable transaction is ‘any transaction with respect to which information is required to be included with a return or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion.'”
Keith Fogg, IRS Examination Division’s Requirement to Consider Collectibility of Potential Assessment (Procedurally Taxing). “At a time when the IRS examination resources have dropped by about 30% over the past six years and collection resources have dropped by almost 40% over that period, does it make sense to go after taxpayers at the examination stage who will turn into uncollectible accounts, or would it make more sense to look on the shelf at cases needing examination where the taxpayer has the ability to pay the liability in the event of an additional assessment.”
Meg Wiehe, State Rundown 2/1: 2017 State Tax Debates Getting Real (Tax Justice Blog). “This week’s Rundown brings news of tax cuts passed in Arkansas and advanced in Idaho, proposals to exempt feminine hygiene products from sales taxes in Nevada and Michigan, revenue shortfalls forcing tough choices in Louisiana and Maine, and more governors’ state of the state addresses and budget proposals setting the stage for yet more tax and budget debates to come.”
Renu Zaretsky, Can we make small stockholders feel great again? (TaxVox). “The President wants US companies to stay put, and he vows to remember the “forgotten people,” or working class Americans. Some of those Americans are corporate shareholders.”
Jack Vitayanon, an IRS attorney in the Office of Professional Responsibility, was arrested today and charged with conspiracy to distribute methamphetamine. According tothe criminal complaint,Mr. Vitayanon has allegedly been trafficking drugs since 2014.
That is precious. We are told by those who wish to impose administrative regulation on tax preparers that we just can’t be trusted without filing annual CPE paperwork with the Office of Professional Responsibility. That’s a little harder to take if we have fewer meth dealers among us, per capita, than the IRS tax profession regulators do.
Howard Gleckman, The Prospects For Tax Reform in 2017 Are Dimming (TaxVox) “To start, it is inconceivable that Congress would enact broad-based reform– with the winners and losers such a measure would create– without the enthusiastic backing of the White House.”
Roger McEowen, Recreational Use Statutes – What is Covered? “Given that agricultural land is prone to activities of third party entrants that could create liability situations for the landowner, knowledge of the rules (and insurance) are key.”