Sunday, June 19, 2016

The Parable of the Talents: Tax Moments

In his 1938 book of memoir-cum-criticism, Enemies of Promise, Cyril Connolly wrote of the perils to the writer of domesticity.
If, as Dr Johnson said, a man who is not married is only half a man, so a man who is very much married is only half a writer (blogger). Marriage can succeed for an artist only where there is enough money to save him from taking on uncongenial work and a wife who is intelligent and unselfish enough to understand and respect the working of the unfriendly cycle of the creative imagination. She will know at what point domestic happiness begins to cloy, where love, tidiness, rent, rates, clothes, entertaining and rings at the doorbell should stop, and will recognise that there is no more sombre enemy of good art than the pram in the hall
Like most writers, I’ve long since lost count of the number of rejections I’ve received. Rejections for written pieces (“This does not suit our needs at this time.”), rejections at job interviews (“You’re very intelligent and seem like you would be an asset, but we’ve decided to hire someone else.”), and even rejections in my personal life (“You’re a sweet guy, J.S., and I like you a lot, but…”). Rejections for this, that, and the other thing. If there’s one thing I know really, really well, it’s rejection *10 Benefits Of Rejection That Will Surely Impress You 

Developing Mossack Fonseca IT worker arrested ... ( Cryptic - Moss... Wood of Margaret River)

Thanks to ICIJ ATO now recruits executives for new tax avoidance taskforce hunting tax cheats multinationals

Turnbull sucked into bribery scandal Macrobusiness. New Zealand, Canada, Australia… What is it with the Five Eyes, these days?

Matt Gardner, LinkedIn Acquisition “Connects” Microsoft to New Tax Avoidance Opportunities (Tax Justice Blog). Who says social media doesn’t work?

News from the Profession. The Accounting Firm Dress Code Revolution Rolls On  (Caleb Newquist, Going Concern). I knew that allowing people to stop wearing hats was the first step down a slippery slope.

Russ Fox, Identity Thief Gets 17 1/2 Years. Good, but it would be better if the IRS wouldn’t leave the store door open and the cash register unlocked when it goes home at night.

Tony Nitti, From Tax Geek To World’s Fastest Triathlete: A Q&A With Olympic Gold Medal Favorite Gwen Jorgensen. “That’s right; at the time she was identified by USA Triathlon as having the necessary swim-run background to excel at the sport, Jorgensen occupied a cubicle in the corporate tax group of Ernst & Young in Milwaukee, doing the things young tax geeks do: formatting spreadsheets, loathing busy-season dinner choices, and using the Internal Revenue Code to prop up a second monitor.”

Sizing up the honesty of small-business owners is one of the Internal Revenue Service’s most vexing problems.
The agency estimates that itcollects $458 billion a year less in taxes from all Americans than the government is actually due. Most of that “tax gap” is income that goes unreported, and the biggest chunk of it, by far — $125 billion— is individual business income.

Australian media a China stooge MacroBusiness

Panama Papers: Behind Malcolm Turnbull’s deal for a tax haven payout Australian Financial Revie

"Former Qwest CEO Nacchio Wins $18 Million Tax Refund Ruling In Court": Denver's CBS4 hadthis report back in April 2015.
Yesterday, a unanimous three-judge panel of the U.S. Court of Appeals for the Federal Circuit issued a decision reversing the refund entitlement ruling.

The TaxProf links to a post by a tax prof asking “Should Companies Be Required To Include Their Effective Tax Rate On Consumer Labels?”  As soon as the government does the same with every “benefit” they give you with some of your own money. Fair’s fair.

In the old days, when lawyers representing the U.S. Department of Justice were found to have lied, an Attorney General might have ended their service. We’re not in the old days any more [Michael Greve] As related in an earlier post, Judge Andrew Hanen of the Southern District of Texas federal court, after concluding that federal lawyers had chosen to hide relevant facts in litigation challenging President Obama’s DAPA immigration initiative, ordered them to take ethics classes in a scathing opinion; his order has variously been criticized for possibly exceeding his jurisdiction, and for being insufficiently stringent to deter future misconduct by the Department’s lawyers.

Ira Stoll recalls a verse from Exodus — translated in the New Berkeley Version of the Christian Bible as “Heap no abuse upon judges” — and notes that the temptation to excoriate judges over unwelcome rulings knows no place or era. Ken White at Popehat pens an explainer, “Is there anything unusual about Judge Curiel’s orders in the Trump University case?” Former U.S. Attorney General Alberto Gonzales kinda-sorta defends the propriety of litigants’ blasting judges, though in a left-handed way (“if I were a litigant who was concerned about the judge’s impartiality, I certainly would not deal with it in a public manner as Trump has, because it demeans the integrity of the judicial office and thus potentially undermines the independence of the judiciary, especially coming from a man who could be president by this time next year.”), drawing a response from Cassandra Robertson via Jonathan Adler. Eugene Volokh examines the no-not-even-close-on-current-evidence case for Curiel’s recusal. Earlier on the controversy here.
Meanwhile, journalists in Detroit have been recalling the story of the flamboyant, litigious, floppy-haired millionaire populist known for his willingness to insult judges and everyone else, who shoved aside the conventional pols to capture a major party nomination. Of course I’m referring to the 1998 run for governor of Michigan of attorney Geoffrey Fieger, a longtime Overlawyered favorite [Deadline Detroit, Zachary Gorchow/Gongwer]

The Adam Smith Institute published a blog last night that was headed: (Tax Avoidance)
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The IRS today announced (IR-2016-86) announced the winners of its first Tax Design Crowdsourcing Challenge:
The Internal Revenue Service today announced the winners of its first crowdsourcing competition, called the Tax Design Challenge, that encouraged innovative ideas for the taxpayer experience of the future.
Have your people call your people. An attorney for Prairie Meadows Racetrack and Casino, Marcus Owens, tells Tax Analysts (free link) that the IRS decision to revoke its Sec. 501(c)(4) tax exemption may be just because IRS people no longer talk to each other.

On its surface, Jesus’ Parable of the Talents is a simple story with four key plot elements: (1) A master is leaving on a long trip and entrusts substantial assets to three servants to manage during his absence. (2) Two of the servants invested the assets profitably, earning substantial returns, but a third servant — frightened of his master’s reputation as a hard taskmaster — put the money away for safekeeping and failed even to earn interest on it. (3) The master returns and demands an accounting from the servants. (4) The two servants who invested wisely were rewarded, but the servant who failed to do so is punished.
Bainbridge, Stephen M., The Parable of the Talents (May 31, 2016). UCLA School of Law, Law-Econ Research Paper No. 16-10. Available at SSRN:

News Release, FASAB Issues Exposure Draft On Tax Expenditures
The chairman of the Federal Accounting Standards Advisory Board (FASAB), D. Scott Showalter, announced today that FASAB is seeking input on the proposed Statement of Federal Financial Accounting Standards entitled Tax Expenditures: Management’s Discussion and Analysis and Disclosure Requirements.

Sen. Hatch Calls For Closer IRS Scrutiny Of Private Museums

Senate Finance Committee Chairman Orrin Hatch (R-Utah) recently concluded a review into private, non-profit museums that enjoy tax-exempt status with a letter sent to Internal Revenue Commissioner (IRS) John Koskinen summarizing the findings of the inquiry. The review, launched in November 2015, sought answers from 11 private foundations designed to assess whether the public interest was being met and whether operations of the foundations merited the substantial tax benefits afforded to their collector-founders through the tax code.

Russ Fox, If You Want to Go to ClubFed… “…The simplest, fastest, and easiest method (via the tax world) is to withhold employment taxes and not remit them to the IRS. This is always investigated.”

Chris Coltrane on tax avoidance, and why it’s bad

Allison Christians (McGill), While Parliament Sleeps: Tax Treaty Practice in Canada, 10 J. Parl. & Political L. 15 (2016):
Canada’s Parliament plays little but a perfunctory role in the adoption of tax treaties, even though these agreements have significant impact on Parliamentary autonomy over core national budgetary matters as well as core legal and administrative functions. This article argues that Canada’s tax treaty process reflects a studied and intentional preference against public engagement in international fiscal
policy, and that this stance has a negative impact on the rule of law.

Wall Street Journal, IRS Says Fines Paid to Finra Aren’t Tax-Deductible:
The Internal Revenue Service has ruled that fines and penalties paid to the securities industry’s self-regulatory organization shouldn’t be considered tax-deductible, a stance that could cost financial firms that settle matters with the regulator. [C.C.A. 2016-23-006 (May 2, 2016)]

Kay Bell, IRS’ Get Transcript full service is back online. “The Internal Revenue Service’s online tool where taxpayers can download copies of their prior year filing data had been effectively out of service for more than a year after it was hacked in in early 2015.”
Four UK financiers found guilty in major film fraud case( The U.K. seems oblivious to the lessons learned by Iowa in its film credit scandal.

FAA Grounds Uber of the Sky Marginal Revolution) 

News from the Profession. Sometimes Clients Say Shady Things (Bryce Sanders, Going Concern).

How Is This Not Tax Fraud?

In May 2007, during a global crackdown on offshore tax havens, an obscure nonprofit lobbying group in Northern Virginia sent a fundraising pitch to a law firm in one of the biggest tax havens in the world — Panama.
The Center for Freedom and Prosperity promised to persuade Congress, members of the George W. Bush administration and key policymakers to protect the players of the offshore world, where hundreds of thousands of shell companies had been created, often to hide money and evade taxes.

Mickey Mouse

Disney CEO Bob Iger thinks companies -- including his -- are simply paying too much in tax to Uncle Sam.


It is not every day that two prominent lawyers are brought before a federal grand jury and directed to provide documents and testimony about conversations they had with a wealthy client.
But that is what happened with two partners at Williams & Connolly, the prestigious Washington law firm, who are representing Morris E. Zukerman, a former Morgan Stanley banker and oil investor. Last month, Mr. Zukerman was accused of failing to pay $45 million in income and sales taxes on works of art and profits from the sale of an oil company.

News from the Profession: Announcing the Certified Pervert Accountant Awards (aka The C[ree]PAs) (Leona May, Going Concern). Credit where credit is due.

Brooks:  Using Facts Of Tax Cases To Reveal Something About Who We Are 

Kim Brooks (Dalhousie), The High Cost of Transferring the Dream

Stuart Gibson, McDonald’s Serves Up a Whopper in Luxembourg (Tax Analysts Blog). “Back in 2009 some enterprising McDonald’s tax planners came up with a clever variation on the shell game: park our European IP in Luxembourg, and then run the profits through a Swiss subsidiary and a U.S. storefront operation whose only function is to keep track of the cash flows.”

News from the Profession. White-Collar Crime Watch: An Online Dating Scam, A Fake CPA, and A Tax-Evading Stripper (Leona May, Going Concern). Once again we scoop Going Concern!

High-end trusts and estates lawyers ... have some of the most fascinating practices in Big Law, with client lists packed with entertainment stars, business moguls, Internet entrepreneurs and reclusive billionaires. While drafting wills, setting up trusts for wayward children, crafting prenuptial agreements for third wives and structuring complex vehicles to reduce taxes, they're privy to the intimate personal and financial details of the lives of the creative and the ultrawealthy. ...