Tuesday, June 28, 2016

Taxpayer Behaviour: Typologies and Influence Factors

All predatory systems of power seek to mask their ultimate aims. As they become more repressive, they become more deceptive. They silence dissidents and bombard the airwaves with lies. Those who effectively resist have to peel back the layers of deceit to understand the intentions of the elites.
We must understand corporate power Fight ...

June 2016 Podcast: Brexit, quantifying kleptocracy & why Panama Papers is tip of offshore iceberg 

Free Meals Influence Doctors’ Drug Prescriptions, Study Suggests Wall Street Journal. As we’ve said repeatedly, gifts as small as a can of soda will predispose the recipient to a sales pitch

NZ. shake up if foreign trusts on the cards following review/

Sydney's elite paying $87k to dodge tax 
Tax Office cracks down on sharing economy

I was happy to see this proposal from the Labor Party to allow state governments to collect criminal fines through the tax and welfare systems (as with HECS debts and child support), rather than jailing defaulters as at present. This was idea I put forward in a paper with Bruce Chapman, Arie Friedman and David Tait, back in 2004 (paywalled, unfortunately)

John Quiggin: A better way of collecting fines ...

Tax convictions falling as technology traps criminals 
Identity Theft and Tax Fraud: IRS Needs to Update Its Risk Assessment for the Taxpayer Protection Program, GAO-16-508: Published: May 24, 2016. Publicly Released: Jun 23, 2016.
Taxpayer Protection Program (TPP). While the Internal Revenue Service (IRS) has made efforts to strengthen TPP—a program to authenticate the identities of suspicious tax return filers and prevent identity theft (IDT) refund fraud—fraudsters are still able to pass through and obtain fraudulent refunds.

 IRS Should Verify Returns Before Sending Refunds, ETAAC Says (Tax Analysts, $link):
The IRS should implement procedures to reasonably verify taxpayers’ identities and withholding before releasing refunds, the Electronic Tax Administration Advisory Committee (ETAAC) recommended in its annual report, released June 21.
What a novel idea. Electronic Tax Administration Advisory Committee Report

*Those who claim country-by-country reporting doesn’t provide useful information are not telling the truth*

California Raised Taxes, Economy Grew 4.1%; Kansas Lowered Taxes, Economy Grew 0.2% Washington Post Wonkblog:  The Interesting Thing That Happened When Kansas Cut Taxes and California Hiked Them, by Jim Tankersley & Max Ehrenfreund:
In 2012, voters in California approved a measure to raise taxes on millionaires, bringing their top state income tax rate to 13.3 percent, the highest in the nation. Conservative economists predicted calamity, or at least a big slowdown in growth. Also that year, the governor of Kansas signed a series of changes to the state's tax code, including reducing income and sales tax rates. Conservative economists predicted a boom. Neither of those predictions came true. Not right away -- California grew just fine in the year the tax hikes took effect -- and especially not in the medium term, as new economic data showed this week.

A Better Way for Tax Reform:
ATO links its myDeductions app straight to your tax return

The Treasury Inspector General for Tax Administration has released a report titled Improvements Are Needed in Offshore Voluntary Disclosure Compliance and Processing Efforts (June 2, 2016 Reference Number: 2016-30-030), TIGTA

Michael Hatfield (University of Washington), Privacy in Taxation, 43 Fla. St. U. L. Rev. ___ (2016):
The IRS has extraordinary legal authority to collect personal information — and it does collect it, on about 290,000,000 individuals each year. Much of this information is not financial: the agency collects notes from therapists’ sessions and surgeons’ files, love letters and reading lists, and information on taxpayers’ sleeping arrangements and the sexual activities of their family members.

“Who is standing in the way of innovation or progress? Vertical silos. Government bureaucracy. Entrenched power networks.”

The Hill, Bush Lawyer Rips GOP for Trying to 'Intimidate' IRS:
George W. Bush's former chief ethics lawyer is slamming congressional Republicans for trying to “intimidate” the Internal Revenue Service (IRS).
Richard Painter, who is now a professor at the University of Minnesota Law School, said the House should not pass a resolution to censure IRS Commissioner John Koskinen. The House Oversight and Government Reform Committee approved the measure last week on a party-line vote.

Jack Townsend, Another Crack in Foreign Account Secrecy – UBS Delivers Singapore Affiliate Records Pursuant to IRS Summons. If hiding income in offshore banks is your tax planning strategy, it’s likely to fail.

Giant corporate entities have become so far-flung and impersonal that “human relations” departments have been created within the soulless structures to cloak the fact that there’s really nothing human about them. HRis mostly known for sending the corporate rank and file peppy motivational memos that boil down to: “The beatings will continue until morale improves.”
Introducing Glencore rapacious global lord

Robert Wood, Offshore Account FBAR Forms Are Due June 30, But Is Filing Your First Admitting A Crime? “Is filing your first FBAR admitting to a crime? Hardly, but this is a common worry.”

Dear Sir, thank you for your tax': HMRC starts to send 'thank you' letters to taxpayers despite keeping them on hold for four million hours
The Telegraph, 13/6/16. HM Revenue and Customs has started to send thank you letters to members of the public who pay their tax on time.  The letters are based on an initiative in Australia where taxpayers receive automatic thank you letters acknowledging the tax that has been paid, although accountants in the UK said that not all taxpayers here would welcome the initiative.
*See: Public Accounts Committee - Oral evidence: Quality of Service to Personal Taxpayers, HC 78 – Q99

Narcis Eduard Mitu, RSP • No. 49 • 2016: 77-87. Our research suggests that discouragement, the traditional tool of tax administrations, is important but not sufficient to explain the level of tax compliance. In this article we tried to identify the main types of fiscal behaviour and the factors that lead to them

Microsoft's New Plan to Avoid $9 Billion in Taxes 

Tony Nitti, New Bill Would Require The Rich To Take A Drug Test In Order To Claim Tax Deductions. Based on this, we should require Congresspeople to take a drug test before they introduce bills.

Robert Gordon, the president of Twenty-First Securities Corp., is something of a guru when it comes to tax efficient investing. He writes and lectures widely on the topic, and has created the visualization below showing the likelihood of various tax outcomes depending on which political party controls the White House and Congress next year. Despite the uncertainty surrounding the November election, Gordon offers two pieces of specific advice for well off folks seeking to election proof their finances. Forbes:  Tax Moves To Make For A Clinton—Or Trump—Presidency, by Janet Novack

End of paper tax disc sees £200m hike in evasion
CCH Daily, 7/6/16. Switching from a paper tax disc to an online system for collecting Vehicle Excise Duty (VED) has prompted a fall of over £200m in the amount of tax collected. The NAO stated: ‘The abolition of the paper tax disc has likely contributed to an initial increase in reporting levels of non-payment which had led to additional compliance and enforcement activity by the agency.’

On 3 June 2016, the ATO formalised its umbrella guides: LCG 2015/1 (Law Companion Guidelines: purpose, nature and role in ATO's public advice and guidance) and PCG 2016/1 (Practical Compliance Guidelines: purpose, nature and role in ATO's public advice and guidance). Play it safe with the ATO: Swim Between the Flags

David Elbert, When taxes don’t measure up. “When it comes to tax law, logic need not apply.”

Leslie Book, Tax Court Sticks to Its Guns and Holds Fraud of Preparer Can Indefinitely Extend Taxpayer’s SOL on Assessment (Procedurally Taxing):
When a taxpayer commits fraud it is black letter law that the statute of limitations (SOL) on assessment remains open indefinitely. In the last decade or so IRS has taken the fraud issue one step further, essentially arguing that a third party’s fraudulent conduct that is connected to the taxpayer’s tax return can also indefinitely extend the taxpayer’s SOL.
Jack Townsend, The Tax Court Sticks to Its Allen Holding that the Taxpayer’s Fraud is not Required for § 6501(c)(1)’s Unlimited Statute of Limitations. “Finally, just a coincidence having nothing to do with the merits, Allen was decided by Judge Kroupa, who resigned from the Tax Court and was recently indicted.”

TaxGrrrl, IRS Warns On Charity Scams Following Orlando Tragedy
Queensland to spend $58 million collecting outstanding debts

The effects of size-based regulation on small firms: evidence from VAT threshold
VATT, 14/6/16. Various types of size-based regulations for firms are typical in most countries (tax schedules, accounting rules, health and safety standards etc.). However, there is only limited evidence of how owners of small firms respond to such rules, and what are the underlying mechanisms behind the observed behaviour. We study these questions by examining the effects of the value-added tax (VAT) sales threshold using tax register data on the universe of Finnish firms and their owners.

Institutional Ownership and Corporate Tax Avoidance: New Evidence
Accounting Review forthcoming. We provide new evidence on the agency theory of corporate tax avoidance by showing that increases in institutional ownership are associated with increases in tax avoidance.

Are Private Firms Really More Tax Aggressive Than Public Firms?
WU International Taxation Research Paper Series, 2016-02.
The findings show that public, not private, firms are more tax aggressive, as the effective tax rates of public firms are lower in individual and group statements.

Steep court fee rises are tax on justice, say UK  MPs

Microsoft agrees secret deal with HMRC that 'allows the company to avoid £100m of UK tax'

Honesty or Dishonesty of Taxpayer Communications in an Enforcement Regime

Peter Reilly, Taxes Ogres And Onions In Gramercy Herald Square Transfer Tax Case. “There is a serious gap between people who design structures and people who actually do returns. I used to think that it must be done better when it came to nine-figure deals, but my brief term with a national firm makes me suspect otherwise.”

As Mark Steyn has written, maybe it would be easier to list which federal agency doesn’t have its own personal SWAT team? 

Ex Eskom boss found guilty of fraud, money laundering

Trump reportedly didn't pay income taxes for two years during the early 90s

HMRC investigations into high-value big company cross border tax cases fall 15% in a year
UHY Hacker Young, 6/6/16. Companies are becoming less aggressive as concerns over reputational damage mount.
Britain’s Elites Can’t Ignore the Masses