Thursday, April 27, 2017

IP, Transparency and Tax Matters: ATO commissioner Chris Jordan reappointed until 2024

Mr Katf [is the] Cronulla Sharks No.1 ticket holder [and] I know how important it is to keep a winning team together and Chris Jordan has been an important part of that winning team and that combination on multinational tax avoidance and I am pleased he's re-signed for many seasons to come," Mr Morrison told reporters on Thursday. 
ATO's Chris Jordan has sealed $6m in pay after being reappointed ... 

ATO commissioner Chris Jordan reappointed until 2024

Today is World IP Day. Oh wait, that’s wrong. “Today is World IP Day.TM” [World Intellectual Property Organization]

Building company linked to Mick Gatto allegedly ripped off workers

Ali, Trump’s Back-to Basics Tax Plan: It’s Tremendous! (Surly Subgroup). Fake news, but maybe accurate

HMRC under pressure to produce results of its football tax fraud investigation | David Conn

HMRC will know its incursions into football must produce results if it is not be accused of ignoring bigger targets in its sights.

The Dodd-Frank Wall Street Reform and Consumer Protection Act: Background and Summary. Baird Webel, Coordinator, Specialist in Financial Economics. April 21, 2017. [via FAS]

Jennifer Bird-Pollan (Kentucky) presented Philosophy and Wealth Transfer Taxation at Georgetown yesterday as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:
Tax policy discussions are dominated by economic theories, and often do not involve philosophical analysis. Because tax is applied distributive justice, it makes sense to bring the insights of philosophy to bear on the work of creating and implementing tax laws. As one model of how philosophy can inform discussions of tax policy, this project looks in particular at the taxation of wealth transfers from different philosophical perspectives. Because wealth transfer taxes, more than most income or consumption taxes, are enacted primarily to redistribute wealth and to increase equality of opportunity, focusing on these taxes, rather than on the more widely used income tax, allows the analysis to focus on how the tax does or does not comply with the philosophical goals of the society that enacted the rule.

Underground economy players impervious to CRA's 'nudge' experiment

Poorest Households Pay More In Taxes Than The Richest 10%, New Figures Reveal

oel Slemrod (Michigan) presented Taxing Hidden Wealth: The Consequences of U.S. Enforcement Initiatives on Evasive Foreign Accounts (with Niels Johannesen (Copenhagen), Patrick Langetieg (IRS), Daniel Reck (UC-Berkeley) & Max Risch (Michigan)) at NYU yesterday as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler:
Beginning in 2009, the IRS initiated a series of enforcement efforts to curb the use of offshore accounts to facilitate tax evasion, along with a voluntary disclosure program to encourage individuals with foreign accounts to become compliant with tax law. This paper examines the impact of increased enforcement activity on U.S. taxpayers’ statements of foreign accounts and reported income on tax returns. We find that enforcement initiatives increased the number of individuals reporting foreign accounts to the IRS by at least 19 percent, and they increased total wealth disclosed by at least $75 billion.

David M. Schizer (Columbia), Between Scylla and Charybdis: Taxing Corporations or Shareholders (or Both), 116 Colum. L. Rev. 1849 (2016):
The US taxes both corporations and shareholders on corporate profits. In principle, the U.S. could rely on only one of these taxes, as many commentators have suggested. Although choosing to tax the corporation or its owners may seem like taking money from one pocket or the other, this Essay emphasizes a key difference: corporate and shareholder taxes prompt different tax planning. Relying on one or the other mitigates some distortions and leaks, while exacerbating others. As a result, choosing which tax to impose is like navigating between Scylla and Charybdis.

Len Burman, A 15-Percent Corporate Tax Rate Could Create An Enormous Tax Shelter (TaxVox). “Combining a corporate tax rate of 15 percent with a top individual rate of 37 percent (another likely Trump proposal) would create a powerful incentive for wealthy people to squirrel away a large portion of their assets in a corporation.”

Matt Gardner, Does a 15 Percent Corporate Tax Rate Sound Low? For Dozens of Major Corporations, Maybe Not (Tax Justice Blog)

ITI backs NEITI on oil industry transparency, accountability

Fat cats: Outgoing Yahoo chief executive Marissa Mayer will likely get $186m payout

Ontario to try giving poor a basic income

The EU wants €2 billion from Britain for failing to stop Chinese crime gangs cheating tax

Embarrassment for AIB as bank fined €2.3m for breach of money laundering rules

TaxGrrrl,Indian Police Allege IRS, FBI, Other Law Enforcement Not Interested In Phone Scam Arrests. “Singh said there was ‘not much’ collaboration with American officials, noting that ‘[w]e had a visit from one FBI agent based out of Delhi some time ago” but that there had been no follow-up.'” If true, that’s a crime, if only morally.

You’re not paying me enough. It’s a gift! Sometimes a taxpayer presents an argument that is so unexpected that it makes you wonder if words have lost their meaning. The Tax Court handled one such case earlier this month.
The case involved a disbarred attorney, who we will call Mr. A, who was helping out a still-licensed attorney. In the course of events, the licensed attorney, a Mr. Mullens, gave Mr. A $15,800. Mr. A. said it was a gift and left it off his tax return. The IRS called it compensation, and things ended up in Tax Court.
Gifts aren’t taxable income. They can be subject to gift tax, but that’s paid by the giver, not the recipient, and between the annual and lifetime gift tax exclusions, it rarely applies anyway. So naturally recipients want gifts. Of course, the IRS doesn’t want every employer to pay minimum wage and large holiday “gifts” to employees. Judge Jacobs explains how the tax law sorts this out (my emphasis, citations omitted):
The Supreme Court concluded that the transferor’s intent is the most critical consideration and there must be an objective inquiry into the transferor’s intent. Generally, the transfer must be made from a “‘detached and disinterested generosity’ * * * ‘out of affection, respect, admiration, charity, or like impulses.’” We must make “an objective inquiry as to whether what is called a gift amounts to it in reality. * * * It scarcely needs adding that the parties’ expectations or hopes as to the tax treatment of their conduct in themselves have nothing to do with the matter.” 
The Judge then turns to the facts at hand:
Mr. Mullens died before trial; hence, we cannot know for certain his intent in making the payments to Mr. A. However, the objective facts demonstrate that Mr. A: (1) was paid after he performed work for Mr. Mullens; (2) submitted a timesheet showing the number of hours he worked, so that Mr. Mullens could submit the timesheets to the trial court “as a cost and get me paid.”; (3) expected to be paid for his work on Mr. Mullens’ “private work” according to the value of the cases he worked on and his contribution towards their success; (4) characterized the $5,000 payment first as a loan that was forgiven, which would not be a gift, see sec. 61(a)(12) (discharge of indebtedness constitutes gross income), and then as an advance paid in anticipation of work he was to perform, which would also not be a gift; and (5) considered himself to be underpaid and confronted Mr. Mullens both on the telephone and by letter demanding a reasonable wage. 
One taxpayer argument as to why the result is really a gift set my world spinning:
Next, petitioners argue that the moneys that Mr. A received could not be compensation because the amount was insufficient to induce him to work for Mr. Mullens. 
Ah, the gift of being underpaid. We have the recipe for universal labor peace. You’re not underpaid, enjoy your gift!
The Tax Court failed to embrace this counterintuitive formulation:
Mr. A’s motives are not in question, but we are mindful that when he performed his work for Mr. Mullens, he was a disbarred attorney and Mr. Mullens knew this. Mr. A was paid $15,000 for 210 to 260 hours of work, which amounted to $58 to $71 per hour. We do not believe this to be an unreasonably low rate of pay for a disbarred attorney… 
In sum, we find that the $15,800 that Mr. Mullens paid to Mr. A is includible in petitioners’ 2012 income.
The Moral? When work is done and cash is received by the worker, the tax law is unlikely to call it a gift. Even if that skinflint should have paid you more.
Cite: Alexander, T.C. Summary Opinion 2017-23

Jim Maule, Pretending a Tax Payment Is For Something Else. “There’s a man in Montana who is unhappy that the county treasurer has not cashed the check he wrote in November to pay his property tax bill… In the memo line, he wrote, ‘******* favors.'”

Gatto settles $15m tax bill for less than $4m

Fatih Guvenen (Minnesota) & Greg Kaplan (Chicago), Top Income Inequality in the 21st Century: Some Cautionary Notes:
Since 2000, different measures of top income inequality have exhibited very different trends. Top income shares based on measures of total income show a continued rise, whereas top income shares based on wage and salary income show no increase in inequality post-2000. The most important difference between these two measures of income is the income that accrues to S-corporations. Moreover, the majority of the recent increase in top income shares is due to an increase in average earnings at very high income levels, much higher than that assumed in typical discussions of top income inequality. Once incomes above the 99.99th percentile are excluded (around $7 million in 2012), we see that little continued growth in top income shares has taken place in the last 20 years. Put simply, so far in the 21st century, all the action in top income shares has been S-corporation income at very, very high income levels. ...