Paul L. Caron

Friday, April 21, 2017

Weekly Tax Roundup

Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog):

Monday, April 17, 2017

Diane Ring, Panama Papers: The One-Year Anniversary (Surly Subgroup). "At its core, the leak revealed the true ownership of over 200,000 offshore entities, thereby raising a host of tax and political questions regarding many of the entities’ owners."

Jack Townsend, Court Denies Motion to Dismiss Counts Against Tax Shelter Lawyer. “I will cut and paste Judge Rakoff’s discussion about § 7212(a) which I think offers good review for tax crimes lawyers.”

Jason Dinesen, Glossary: Itemized Deductions. “Itemized deductions are an optional deduction taxpayers can take on tax returns for things such as medical expenses, property taxes, mortgage interest, and charitable contributions.”

Jim Maule, Why Are Users So Reluctant to Pay Taxes for What They Use? Because they’d rather somebody else pay.

Kay Bell, How e-file and, if necessary, e-pay your taxes:

The IRS doesn’t endorse any particular tax software, but you can get a look at those who meet its filing standards by checking out the companies that are participating in Free File. Most also offer paid versions of their Free File software if you don’t qualify to use the no-cost online option.

If you are, however, eligible for Free File — that’s folks, regardless of filing status, whose adjusted gross income is $64,000 or less — consider using it. Or some other free option, either through the software companies or, as mentioned earlier, via a special deal with your bank or other financial account.

Every year parents bring in W-2s of kids who have a small first W-2, no other income, meaning they can get a little refund. I tell them that they should have the kid try to get the refund through free-file. The newly-minted taxpayer might learn something, and they then don’t have to pay me more than the refund to do the return.

Leslie Book, Arrests Made in IRS Scam Call Center Probe; Dark Web a Home for Stolen Tax Information (Procedurally Taxing). ” Last week Accounting Today in Tax refunds are selling cheap on the Dark Web discusses how there is a fully active market for sales of individuals’ W-2s.”

Lew Taishoff, SCAR TISSUE. “But rather than wasting time, effort, postage and carbon on this stupidity, why not mandate a form of SNOD?”

Morgan Scarboro, To What Extent Does Your State Rely on Property Taxes? (Tax Policy Blog):

For a state with high income tax rates, Iowa has a surprisingly heavy reliance on property taxes. But poor New Jersey…

News from the Profession. Infrastructure-as-a-Service Giants Own the Cloud with Lavish CapEx  (Megan Lewczyk, Going Goncern). “This situation reminds me of another industry we all know and love: public accounting.”

Peter Reilly, Amazon’s Fight With IRS – At Least It Gives People Work. “The Tax Court, showing no consideration for tax bloggers who have returns to prepare, finally released its decision in Amazon’s long battle with the IRS on March 23.”

Robert D. Flach, TAX SEASON’S OVER! For him, anyway. Congratulations, Robert!

TaxGrrrl, Taxes From A To Z (2017): Z Is For Zero Percent Rate. “One of the mistakes that taxpayers make is conflating a zero percent rate with being exempt from tax: it is not the same thing.”

Tax Justice Blog, Tax Justice Digest: Resources for Tax Day 2017

TaxProf, The IRS Scandal, Day 1437: Lois Lerner Fears For Her Life, Asks Federal Court To Seal Her Upcoming Deposition Testimony.


Tuesday, April 18, 2017

Career Corner. Is a Remote Accounting Job Right for You? Ask Yourself These 4 Questions (Marsha Leest, Going Concern)

Jack Townsend, Upward Variance Not Asserted by Government Sustained on Appeal. “As I said, Judge McBryde is very smart and knows how to make a sentence likely to stand up on appeal when outside the Guidelines range.”

Jason Dinesen, Why is the SE Tax Deduction Taken on the 1040 and Not on Schedule C?

Jeremy Scott, Why a VAT Is a Poor Substitute for a Corporate Tax (Tax Analysts Blog). “Taxpayers who are skeptical of higher prices under a destination-based cash flow tax should be angrier about the effects of a VAT.”

Jim Maule, Proving Some Tax Evidence Is Not The Same as Proving All. “Sometimes it’s not enough to produce some evidence to support a taxpayer’s claim for an exclusion, deduction, or credit. Sometimes it’s not enough to produce what the taxpayer has or knows. Sometimes it is necessary to find and produce evidence of what others have or know.”

Kay Bell, 10 last-minute tax filing tips

Keith Fogg, Making up Rules. “In the U.S., however, we are not immune from requests that do not have grounding in the code, or regulations, or even the manual.”

Lew Taishoff, “AS CLEAR AS ANYTHING IN THE CODE”. “Now if anyone objects that I blog a lot of Judge Holmes’ opinions, with or without honorifics, I can only reply that he gets some really good cases.”

Paul Neiffer, Another Tax Season Comes to an End. “If you have not filed your tax return yet, don’t panic, you can always file an extension until October 15, 2017.”

Roger McEowen, Public Access To Private Land Via Water. “One issue that has popped-up recently in South Dakota involves public access to farmland that has become flooded.”

Scott Greenberg, Tax Freedom Day 2017 is April 23rd (Tax Policy Blog):

Tax Freedom Day® is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes—individual as well as payroll, sales and excise, corporate and property taxes—and divides them by the nation’s income. In 2017, Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total tax bill of $5.1 trillion, or 31 percent of national income. This year, Tax Freedom Day falls on April 23, 113 days into the year.

Tax Freedom Day varies by state. Iowa’s was Friday last week. Of course, for preparers, it’s tomorrow.

Shu-Yi Oei, The Surly Subgroup Turns One! Congratulations on one year of blogging from this group of distinguished tax academics.

TaxGrrrl, 2017 Tax Day Specials, Freebies & Deals. If you have any money left after filing today, Kelly has some tax day deals for you! She lists a few that operate in the Des Moines area, including Breuggers Bagels, Firehouse Subs, Quiznos, and Noodles & Company.

TaxProf, The IRS Scandal, Day 1438:  Sessions Is Noncommittal On GOP Request To Reopen DOJ Probe Of Lois Lerner.


Thursday, April 20, 2017

Annette Nellen, Best Accounting Blogs of 2017

Career Corner.  I’m Calling BS on Your Cliched Career Aspirations (Rachel Andujar, Going Concern)

Eugene Steuerle, How the Fight over Symbols Prevents Health, Trade, Immigration and Tax Reform (TaxVox). “In taxation, the symbolic fights almost always center on the size of government and progressivity. Yet many of the tax code’s real problems are that it is inefficient, complex, and treats those with equal incomes unequally and inequitably. ”

Jason Dinesen, Do I Need a Receipt for Charitable Contribution Less than $250?

Jim Maule, What Is It With Minnesota Professors and Taxes? “Now comes a report that a member of the economics faculty at the University of Minnesota has been charged with failure to pay Minnesota state income taxes and with failure to file state income tax returns.”

Kay Bell, You paid your taxes, now find out how they’re spent. “The New York TimesDealBook column described USAFacts as ‘perhaps the first nonpartisan effort to create a fully integrated look at revenue and spending across federal, state and local governments.'”

Kristine Tidgren, Iowa Beginning Farmer Tax Credits Facing Changes (Ag Docket)

HF 652 passed out of subcommittee on April 18. It would retroactively reduce the 2017 AATC credit from 7% to 6% for a cash rent lease and from 17% to 16% for a share lease. The proposed legislation would also retroactively reduce the CFTC from 7% to 6% for 2017. For 2018, the proposed legislation would slash the AATC from 5% to 4.5% for cash leases and from 15% to 14% for share leases. CFTC would expire.

Is there really a better justification for a “beginning farmer” credit than, say, one for “beginning accountants?”

Leslie Book, Court Allows IRS to Proceed With Summons Issued to Taxpayer in the Medical Marijuana Business (Procedurally Taxing). “The federal income tax treatment of the marijuana industry likewise reflects an odd reality: those in the business are expected to pay tax on their sizeable profits, yet Section 280E prohibits those in the business from claiming deductions that they would be entitled to if they were trafficking in other products that did not constitute a controlled substance under federal law.”

Lew Taishoff, A MONSTER FORWARD. “No, not a ten-foot tall basketball player. These are carefully-structured Variable Prepaid Forward Contracts (VPFC), whereby a stockholder with a basis of zippo cashes out $200 million worth of stock for no current gain.”

Meg Wiehe, State Rundown 4/19: Alaska’s Long Income Tax Freeze May Be Thawing (Tax Justice Blog)

Morgan Scarboro,  To What Extent Does Your State Rely on Corporate Income Taxes? (Tax Policy Blog):

Despite it’s highest-in-the-nation tax rate, Iowa’s corporation income tax as a percentage of revenue is below the mean.

Robert Wood, Trump Tax Returns Are Still No Holy Grail. Well, they wouldn’t make a very good wine goblet.

Roger McEowen, Overview of Gifting Rules and Strategies. “While there still remain significant income tax incentives to gifting, the transfer tax system rules indicate to many people that it may be better to not gift property and thereby cause it to be included in the estate at death where the exclusion will prevent it from being subject to federal estate tax.  By causing the property to be included in the estate will result in a basis step-up equal to the fair market value of the property as of the date of death.”

TaxGrrrl, How Do You Measure Up To Other Taxpayers?. “The data suggests that millennials are least likely age group to file their taxes early.”

TaxProf, Sen. Flake Releases Report on ‘Outlandish Tax Rackets’. It quotes the report:

Wasteful tax expenditures intended to benefit specific industries profiled in this report include:

-the write off for publishers to increase circulation;

-write offs for gambling losses; and

-tax credits for chicken poop power.

Though the last item would seem to promise unlimited energy, considering how much can be generated by just one state legislature.


Friday, April 21, 2017

Andrew Mitchel, Updated – IRS Practice Units by Topic. “We have updated our resource page that categorizes the IPUs by topic.”

David Herzig, A Libertarian Tip (Surly Subgroup).

Des Moines Register, Is wind power saving rural Iowa or wrecking it?:

The state’s growing amount of green energy — Iowa leads the nation with 37 percent of Its annual electricity portfolio — has helped attract billions of dollars in capital investment from Facebook, Microsoft and Google data centers and hundreds of jobs in the Des Moines area and Council Bluffs.

But Iowa’s growing energy harvest has birthed a new wave of opposition from critics who call wind turbines noisy, over-subsidized eyesores that can be dangerous.

Longtime readers already know how I feel.

Elaine Maag, If the Government Shuts Down: Your Tax Refund May be Shut Down as Well (TaxVox). Another reason not to overdo withholding.

Jack Mintz, Phillip Bazel, Competitiveness Impact of Tax Reform for the United States (Tax Policy Blog):

Among 43 nations surveyed, the United States has the second highest statutory corporate income tax rate at 39.1 percent and is one of the few nations that has not reduced its statutory tax in the past seven years.

Of course, within the U.S. Iowa has the highest corporation tax rate, even taking into account the 50% deduction for federal taxes.

Jim Maule, A Well-Intentioned But Pragmatically Unwise Tax Filing Suggestion. “When a reader sent me an email directing my attention to this commentary I knew immediately that it was a foolish proposition that begged for a response. How did I know? The headline told me, ‘Let’s Make Tax Day a Month Earlier.'”

Kay Bell, 4 moves to make now if you missed the tax-filing deadline

Kristine Tidgren, D.C. Circuit Says Commercial Animal Farms Must Report Air Emissions (Ag Docket). “Many of the farms subject to this new reporting requirement can likely comply by issuing an annual report of ‘continuous releases.’ Nonetheless, they’ll be starting from scratch to implement these procedures. ”

Lew Taishoff, THE GUYS FROM THE HOOD. “And I’m giving the guys and Prof. Liz a shout-out, and a Taishoiff ‘Good Job,’ for John C. Trimmer and Susan Trimmer, 2017 T. C. 14, filed 4/20/17. The guys manage to cop a win from ex-Ch J. Michael B. (“Iron Mike”) Thornton, no small feat even for battle-hardened TC vets.”

News from the Profession. Let’s Play a Game of ‘Who Would Win in a Fight’ Accounting Edition (Adrienne Gonzalez, Going Concern).

Paul Neiffer, Late Options On Bonus Depreciation Are Available. “However, in order to get a written ruling from the IRS, the cost can easily approach $25,000 or more between the IRS fee and the cost to prepare the request.”

Stephen Olsen, What is a “Record” for FOIA (Procedurally Taxing)

TaxGrrrl, States Are High On Tax Revenues But Feds Still Say No To Marijuana.

TaxProf, The IRS Scandal, Day 1442:  Editorial Calls For Firing IRS Commissioner Koskinen

Tyler Cowen, State income tax matters for sports team performance, Miami Heat edition bet against the Raptors (Marginal Revolution). Tyler features a study from Erik Hembre, with this quote (my emphasis):

State- and local-income tax rates differ across locations, giving low-tax teams a competitive advantage when bidding for players. I investigate the effect of income tax rates on professional team performance between 1977 and 2014 using data from professional baseball, basketball, football, and hockey in the United States. Regressing income tax rates on winning percentage, I find little evidence of income tax effects prior to 1994, but since then a ten percent increase in income taxes is associated with a three percent decline in winning percentage. A robustness check using within state variation in income taxes affirms this result. The income tax rate effect varies by league, with the largest effect in professional basketball, where teams in states without income tax win 4.5 more games each year relative to high-tax states. The income tax effect is smallest in major league baseball, which could be explained by greater team payroll disparity. Placebo tests using college team performance find no evidence of an income tax effect.

It is only one study, of course. As it confirms my biases, though, I’m inclined to believe it. I find the arguments of the Iowa Policy Project that state taxes don’t matter implausible, based on my 30+ years of tax practice experience. While taxes aren’t everything, they are certainly a thing.

IRS News, Tax, Weekly Tax Roundup | Permalink