Thursday, October 26, 2017

The Deep Problem with Tax Policy: No One Understands It

Story image for einstein from ABC OnlineAlbert Einstein's handwritten note on happiness fetches $1.7 million ...

Canberra creative agency launches Acting EL1 T-shirt as a tribute to ..

Lobbyists and the privatisation of the political process.
"Witness the emergence of a new political class, which takes decision-making away from the parliament, and which minimizes the influence of any advice from within the public service, universities and the CSIRO." (Dr Greg Bailey in Pearls & Irritations)

Bermuda hack: HMRC to investigate some of Britain's wealthiest ...

Three good old dust-ups to get officials' blood pumping.
As usual there were plenty of dust-ups between the Dorothy Dixers on the first day of the Senate’s supplementary estimates hearings yesterday. Here’s a run-down of some of the clashes, claims and counter-claims.

Bronte RSL site developer suffers defeat as court rules in favour of...

I shot this image in Sydney using my iPhone.

2017 CPA-Zicklin Index of Corporate Political Disclosure and Accountability

The Center for Public Integrity – Your favorite companies may be political black boxes

“You book a hotel on You buy a Garmin to navigate highways. Finally, you stream Netflix movies to keep the kids occupied on the trip. Just know you’re patronizing companies that volunteer virtually nothing about their political practices and spending, according to a new study on corporate political disclosure and accountability by the nonpartisan Center for Political Accountability and the Zicklin Center for Business Ethics Research at the University of Pennsylvania’s Wharton School. Other familiar names such as travel website TripAdvisor, satellite service provider Dish Network Corp. and energy drink-maker Monster Beverage Corp. rank among 58 companies within the S&P 500 that earned a score of zero on the study’s 70-point scale. Scores are calculated based on 24 indicators that range from whether a company publicly discloses corporate contributions to political committees and organizations — including politically active nonprofit organizations that don’t themselves disclose their donors — to whether it posts a detailed report of its corporate political spending on its website. The study also awards points to companies that have established clear political spending and disclosure policies. Other notable companies receiving low political transparency scores include toymaker Mattel Inc., discount stores Dollar General Corp. and Dollar Tree Inc., Michael Kors Holdings Ltd., Tyson Foods Inc. Also among the basement dwellers: consumer credit reporting agency Equifax, which is facing congressional hearings after a massive breach of its data systems that compromised the security of about 143 million  Americans’ personal information. When asked about Tyson Food’s score of three points out of a possible 70, Caroline Ahn, a Tyson Foods spokeswoman, said the company complies with federal disclosure requirements…”

Tax Attorney Sentenced to Two Years for Evasion and Obstruction (10/16/17)

USAO SDNY announced here the sentencing of a tax attorney, Harold Levine, to two years imprisonment for counts of tax evasion and tax obstruction to which he pled.  I previously wrote on denial of his earlier motion to dismiss.  Court Denies Motion to Dismiss Counts Against Tax Shelter Lawyer (Federal Tax Crimes Blog 4/14/17), here.  The following are the key excerpts from the USAO SDNY press release for the sentencing:
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAROLD LEVINE, a Manhattan tax attorney, was sentenced today by U.S. District Judge Jed S. Rakoff to 24 months in prison for tax evasion and obstruction of the Internal Revenue Service (“IRS”), stemming from his scheme to siphon millions of dollars of tax shelter fee income from the law firm at which he worked and failing to report the diverted fees as income.  LEVINE’s scheme also involved making false statements to IRS auditors, and urging a witness to provide false testimony to the same IRS auditors who were investigating LEVINE’s receipt of the fees.  
* * * * 
Between 2004 and 2012, LEVINE, a tax attorney and former head of the tax department at a major Manhattan Law Firm (the “Law Firm”), schemed with co-defendant Ronald Katz, a certified public accountant, to obstruct and impede the due administration of the Internal Revenue laws by evading income taxes on millions of dollars of fee income generated from tax shelter and related transactions that LEVINE worked on while a partner of the Law Firm.  Specifically, LEVINE failed to report approximately $3 million in income to the IRS on his personal tax returns during the period 2005-2011.  Most of the fee income LEVINE failed to report was routed by him through a limited liability company LEVINE controlled, which was nominally owned by a family member. 

PTPHuffington Post:  The Deep Problem with Tax Policy: No One Understands It, by Edward McCaffery (USC):

As America once again considers tax reform, with President Trump promising the greatest tax cut ever, the nation faces many choices. We could attempt to shore up the individual income tax, or move to a more consumption-based system. We could lower all rates, or just raise the standard deduction. We could cut the payroll tax instead of or in addition to the income tax. We could flatten tax rates or make them more progressive. We could reform and make corporate taxes more sensible, or even eliminate them altogether. And so on: there are many options.

Goodwill HuntingMitchell L. Engler (Cardozo), Goodwill Hunting Gone Bad: Tax Law's Outmoded Treatment of Goodwill, 96 Neb. L. Rev. ___ (2017):

Goodwill reflects the positive consumer association with a business. Goodwill thus overlaps with trademarks and other related assets. This close association impedes the separation of goodwill value from such related assets. Difficulties thus arise when the tax law treats goodwill more (or less) favorably than related intangible assets.

For instance, the tax law previously denied any depreciation deductions for goodwill. Business buyers thus often allocated their costs away from goodwill and towards related assets like depreciable customer lists. The IRS responded with the initial “goodwill hunting” wave, challenging taxpayers’ low goodwill valuations. Congress addressed this litigious area in 1993 with new, matching depreciation rules for purchased goodwill and related intangible assets.

  • Take global action on big firms' tax, German pro-business party urges  (23 Oct 2017)

  • Brazil's Petrobras loses tax income case, will appeal  (23 Oct 2017)

  • Yes, Puerto Rico pays federal taxes. Here's how much  (23 Oct 2017)

  • US investment banks charge up to $15k for analyst calls  

  • Turkish banks could face big US fines over Iran  (23 Oct 2017)

  • Australians 'wising up' to use of tax havens, says Andrew Leigh  (23 Oct 2017)

  • US business goes in to battle for cherished tax breaks  (23 Oct 2017)

  • Labour Peer seeks to change the tax status of the Duchy of Cornwall - Duchy of Cornwall Bill [HL] (23 Oct 2017)

  • Royal London lobbies for pension lump sum withdrawal tax changes  (23 Oct 2017)

  • HMRC altered guidance to deny interest relief to landlords  (23 Oct 2017)

  • UK energy firms call on chancellor to boost carbon tax  (23 Oct 2017)

  • HMRC defeats £325m tax avoidance scheme  (23 Oct 2017)

  • HMRC claims Upper Tribunal victory in Clavis Liberty 1P case  (23 Oct 2017) 

  • Read Court judgement in Clavis Liberty Fund 1 LP v Revenue and Customs (INCOME TAX : tax avoidance scheme) [2017] UKUT 418 (TCC) (19 October 2017)  (23 Oct 2017)

  • France dials back on digital tax plans after US meetings  (20 Oct 2017)

  • Macron suffers EU setback over tech tax plans  (20 Oct 2017)

  • Amazon offered billions in tax breaks for its second headquarters  (20 Oct 2017)Payments

  • Nigel Farage admits trying to avoid tax with offshore fund  (20 Oct 2017)

  • To what extent do companies report on their tax payments? - Only 2.5% of companies report comprehensively on their tax payments (20 Oct 2017)

  • Yaoure tax holiday costs Cote d’Ivoire $120 million  (20 Oct 2017)

  • $50bn tax avoidance: Investigate enablers to stop schemes  (20 Oct 2017)

  • Neymar fined £900000 by Brazil court for tax evasion after PSG star used image-rights companies to reduce payments  (20 Oct 2017)

  • Taxation of the collaborative economy requires genuine European cooperation  (20 Oct 2017)

  • The FCA report on Rio Tinto shows significant failures of accounting. Why are auditors PwC not in the dock? (20 Oct 2017)

  • Rio Tinto, Former Top Executives Charged With Fraud  (20 Oct 2017)

  • HMRC consults on draft guidance on enabler rules for tax advisers   (20 Oct 2017)

  • HMRC Draft Guidance Consultation: Penalties for enablers of defeated tax avoidance (20 Oct 2017)


  • HMRC Report: The Code of Practice on Taxation for Banks - Annual Report 2017 (20 Oct 2017)

  • UNEQUAL EXCHANGE: How poor countries are blindfolded in the global fight against banking secrecy (20 Oct 2017)

  • Compulsory public country-by-country reporting and CCCTB – harbingers of total tax harmonization in Europe  (20 Oct 2017)

  • All bets are off: HMRC scuppers innovative avoidance scheme  (20 Oct 2017)

  • Fres controversy sheds light on corporate tax avoidance  (20 Oct 2017)

  • Big bank theory! From Vijay Mallya to Ferdinand Marcos, money-laundering cases that made headlines
      (20 Oct 2017)

  • Tax revenues up £35.6bn as CGT and stamp duty bite  (20 Oct 2017)  

  • HMRC Tax Receipts and National Insurance Contributions for the UK for September 2017 (20 Oct 2017)

  • Canada Tweaks Reforms To Taxation Of Passive Investment  (20 Oct 2017)

  • Bermuda's New Premier Fires Back At 'Tax Haven' Accusations  (20 Oct 2017)

  • Cayman attempts to shake its tax haven label in US meetings  (20 Oct 2017)

  • Six ways the UK’s regulatory system is a protection racket for the elite  (19 Oct 2017)

  • Tax justice, the new Washington consensus  (19 Oct 2017)

  • PanamaPapers: MEPs accuse EU national governments of lacking political will on tax avoidance  (19 Oct 2017)

  • Some EU members obstructing money laundering fight  (19 Oct 2017)

  • I've seen how the EU tackles tax evasion versus the US – and if Brexit Britain follows Trump, we're headed for disaster  (19 Oct 2017)

  • Web of Australian Adani solar companies leads to offshore tax havens  (19 Oct 2017)

  • Labour eyes plan for windfall tax on PFI companies  (19 Oct 2017)

  • Stiffing US Taxpayers on 'Grand Scale,' Fortune 500 Holding $2.6 Trillion Offshore  (19 Oct 2017) 

  • Read the US PIRG Report- Offshore Shell Games 2017: The Use of Offshore Tax Havens by Fortune 500 Companies (19 Oct 2017)

  • Labour demands review into City of London role in money-laundering  (19 Oct 2017)

  • UK banks 'exposed to money laundering in South Africa'  (19 Oct 2017)

  • HSBC, Standard Chartered referred to SFO and FCA over money laundering claims  (19 Oct 2017)

  • Chancellor asks for scrutiny of UK bank links to South Africa corruption inquiry  (19 Oct 2017)

  • Pension Tax Relief: UK Chancellor hatches plans for pension raid on older savers
       (19 Oct 2017)

  • Wealth before health? Why intellectual property laws are facing a counterattack  (19 Oct 2017)

  • The hidden 'mansion tax' that could cost buy-to-let investors thousands  (19 Oct 2017)

  • Freeze on tax thresholds on UK Budget agenda  (19 Oct 2017)

  • Stupidity of Voluntary Codes: UK tax authorities warn banks against aggressive avoidance  (19 Oct 2017)

  • America needs higher wages, not lower taxes  (19 Oct 2017)

  • Corporations to keep tax break lost by millions of Americans  (19 Oct 2017)

  • Amazon and eBay profiting from online VAT fraud, says watchdog  (18 Oct 2017)

  • Amazon, eBay, blasted by MPs over VAT. It's a problem with an easy fix  (18 Oct 2017) 

  • UK House of Commons Committee of Public Accounts Report - Tackling online VAT fraud and error (18 Oct 2017)

  • Use of tax consultants cripples tax institutions  (18 Oct 2017)

  • OECD's Gurria Calls For Collective Action On Digital Taxation  (18 Oct 2017)

  • Scotiabank looks to sell gold trading unit after money laundering scandal
    (18 Oct 2017)

  • Twenty nations' tax laws aid multinational profit shifting, OECD report says  (18 Oct 2017)

  • OECD reports action taken to amend preferential tax regimes  (18 Oct 2017)

  • OECD: Governments rapidly dismantling harmful tax incentives worldwide: BEPS Project driving major changes to international tax rules   (18 Oct 2017)

  • OECD/G20 Base Erosion and Profit Shifting Project Harmful Tax Practices ‑ 2017 Progress Report on Preferential Regimes Inclusive Framework on BEPS: Action 5 (18 Oct 2017)

  • Reality Check: Is it legal to tax old people more?  (18 Oct 2017)

  • The Role of Financial Information-Sharing Partnerships in the disruption of Crime  (18 Oct 2017)

  • A bridge to African self-reliance: The big bond  (18 Oct 2017)

  • The Good, the Bad, and the Ugly: How Do Tax Incentives Impact Investment?  (18 Oct 2017)