Friday, May 27, 2016

Taxing Times: The apple does not fall far from the tree

“All wishes, whatever their apparent content, have the same and unvarying meaning: ‘I refuse to be what I am.’”
~W.H. Auden, “Interlude: West’s Disease” (from The Dyer’s Hand)

The prevailing view was Quoted in John Poynder, Literary Extracts (1844), vol. 1, p. 268. [1]
Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like. ( via John Quiggin) 
Google and Tax Avoidance: From the "Double Irish With a Dutch Sandwich" to "Delaware Alphabet Soup" 

TaxGrrrl, TIGTA Announces Significant Arrests In Massive IRS Phone Scam

Kay Bell, New telephone tax scam targets students with fake ‘federal student tax’ call. “Imposters posing as IRS agents are trying to trick college students into paying a ‘federal student tax’ – a tax that doesn’t even exist.”

Mitch Maahs: Sports and Fitness Bill Would Provide Tax Advantages for Gym Memberships and Sports Equipment  (Davis Brown Tax Law Blog). The tax law — is there anything it can’t do?

Three Years of Hell to Become the Devil

Panama Papers Confirm Miami a Disneyland for Fraud HuffPo

News from the Profession. Accountant May Have Mixed Up Her ‘Grocery’ and ‘Buy With Stolen Money’ Lists (Caleb Newquist, Going Concern)

Jeffrey Harrison (Florida), The Diva Tax: Insufferable Diva, BUT He Writes:
I mean he and she divas although I know that is technically incorrect but cut me some slack on this one.
I wrote about this general idea some time ago. The context was whether "character" should be consider a plus among law professors so that it off-sets a lack of productivity. The converse question is harder -- should a low character law professor be cut extra slack if he or she writes or at least is perceived as being productive. ...

Wall Street Journal op-ed:  Teaching With Judge Bork in Mind: The Best Teachers Are Driven by Love for the Subject They Teach, by Helaine L. Smith:
The current wrangling over a Supreme Court nomination calls to mind Robert H. Bork’s reply when he was asked at his confirmation hearing in 1987: Why do you want to be on the Supreme Court? He responded, “Because it would be an intellectual feast.” For that he was roundly condemned as heartless by his enemies and politically naïve by his friends.

Robert D. Flach has set up a NEW FACEBOOK GROUP FOR TAX PROS. “This group is not a place to seek answers or assistance with specific tax law questions – there are many other groups for that. The purpose of this group is to share online and print resources, and to provide a forum for discussion on issues of interest to the tax preparation community.”

Symposium, We Are What We Tax, 84 Fordham L. Rev. 2413-2753 (2016):

Leslie Book, TIGTA Report Makes (Incomplete) Case For Expanded Math Error Authority. “The report is sure to generate headlines, as it details some eye popping numbers about EITC improper payment rate and the IRS’s failure to take action on EITC-claiming returns it knows are likely to contain errors.”

The Oversight Subcommittee of the House Ways & Means Committee holds a hearing today on Protecting Small Businesses from IRS Abuse, Part II: [T]he Subcommittee will hold a follow-up hearing to Protecting Small Businesses from IRS Abuse, where members examined how the Internal Revenue Service wrongly used its authority to seize taxpayer dollars and harm small businesses.

Bogus Defenses of Tax-Dodging Corporate Inversions

By Roger Bybee, a Milwaukee-based writer and activist who teaches Labor Studies at the University of Illinois. This is the second article in a three-part series, originally published in the May/June issue of Dollars & Sense. You can find part one here

“We made the world we’re living in and we have to make it over.”

One of Richard Feynman’s little-known sketchesTerrence R. Chorvat (George Mason), Corporate Equities as Lotteries: Skewness and the Tax Preference for Corporate Debt:

Commissioner announces review of MP allowances ruling
With a number of media reports circulating in relation to travel allowances and work-related expenses, we are urging all taxpayers to understand their obligations and check their claims.  Australian Taxation  Office to probe MPs double-dipping tax rort

Howard Gleckman, About TSA, IRS, and Being a Washington Scapegoat (TaxVox):
Start with an agency that deals extensively with the public. The agency stumbles. Congress cuts its budget. The resource-constrained agency does an even-worse job. And the very lawmakers who limited the agency’s ability to do its job express shock and outrage that it…can’t do its job.

Most readers will already know of the indictment of Morrris E. Zukerman, an affluent alleged tax cheat.  The indictment is here and the Press Release from the USAO SDNY is here.  One of the news items about this indictment is:  Jesse Drucker, Oil Investor Zukerman Dodged $45 Million in Taxes, U.S. Says (Bloomberg News 5/23/16), here.

I think the USAO SDNY provides a good summary of the criminal mischief.  The key excerpts from the press release are:

MORRIS E. ZUKERMAN, a Manhattan businessman who owns companies involved in energy investments, was charged today in a three-count Indictment with engaging in multi-year tax fraud schemes pursuant to which he evaded over $45 million in income and other taxes.  

TaxGrrrl, Lawsuits Gone Wild: Francis Still Fighting Back Against Foreclosure. Sounds like his financial life is as interesting as his personal life

The tax preference for interest payments by corporations as compared to dividend payments is a long surviving feature of many tax systems. Many have argued that there is no reason for this preference and so it distorts the capital structure of corporations needlessly. This article argues that because the returns to equity are more positively skewed as compared to debt, individual investors will tend to value equity more than they would value it given only its mean and variance characteristics.

Michael Mancil Brown was found guilty late yesterday by a federal jury sitting in Nashville for engaging in an extortion and wire fraud scheme involving former Presidential candidate Mitt Romney’s tax returns, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant United States Attorney Jack Smith of the U.S. Attorney’s Office for the Middle District of Tennessee and Special Agent in Charge Todd Hudson of the U.S. Secret Service’s Nashville Field Office.
Reflecting on Audre Lord’s assertion that one can’t dismantle the master’s house with the master’s tools, which Le Guin considers a “rich and dangerous” metaphor, she writes:
Power not only corrupts, it addicts. Work becomes destruction. Nothing is built. Societies change with and without violence. Reinvention is possible. Building is possible. What tools have we to build with except hammers, nails, saws — education, learning to think, learning skills?
In a sentiment that calls to mind the great cellist Pau Casals’s wonderful notion of making this world worthy of its children, Le Guin adds:
Are there indeed tools that have not been invented, which we must invent in order to build the house we want our children to live in? Can we go on from what we know now, or does what we know now keep us from learning what we need to know? To learn what people of color, the women, the poor, have to teach, to learn the knowledge we need, must we unlearn all the knowledge of the whites, the men, the powerful?
It’s now time for one or both of our major political parties to tackle the biggest single hidden issue in the election campaign — the way the tax office is treating the small- and medium-sized business community It’s time to help small business take on the tax office

Richard Holden, professor of economics at UNSW Business School, discusses Australia’s housing affordability crisis. Watch now.

 Despite potential for schadenfreude, please refrain from taxing university endowments [John McGinnis]
Kay Bell, Texas former billionaire Sam Wyly convicted of tax fraud. “In her 459-page opinion, Houser found that the Wyly brothers committed tax fraud over the course of almost 15 years through the sophisticated use of foreign trusts, annuities, and Nevada corporations.”

Jack Townsend, Sam Wyly’s Continuing Travails — the Bankruptcy Edition. “As to Sam’s claim that he did not know, ‘The Court does not believe that the law permits Sam to hide behind others and claim not to have known what was going on around him.'” Sam Wyly's Continuing Travails -- the Bankruptcy Edition

Iris was the only daugther of Alice and Hurtle Bald the Postmaster of Darwin the Post office. Before coming to Darwin with her parents in 1940, Iris worked for the PMG in Adelaide. In Darwin Iris worked for the Taxation department. Iris was involved in the social and sporting lifestyle that Darwin had to offer. On the morning of the "Bombing of Darwin" at approximately 9.45 am, Iris was walking through the main entrance of the Post Office when a bomb made a direct hit on the Post Office, she was killed along with her mother and father and five other members of staff who were working at Post Office at the time... ATO Hero: WWII

David Brunori, A Due Process Win for Taxpayers (Tax Analysts Blog). “The taxpayer clearly availed himself of the benefits of the markets in Ohio by owning a company there, but did the transaction, i.e., the sale of the company, have a connection to Ohio? The court said no — and that has to be the answer.”

News from the Profession. Let’s Obsess Over: The Accountant Trailer (Caleb Newquist, Going Concern). I lived in a 12-wide while taking accounting courses — or is this a different kind of trailer?

David Elkins (Netanya), The Merits of Tax Competition in a Globalized Economy, 91 Ind. L.J. 905 (2016):
Since the turn of the current century, leading transnational organizations and academic scholarship have identified tax competition among countries as one of the scourges of the international tax regime. Both the EU and the OECD have warned that tax competition erodes the tax bases of Member States and impedes their ability to provide essential services. Commentators have argued that unrestrained competition is driving tax rates on mobile sources of income to (or close to) zero, a process that jeopardizes the very existence of the welfare state, exacerbates problems of global poverty, and deprives developing countries of funds that they desperately need in order to improve their physical infrastructure and human capital. Tax competition is also said to misallocate economic resources by driving investment to where the tax rate is lowest rather than to where the return on investment is highest.

Kay Bell, U.K. taxpayers target of tax refund phishing scam

US companies’ cash pile hits $1.7tnFinancial Times. Infuriating and wrong. Conflates cash holdings with booking profits offshore for tax purposes, which has nada to do with where cash is actually held. And there is no evidence that any of these companies booking profits offshore pay a tax cost to invest in the US, charitably assuming they had any desire to do so  
Only about one-quarter of U.S. corporate stock is held in taxable accounts, far less than most researchers and policymakers thought. The share has declined sharply from more than four-fifths in 1965.  In a report published today in the journal Tax Notes, my Tax Policy Center colleague Lydia Austin and I found the other three-quarters of shares now are held in tax-exempt accounts such as IRAs or defined benefit/contribution plans, or by foreigners, nonprofits or others.
That is Steven M. Rosenthal, here is further information

 Yahoo ad revenues vs Google, Facebook Business Insider