Monday, August 06, 2018

Beyond Predatory Civilisation: Philanthropic Loophole:

Change only happens if we do things differently

CREW Scores Major Court Victory Against Dark Money

 “In a major defeat for secret money in politics, a judge ruled that dark money groups that spend at least $250 in independent expenditures—a key type of political ad—must report every contributor who gave at least $200 in the past year as well as those who give to finance independent expenditures generally, throwing out an illegal three decades old regulation that was used to avoid disclosure and changing the legal landscape for political spending. The decision in Citizens for Responsibility and Ethics in Washington (CREW) v. Federal Election Commission (FEC) and Crossroads Grassroots Policy Strategies, handed down late on Friday, declares that the law unambiguously commands more disclosure than the FEC has required in 30 years, restoring Congress’s intended full disclosure of those making contributions to groups that fund independent expenditures—ads that explicitly endorse or oppose a candidate for office. “This ruling looks like a major game changer,” CREW Executive Director Noah Bookbinder said.

July 22, 2018 mark[ed] the 20th anniversary of Low Income Taxpayer Clinics (LITC). Low Income Taxpayer Clinics were enacted by Congress on July 22, 1998, as part of the IRS Restructuring and Reform Act of 1998. The LITC program today consists of 134 clinics in 48 states and the District of Columbia. From 2013 to 2016, LITCs:

  • represented more than 100,000 low income taxpayers with IRS controversies; and
  • educated more than 450,000 low income taxpayers along with those for whom English is a second language about their rights and responsibilities under the tax code. ...

Pepperdine Law School is proud to offer a Low Income Taxpayer Clinic at our location onSkid Row in downtown Los Angeles at the Union Rescue Mission, led by Isai Cortez.

Wall Street Journal, Firms Opt to Sell, Not Use, Tax Credits

Chronicle of PhilanthropyChronicle of Philanthropy:  How the IRS’s Stance on Donor Disclosure Corrupts the Nonprofit World, by Roger Colinvaux (Catholic):

Late in 2014, Nicholas Woodman, the founder and chief executive of GoPro, announced what appeared to be an extraordinary act of generosity.

Mr. Woodman, then 39, had just taken his camera company public, and was suddenly worth about $3 billion. Now he was giving away much of that wealth — some $500 million worth of GoPro stock — to the Silicon Valley Community Foundation, an organization based in Mountain View, Calif., that would house the assets of the newly formed Jill and Nicholas Woodman Foundation. ... The executive basked in prestige and gratitude. ...

But four years on, there is almost no trace of the Woodman Foundation, or that $500 million. The foundation has no website and has not listed its areas of focus, and it is not known what — if any — significant grants it has made to nonprofits. ...

If the benefit to the needy is difficult to see, the benefit to Mr. Woodman is clear. After GoPro’s initial public offering, he faced an enormous tax bill in 2014. But by donating via the Silicon Valley Community Foundation, he eased his tax burden in two ways. First, Mr. Woodman avoided paying capital gains taxes on that $500 million worth of stock, a figure that most likely would have been in the tens of millions of dollars. He was also able to claim a charitable deduction that most likely saved millions of dollars more, and probably reduced his personal tax bill for years to come.

Mr. Woodman achieved this enticing combination of tax efficiency and secrecy by using a donor-advised fund — a sort of charitable checking account with serious tax benefits and little or no accountability.

Donor-advised funds, or D.A.F.s, allow wealthy individuals like Mr. Woodman to give assets — usually cash and stock, but also real estate, art and cryptocurrencies — to a sponsoring organization like the Silicon Valley Community Foundation, Fidelity Charitable or Vanguard Charitable. But while donors part ways with their money, they don’t give up control. The sponsoring organizations make grants to hospitals, schools and the like only at a donor’s request. So while donors enjoy immediate tax benefits, charities can wait for funds indefinitely, and maybe forever.

UK: Law firm Mishcon de Reya complains about anti-tax evasion measures The Guardian
This is the same law firm threatening libel action in the UK against murdered journalist Daphne Caruana Galizia, as reported recently in The Guardian here.

Exclusive: Deutsche Bank reports show chinks in money laundering armour Reuters

Peter Harris & Jonathan Coppel

Chairman of the Productivity Commission & Full-Time Commissioner

'Rising Inequality? A stocktake of the evidence'

Tuesday, 28 August 2018

Beyond the bandwagon effect: WHY A DIGITAL TAX STRATEGY IS ESSENTIAL FOR CORPORATE AUSTRALIA - by Ghaleon Ong, Product Manager, Thomson Reuters Tax & Accounting

Through the combined pressures of global regulatory reforms (especially, although not exclusively, in taxation reporting and transparency), the rise of the digital marketplace, big data and a "do more with less" approach to profit margins, corporations have had to make significant changes to business processes and platforms. The tax function has not only been swept into this transformation, but, albeit somewhat reluctantly - found itself at the centre.
Change is unavoidable and requires tax departments to rethink technology and its role in the overall strategic plan of the business. Thomson Reuters' 2018 European Tax Technology Survey [Survey (Link)] revealed that tax functions without a digital strategist in their teams were feeling the strain. So I would suggest it's not too big a stretch to say that adopting a digital tax strategy has gone from "bandwagon trendy" to a global business imperative.
Recently, I had the privilege to present at the Corporate Tax Association (CTA) Convention in Sydney about the current state of play on the Australian tax technology stage.
The Convention provided excellent opportunities to share and hear insights on the status and direction of digital for the corporate tax world, including the ATO on its digital tax strategy and its longer-term plans for proactive digital interaction with corporate taxpayers.
My key takeaways were:

1. Corporates are acutely aware of the evolving tax regulatory and administrative framework surrounding their businesses domestically and internationally, and have therefore implemented tax solutions to address this (in part, as an immediate (some may say knee-jerk) response, but a response nonetheless).
2. However, only a handful have a well-defined digital tax strategy and roadmap in place.
3. Consequently, current adoption of tax technology is disparate, with some areas of tax adopting software solutions (particularly for indirect tax) and others with manual processes and a plethora (and ever-growing collection) of spreadsheets.
4. Alarmingly, many tax functions do not currently have a holistic view (eg documentation and logical mapping) of the processes underpinning the delivery of their tax reporting obligations, creating significant risks including:
1. lack of a comprehensive tax audit trail;
2. "Tax key man" risk - where critical operational knowledge is lost due to staff turnover;
3. task duplication;
4. inefficient/ineffective work flow across the tax function being "under the radar";
5. increasing likelihood of penalty imposition by tax authorities due to a range of factors, including a lack of sufficiently robust, on-demand corroborative data to support tax positions on issues under contention, and late lodgment of tax reports (such as returns and Country-by-Country reports).
5. Yet most corporates have commenced a substantive "health check" of their tax functions (as part of broader finance transformation projects), and are already investigating a range of cutting edge solutions to address these operational gaps, potentially heralding a longer-term shift in the dynamics and roles within the tax function.
Based on the above, irrespective of where an organisation is currently at in this transformative journey, it might be useful to keep the following in mind:
1. Define the end-game: Is the corporation seeking to simply achieve efficiencies around the delivery of its tax compliance obligations? Or does it want to do more with its transactional data (eg business intelligence and data mining) flowing from indirect tax determination workflows as part of a broader transformation project?
2. Know the workflow process(map and document!): Corporations should ensure they have full visibility over each component of their workflow, empowering them to identify redundant, repetitive and manual processes (eg data cleansing, manipulation, validation and mapping) for rationalisation and / or automation.
3. Know what solutions are available: From bolt-on tax software suites (such as Thomson Reuters ONESOURCE), ERP customisations (eg integrated indirect tax determination engines) to intelligent automation solutions (as highlighted by my co-presenter, Michael Flanderka, Data Interactive), there are myriad options to choose from, and certainly no one-size fits all solution. Corporations should select the one which aligns with their circumstances (eg budget, risk appetite, ability to deliver).
4. Take the tax team on the journey: Corporations should communicate, earn the buy-in and upskill tax team members most affected by these changes. Without their support, any transformative projects merely sit on foundations of sand.
With the changes that have already taken place, and those in the pipeline, there will be no stopping tax administrators, global markets, and technological-driven change. So, for corporate Australia, the message is clear - it's time to join the digitisation train before it leaves the station - as I said at the outset, adopting a digital tax strategy is now a global business imperative.

Beyond the bandwagon effect