Paul L. Caron
Dean


Friday, February 3, 2017

Weekly Tax Highlight And Roundup: Mary Tyler Moore And The IRS

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.

MTM1

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?

MTM2

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.”

Lisa Christensen Gee, What to Watch in the States Series: Tax Policy 2017 (Tax Justice Blog). “The last time this many states faced deficits was during the Great Recession.”

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.”

News from the Profession. Flexible Schedules, Goodwill and Gossipy Bosses (Caleb Newquist, Going Concern).

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.”

Peter Reilly, IRS Scandal Daily Coverage The Final Chapter. Peter puts a critical eye on the IRS scandal and the TaxProf’s continuing coverage of it. He minds my view “nuanced,” “interesting,” but “not persuasive.”

Robert D. Flach is right on time with your Monday Buzz! Links today cover the ground of tax prep costs to this year’s changed FBAR due date.

Robert Wood, Missing An IRS Form 1099? Don’t Ask For It

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.”

Sam Brunson, Privacy Is Dead: Crowdsourcing Tax Enforcement (Surly Subgroup). “Requiring the public disclosure of tax returns has at least two beneficial results, from a tax compliance perspective.”

TaxGrrrl, Fix The Tax Code Friday: Increased Security & Delayed Tax Refunds.

TaxProf, The IRS Scandal, Day 1360: VP Pence, GOP House And Senate Push Trump To Fire Koskinen. If he keeps Koskinen on, it’s a sign that he is just fine with IRS meddling in politics, at least on his behalf.

Tracy Gordon, A new tool to get under the hood of state and local budget choices (TaxVox). “To help shed some light on these choices, the Urban Institute’s State and Local Finance Initiative (SLFI) has created a new interactive web feature. This tool breaks down spending per capita in each state so users can see how many people get a specific service and how much state and local governments spend per recipient.”

Tuesday, January 31, 2017

Bad News from the Profession. Bad News for Anyone Excited About Sustainability Reporting (Caleb Newquist, Going Concern).

Carl Davis, And Then There Were Six: Amazon Expands Its Sales Tax Collection (Tax Justice Blog). “By March 1, the number of states where Amazon.com collects sales tax will have leapt from 29 to 39 in a span of just two months.”

David Herzig, Twitter Tax Feeds for 2017  (Surly Subgroup)

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.

Jack Townsend, Third Circuit Reverses District Court on Application of Work-Product Privilege for Email to Return Preparer.

Jason Dinesen, Getting Your Business Off to a Good Start, Part 5: Independent Contractor vs. Employee

Jim Maule, Taxpayer Wins Tax Case But Attorney is Criticized. Prof. (emeritus) Maule quotes the Seventh Circuit: “A petition for review is not a complicated document; it could have been mailed with time to spare.”

Kay Bell, The many versions of IRS Form 1099

Richard Auxier, States should prepare for possible fiscal storm (TaxVox).  “Two-thirds of states enter the year with deficits, and 32 states spent less in real terms in 2016 than 2008. But states must also shift their attention to the gathering fiscal storm clouds in Washington, DC.”

Robert Wood, IRS Form 1099 Or Form W-2? “Some people ask ’1099 or W-2?’ as if they were asking how you take your coffee.”

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.”

Scott Greenberg, Scott Hodge, FAQs about the Border Adjustment (Tax Policy Blog): The Tax Foundation is at least neutral to a border adjusted cash flow tax, and several key people there favor it. Meanwhile, this is reported: Koch Network Ready for a Fight on the Border Adjustment Tax. This should puzzle those who say the Tax Foundation is just a Koch mouthpiece.

TaxGrrrl, When To Expect Your W-2, 1099 & More Tax Forms In 2017 (And What To Do If They’re Missing). “The form that most folks care about is the form W-2, which has an annual due date of January 31. Your tax form is considered on time if the form is properly addressed and mailed on or before that date.”

TaxProf, The IRS Scandal, Day 1363. It saddens me to learn that Judge Crater references no longer resonate.

 

Wednesday, February 1, 2017

Career Corner: Can Starting Over Lead to a Better Balance of Career Ambition and Lifestyle? (Rachel Andujar, Going Concern)

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.”

Department of Justice, Over 100 Defendants Charged in Government Impersonation, Fraud, and Theft Schemes Involving Tens of Thousands of Stolen Personal Identities

Donald Marron, Can Trump make Mexico pay for the wall? (TaxVox). “Neither the DBCFT nor a tariff can make Mexico pay for the wall.”

Jim Maule, Tax Clients Who Aren’t Stars But Who Look to the Stars. “I learned several things. First, there are people who seriously consider astrological, or similar, guidance to be valuable, and use it.” I think many of them are legislators.

Joseph Henchman, Kavya Rajasekar, Potential Supreme Court Nominees on State Taxes and Interstate Commerce (Tax Policy Blog). “Judge Gorsuch appears to share Justice Scalia’s criticism of the Dormant Commerce Clause.”

Kay Bell, Why we put off filing our taxes and how to stop it. For me, it has something to do with being busy on other people’s taxes. 

Kristine Tidgren, Iowa Court of Appeals Enforces Partition Fence Agreement (Ag Docket). Roaming cattle are involved.

Leslie Book, Podiatrist Has to Foot The Tax Bill: No Settlement and No Basis (Procedurally Taxing)

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.”

Robert D. Flach follows tradition, posting THE TWELVE DAYS OF TAX SEASON

Robert Wood, Hey, My IRS Form 1099 Is Wrong…Maybe Intentionally

Roger McEowen, The Burden of Proof in Tax Cases – What are the Rules? “When a taxpayer gets a notice of deficiency, the taxpayer normally bears the burden of proof.  The deficiency is, essentially, presumed to be correct.”

TaxGrrrl, White House Petition To Release Trump’s Tax Returns Closes In On A Half Million Signatures

TaxProf, Joint Tax Committee Releases Tax Expenditure Estimates For 2016-2020

 

Thursday, February 2, 2017

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.'”

Clint Locke, IRS Attorneys as Public Servants and Enforcers (Surly Subgroup). On the conflict between working for the taxpayer and working for the tax collector at the same time.

Jack Townsend, Should the Indictment Be Submitted to the Jury In Determining Guilt or Innocence? “Now, why would a defendant fight about what is in the indictment?”

Kay Bell, Trump’s Supreme Court appointee could help decide online sales tax issue

 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.”

News from the Profession. Drones Set to Disrupt the “Ideas Accounting Firms Won’t Pursue” Niche (Adrienne Gonzalez , Going Concern).

Paul Neiffer, Now is the Time to Make Commodity Gifts. “To take full advantage of gifts to kids, you need to make a gift of grain harvested in the prior year.”

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.”

Robert Wood, IRS Professional Responsibility Lawyer Charged In Drug Distribution Conspiracy

Russ Fox, Breaking Bad Hits an IRS Attorney:

Jack Vitayanon, an IRS attorney in the Office of Professional Responsibility, was arrested today and charged with conspiracy to distribute methamphetamine. According to the 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.

Stuart Gibson, Tax Division to the Rescue – If Trump Wants to be Rescued (Tax Analysts Blog). Will promoting attorneys with Tax Division experience lead to Justice Department political independence?

TaxGrrrl, Which Tax Form Should I File: 1040, 1040EZ, 1040-A Or Something Else?

TaxProf, The IRS Scandal, Day 1365:  55 GOP Members Of Congress Ask Trump To Fire Koskinen. The longer he waits to do this, the more it looks like he wants to wield the IRS, rather than reform it.

 

Friday, February 3, 2017

Aidan Russell Davis, What to Watch in the States: Further Attempts to Weaken or Eliminate Progressive Taxes (Tax Justice Blog). He makes that sound like a bad thing. State tax systems are an awful and futile vehicle for income redistribution.

Annette Nellen, States need to get ready for federal tax reform

Christine Speidel, What is the Meaning of the Affordable Care Act Executive Order (Procedurally Taxing). “The bottom line is that there are changes to come, but so far nothing has changed for tax year 2016 returns.”

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.”

Jack Townsend, Update on Passport Revocation, Denial or Limitation for Seriously Delinquent Tax Debts.

Jason Dinesen, Are Unemployment Benefits Taxable?

Joseph Thorndike, If Trump Cares About Tax Reform, He’d Better Get Busy (Tax Analysts Blog)

Kay Bell, IRS’ 2017 list of Dirty Dozen tax scams definitely has a ‘Groundhog Day’ vibe. “And so far, the 2017 Dirty Dozen list looks a lot like the 2016 version.”

News from the Profession. Knowing a Tax Filing Deadline and Meeting It Require Different Skills. (Jim Maule)

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.”

Steven Entin, Long Run Growth and Budget Effects of the Expensing Provision in the House Republican Tax Reform Blueprint (Tax Policy Blog). “Even after subtracting the projected added interest outlays, by the ninth year, expensing adds enough to the growth of jobs and incomes to raise tax revenue, net of additional borrowing costs, above levels projected under current law.”

TaxGrrrl,Your 2017 Tax Form Cheat Sheet

TaxProf, Trump Vows To ‘Destroy’ Law Banning Political Endorsements By Tax-Exempt Churches: One of Trump’s ‘Least Objectionable Policies’?.

 

https://taxprof.typepad.com/taxprof_blog/2017/02/weekly-tax-highlight-and-roundup.html

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