Monday, August 01, 2016

The Difference Between Tax Minimisation and Tax Avoidance

Here’s what the ledger might look like. Christopher D. Legras investigates If Writers Charged for their Time on Media Dragon's and McSweeney's

IRS Logo 2Breitbart op-ed:  Congress Must Impeach the IRS Commissioner, by Reps. Jim Jordan (OH-4), Tim Huelskamp (KS-1) & John Fleming (LA-4):

Today Americans see two sets of rules: one for the powerful and politically connected and another for ordinary Americans. They view the system as rigged — and they’re not wrong. There’s a roster of Obama administration officials that have abused their offices and not been held accountable.

A humorous starter guide as to how multinational engage in legal tax evasion, and how to tell Apple to cut it out.
We’re happy to share a rather brilliant explanation of corporate tax
reductionerm, elimination shennanigans from the news and political satire show in Australia, The Undercurrent. In their words:
“Thousands of global companies avoid paying tax.  That leaves us, taxpaying citizens, to pick up the tab. So we humbly present to you The Undercurrent Guide to Legal Tax Evasion.  If you’re as pissed off as we are, you can do something about it here.” (More on their #iPhone7Boycott petition below.)
*Video: Guide to Legal Tax Evasion (With #iPhone7Boycott)

Leslie Book, 8th Circuit Strikes Down Restrictions on Internet and Computer Use Special Conditions for Convicted Tax Evader (Procedurally Taxing). “Today’s technology obviously facilitates a greater spreading of ideas; that carries heavy risk when the ideas are bad and encourage others to likewise break the law. Yet this opinion I think rightfully limits broad restrictions on computer usage for general tax evasion offenses.”
Jack Townsend, Eighth Circuit Opinion on Cheek Good Faith Defense and Conditions of Supervised Relied. “The defendant does not have to prove anything in a criminal case.” Another take on the same case discussed by Leslie Book.

Highest-paid CEOs run worst-performing companies, research finds Independent (Dan K). Study here. Note this is not a new finding, but this study does an important job in differentiating between “summary pay” which is what is reported v. what they actually took home  ...

Barbarians at the Gates Craig Murray

Are Those Safe Haven Assets Safe Anymore? Bloomberg

Goldman Sachs Subpoenaed by U.S. Agencies for Documents Related to 1MDB WSJ

Facebook Fails to Show Up for Seventh Tax Summons From IRS Bloomberg

Ji Li (Rutgers), 'Strangers in a Strange Land'—Chinese Companies in the American Tax System, 68 Hastings L.J. ___ (2016):
Two distinct features describe foreign direct investment (“FDI”) from emerging economies: (1) most of the investors thrive in poor regulatory environments, and (2) the visible hand of the state exerts a powerful influence. Due to these two features, emerging market FDI poses novel questions to tax law scholars and U.S. policymakers. For instance, will the investors import noncompliance practices? Or will they adapt to the complex and stringent regulatory regime of the host country?

UK Treasury Select Committee seeks scrutiny of Office for the Tax Simplification (OTS) senior appointments

French workers 'pay the most taxes in Europe', This Interactive Calculator Shows How Much Tax Havens Are Costing America:
Many multinational corporations use their global reach, and a fair degree of high-tech accounting, to shift their assets, profits—and taxes due—to so-called offshore tax havens. These countries have minimal corporation tax rates, drastically reducing the amount of tax these multinationals have to pay. Below is a list of the 30 U.S. companies with the biggest offshore holdings. Our calculator gives you an idea of how much more money Uncle Sam would make if all that income were declared in the U.S. 
Tax-havens-2 (2)
The calculator above lists the aforementioned 30 Fortune 500 companies with the biggest offshore holdings. They are ranked by the total value of their subsidiaries in offshore tax havens, in descending order.

Following up on my previous post, Federal Government To Start Tracking Luxury Home Buyers, Beginning In Miami (>$1m), NYC (>$3m):  New York Times, U.S. to Expand Tracking of Home Purchases by Shell Companies:
More than a quarter of the all-cash luxury home purchases made using shell companies in Manhattan and Miami were flagged as suspicious in a new effort to unearth money laundering in real estate, the Treasury Department said Wednesday. As a result, officials said they would expand the program to other areas across the country.

Wall Street Journal, A Shrinking World Spurs Calls to Rewrite the Tax Guidebook:
The argument against taxing capital income relatively more than wages is losing its force.
The Group of 20 has spouted the importance of “inclusive growth” for years without spelling out what it really means or how to generate it. The Organization for Economic Cooperation and Development, at least, will be telling G-20 finance ministers in Chengdu, China, this weekend what it thinks it should mean for taxation: less of it on low-income workers and more on high-income shareholders.
The Paris-based think tank has just junked the conventional economic wisdom on tax it had been promoting for years. That old view said income from capital that individuals receive—such as interest, rents, and dividends—should be taxed much more lightly than wages and salaries.

*The late Kerry Packer famously said, "I don't know anybody that doesn't minimise their tax … Of course I'm minimising my tax. If anybody in this country doesn't minimise their tax they want their head read. As a government I can tell you you're not spending it that well that we should be paying extra". Melissa Browne: The difference between tax minimisation and tax avoidance

When the owners of a business want the flexibility of distributing income to family members, to reduce the impact of income tax on net business income, a discretionary family trust with a company acting as trustee provides flexibility from a tax planning point of view and legal protection
How to avoid the ATO auditing your family trust

Following up on Sunday's post, Trump's Call To Repeal The Johnson Amendment And Allow Churches To Endorse Political Candidates:  
Adam Chodorow (Arizona State), Donald Trump Wants to Politicize the Pulpit:
One of the biggest applause lines of the Republican convention was Donald Trump’s call to repeal the so-called Johnson Amendment, which, among other things, conditions churches’ tax-exempt status on ministers refraining from political speech at their pulpits
Reuters reports that the Swiss Federal Tax Administration announced that it will respond to an IRS treaty request for information on U.S. depositors meeting certain characteristics.  John Miller, Swiss to pass information on HSBC accounts to U.S. tax agency (Reuters 7/26/16), Swiss Connections  The request appears to be a group request (or what I call a John Doe Treaty request) whereby the U.S. depositors are not named (indeed, the IRS in most cases would not know their names) but certain characteristics of material potential U.S. tax noncompliance are suggested
Swiss FTA to Pass HSBC U.S. Depositor Information to IRS Under Treaty

Deloitte's 2016 Global BEPS Survey [BEPS SURVEY REPORT] offers insights into how the growing demand for greater financial transparency has positioned tax strategy as a significant business issue for the entire C-Suite and corporate board, not just the tax director. In fact, Deloitte says over 92% of respondents agree that tax structures are under greater scrutiny by tax administrations than a year ago, intensifying the expectation for CEOs and CFOs to know where their profits are earned and how much tax has been paid.

ATO resource targets illegal pension schemes

ATO targets self-managed super in annual tax return crackdown

Swiss to pass information on HSBC accounts to US tax agency  

Los Angeles Times: If California's a 'Bad State for Business,' Why Is It Leading the Nation in Job and GDP Growth?, by Michael Hiltzik:
State and federal statistics released as recently as Friday make it clear: California is smoking hot, economy-wise.
The state gained 40,300 jobs in June and 461,000 over the year. With a gain of 2.9%, that was the best 12-month record of any large state except Florida, which won by a nostril with a gain of 3%, and much better than the nation as a whole (1.7%). According to the congressional Joint Economic Committee, California leads the nation in growth in its gross domestic product, which grew by 4.2% in 2015 — more than twice the national rate.

Group of 20 finance ministers say taxation policies should be improved worldwide to reflect globalisation and promote socially balanced, sustainable economic growth.
US Treasury Secretary Jack Lew said that not only specific tax rules but entire "taxation administrations [based on national boundaries] have to be updated."
CIoT urges HMRC to delay introduction of new corporate tax evasion offence

UK House of Commons Committee of Public Accounts Report: HMRC Quality of service to personal taxpayers and replacing the Aspire contract

UK House of Commons Committee of Public Accounts Report: Conclusions and recommendations on HMRC Quality of service to personal taxpayers and replacing the Aspire contract

UK House of Commons Committee of Public Accounts Report Summary : HMRC Quality of service to personal taxpayers and replacing the Aspire contract

Fears grow over Scottish firms used for money-laundering

Scotland as a tax haven 

Anne Alstott (Yale), Tax and … Housing Policy:
In his new book, Evicted, Harvard sociologist Matt Desmond recounts the human cost of the frequent evictions that disrupt life in poor communities. Desmond doesn’t focus on the role of the tax code in housing policy, but his work suggests directions for further thought. ...

Federal court orders 2 Canadian banks to hand over Cayman bank info to CRA

AALS, Call for Participation in a Discussion Group on The Future of Tax Administration and Enforcement:
The Annual Meeting Program Committee introduced a new program format, Discussion Groups, at the 2016 Annual Meeting to facilitate scholarly discussion and engagement. Discussion Groups provide a small group of faculty an opportunity to engage in a sustained conversation about a topic of interest. The objective is to facilitate a lively and engaging real-time discussion among participants. Discussion Group participants will typically be expected to write and share a short presentation summary (3-5 pages) as part of their participation. The Discussion Group sessions, however, will not feature formal presentations. Instead, the written summaries are intended to facilitate a lively and engaging real-time discussion among the participants. Participants in this Discussion Group will consist of a mix of the people identified in the original proposal along with additional individuals selected on the basis of this call for participation. There will be limited audience seating for those not selected in advance to be discussion participants.

Cost of Tax Avoidance: Examining the Role of Product Market Structure

Wall Street Journal, Car-Sharing Industry Carries Heavy Tax Burden:
Local taxes put Zipcar and Car2Go at a disadvantage in competing with ride-hailing services Uber and Lyft, research by DePaul University shows.

Vic Fleischer Named Co-Chief Tax Counsel For Democrats On Senate Finance Committee (July 20, 2016)
Politico, Morning Tax: Backlash Begins:
It took a little while, but prominent conservatives in the tax field are starting to question Sen. Ron Wyden’s decision to bring on Victor Fleischer as co-chief tax counsel for Finance Committee Democrats. Fleischer, a University of San Diego law professor, helped jump-start the movement to end the preferential tax treatment of carried interest, which has become something of a cause celebre among Democrats.