Category: Tax

Illinois Tax Policy, Once Again, Fails to Impress

Known smartypants George Will took the state of Illinois to task over the weekend for their less-than friendly tax policy. He tells an anecdote of Tim Storm, a business owner that relocated his company to Beloit, Wisconsin from Rockton, Illinois which is a whopping five miles away. This was, at least in part, due to the state’s recently enacted “Amazon tax”:

Illinois, comprehensively misgoverned and ravenous for revenue, has enacted what has come to be called an “Amazon tax.” It requires Amazon and other online retailers to collect the state’s sales tax. Amazon and many other retailers responded by severing their connections with their Illinois affiliates.

Not only is GW all over Illinois’s decision to go after online retailers for sales tax, he also reminds everyone that the pols in the Land of Lincoln did a number on individual and corporate income tax rates:

In January, a lame-duck session of Illinois’ legislature — including 18 Democrats who were defeated in November — raised the personal income tax 67 percent and the corporate tax almost 50 percent. This and the increase — from 3 percent to 5 percent — in the tax on small businesses make Illinois, as the Wall Street Journal says, “one of the most expensive places in the world to conduct business.”

So as you can see, Illinois is on the ropes for its fiscal (mis)steps. Of course, Will isn’t the first person to call out the state for being a little tax happy, as Americans for Tax Reform was all over Illinois for this back in January. Of course, ATR managed to criticize the policy in a snarky Swede fashion as opposed to a bowtie-wearing polymathic diatribe. For obvious reasons, we’re partial to the former.

Working up a tax storm in Illinois [WaPo]

Who Would Have Guessed That Texas CPAs Would Oppose the Elimination of Oil and Gas Tax Breaks?

Next thing you know you’ll hear about CPAs in Iowa (with the exception of one with whom we’re acquainted) opposing the repeal of ethanol credits.

The Texas Society of CPAs’ Federal Tax Policy Committee addressed the issue in its “Analysis of Legislative Proposals to Repeal Certain Tax Treatments of Domestic Oil and Gas Exploration and Development”.The committee agrees that reducing the deficit is of utmost importance, but said that any effort to cut tax incentives for oil companies and raising taxes on oil and gas exploration and development should be weighed against its potential to exacerbate the current underemployment issue, and the need for a secure source of energy.

As noted in the analysis, the committee said it believes repealing tax benefits and allowances for the industry could adversely impact the state’s oil and gas industry, and the economies of Texas and the U.S.

Texas CPAs Oppose Elimination of Oil and Gas Tax Breaks [AT]

One of the Guys That Wrote the Mother of All Corporate Tax Textbooks Has Died

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James Eustice, who co-authored Federal Income Taxation of Corporations and Shareholders with Boris Bittker, died yesterday at 77. He was a Gerald L. Wallace Professor of Taxation Emeritus at NYU and counsel at Cooley LLP.

This epic book is more appropriately referred to as a “treatise” but it probably served as your primary source of information for your corporate tax classes.

For anyone not familiar with B&E, it’s quite the impressive piece of work and would be an excellent weapon of choice in a tax nerd duel. I personally never assaulted anyone with my copy but it did come in handy when I had trouble sleeping in grad school.

Anyone else with fond memories of B&E are invited to share them.

Death of Jim Eustice [TaxProf Blog]

California Attorney General Not Amused By ‘Tax Lady’ Roni Deutch Destroying Records, Using Client Refunds to Pay Debts to a NASCAR Team (Allegedly)

If you’re an insomniac and adverse to softcore porn, you’ve probably seen Roni Deutch at some point, talking tax relief for those oppressed by the IRS to the point of it being a hate crime.

Last August, former California Attorney General and current Governor Jerry Brown sued Ron for a “heartless scheme,” of ripping off those people that needed her help settling disputes with the IRS. RD disputed the charges, continues to tout her expertise and is still issuing lame press releases that gives her some appearance of still being in the game.

As annoying as that probably is, the AG really got bent out of shape when it discovered that Deutch was destroying records and using client refunds to pay off some debts.

Harris’ office said Deutch has systematically destroyed documents for months and may have shredded up to 2.7 million pages of records.

The Attorney General said Deutch had been spending $3 million a year on advertising, mainly late at night on cable TV and that only one in 10 clients received any benefit from working with her firm.

The state also said Deutch was supposed to pay $435,000 in refunds by January, but instead released the money to other creditors, including family and friends, a NASCAR racing team and a casino.

Since these types of actions are typically frowned upon, current California AG Kamala Harris has asked a judge to find the Tax Lady to be in contempt of court and be given a free five-day stay at a local prison for each violation. Not sure how that math will work out but that could amount to a lot of NASCAR being watched on prison TV.

“Tax Lady” Roni Deutch has problems of her own [Reuters]

Gird Your Loins, Unscrupulous Tax Preparers

The IRS is on you like white on rice.

The Internal Revenue Service is taking steps to stop tax preparers with criminal tax convictions or permanent injunctions from preparing tax returns. This is just one of several recent moves to improve the quality and oversight of the tax preparation industry.

More than 700,000 tax preparers nationwide have registered with the IRS and obtained Preparer Tax Identification Numbers (PTINs). This nine-digit number must be used by paid tax return preparers on all returns or claims for refund. Paid preparers must renew their PTINs annually to legally prepare tax returns.

“We owe it to all taxpayers and the many honest tax return preparers to remove the relatively small number of bad actors from the tax preparation industry,” said Doug Shulman, IRS Commissioner. “Just one unscrupulous tax return preparer can cause a lot of financial damage to both taxpayers and the tax system.”

Nineteen ne’er-do-wells have already gotten word that they’ll be stripped of their PTINs for unseemly behavior of some kind or another. Best get that CPA so you don’t have to mess with the whole thing…until you the IRS lumps them in too.

IRS Begins Enforcement of New Return Preparer Rules [IRS]

ATR: SAVEGO Is a No-go

If you’re like us, you’re strangely fascinated by the Americans for Tax Reform and their tax intolerant ways. ATR President Grover Norquist and his band of tax annihilating orcs have battled to get as many signatures on their taxpayer protection pledge as possible and will strike down – often through sternly-worded letter – anyone who dares break that pledge.

Because tax and budgetary policy can be a tricky game, sometimes compromises get floated out there so Democrats and Republicans might find common ground. This common ground typically consists of both sides giving a few things up and agreeing to live with a few things that aren’t ideal.

A recent compromise over the debt-ceiling debate known as SAVEGO was recently passed around some budget wonks and ATR is going on record that any taxpayer protection pledgers best not give it a second look:

ATR is warning that Republicans would be violating their Taxpayer Protection Pledge if they sign on to the deal. SAVEGO as proposed would count tax earmarks as “spending” in the tax code. ATR does not view tax breaks as a type of spending and insists that eliminating them must be accompanied by tax cuts.

SAVEGO would put in place a trigger that, if reached, would cause across-the-board spending cuts or slashing tax breaks.

“Support for a net tax increase trigger is a clear Pledge violation,” ATR Tax Policy Director Ryan Ellis told The Hill Thursday. “A vote for this is a vote for automatic net tax increases.”

“The second clause of the Pledge says that signers will oppose any net reduction or elimination of deductions and credits, unless matched dollar-for-dollar by cutting tax rates. The SAVEGO plan is in direct violation of the Pledge,” he added.

Americans for Tax Reform: SAVEGO violates tax pledge [The Hill]

What Is the Most Difficult Sentence to Understand in the Tax Code?

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The IRC is probably the last thing many of you want to think about right now but, yes, I’m going there.

David Foster Wallace’s posthumous novel, “The Pale King“, is set in an IRS office in Peoria, Illinois and you’ll be shocked – SHOCKED! – to learn that the protagonist is fighting extreme boredom at his job. Wallace did extensive research prior to writing his final book including taking accounting classes at Illinois State University and carrying on “lively correspondence with tax lawyers and C.P.A.’s, peppering them with questions about the Tax Reform Act of 1986, compliance studies, I.R.S. office furniture, and an exotic tax shelter called ‘the Silver Butterfly,'” the Times reports.

One of the accountants Wallace corresponded with was Stephen Lacy who wrote this about Section 509(a):

“[L]egendary as the most difficult sentence to understand in the tax code,” adding: “I find that although I can never quite understand what it says, after I read it several times and concentrate, I can actually get into a kind of weird Zen-type meditation high! (Then again sometimes it provokes a profound anxiety attack.)”

“Legendary,” not only because its Mr Lacy’s drug of choice, but because Ronald Reagan quoted this passage back in June of 1986 when he set forth on his divine mission of reforming the tax code. A mission he ultimately achieved and thereby canonizing himself in the hearts and minds of many (can’t you picture the shrine in Grover Norquist’s house?). Anyhoo, here it is, in all its glory:

For purposes of Paragraph (3), an organization described in Paragraph (2) shall be deemed to include an organization described in Section 501(c) (4), (5), or (6) which would be described in Paragraph (2) if it were an organization described in Section 509(a)(3)

Not exactly Stieg Larsson is it? Anyway, if any portion of the code is still haunting your dreams and you feel as though it tops 509(a), you’re invited to exorcise it out now and your conscience will finally be clear.

David Foster Wallace and the Literary Tax Accountant [NYT]

Latest Poll Suggests That Most People Think Paul Ryan’s Deficit Reduction Plan Is a Lousy Idea

[A McClatchy-Marist] poll reported that roughly two out of three registered voters — 64 percent — would be in favor of increasing taxes on annual income over $250,000. President Obama reiterated in his deficit-reduction speech last week that he favored allowing taxes to rise on families in that income level. Independents favored that plan of action at roughly the same percentage as the country at large, with more than eight in 10 Democrats also behind the idea. A majority of Republicans, 54 percent, opposed it. The poll was conducted both before and after Obama’s Wednesday speech, with support for higher taxes on wealthier Americans picking up afterward. Meanwhile, fully four in five registered voters oppose cutting Medicare and Medicaid. The House GOP’s fiscal 2012 budget, largely crafted by Rep. Paul Ryan (R-Wis.), makes fundamental long-term changes to both health entitlement programs, converting Medicaid into a block grant and turning Medicare into a type of voucher system. [The Hill, Earlier]

Teens Volunteering for VITA Wise Beyond Their Years

As you’re all aware, the teen years are a confusing time. Trying to fit in, keeping the parents off your back and trying to determine what exactly is going with your body is enough to drive you to underage drinking.

Some junior and seniors at a high school in Monticello, New York have been brave enough to add tax preparation to the mix volunteering for the IRS’s VITA program. “It’s a little confusing, but you get the hang of it,” said Marcus Daniels-Penn, told the Journal. Of course not everyone participating has such a optimistic view of the experience as Adam Kaiser, who was struggling with determining who can be claimed as a dependents, noticed something most people don’t realize until long after they leave the quad, “The government can’t do anything simple,” he said.

Tax Preparers Straight Out of ‘Glee’ [WSJ]

Tax Day Rally Photos (2011)

Editor Note: Last Friday students from my Internet Media class (What? You think I just surf the web all day?) took to the streets of the Mile High City to cover the Tax Day Rally at the Colorado State Capitol as part of an extra credit opportunity. Their photos appear on the following pages as well as a brief commentary presented here by Nikita Blue.

Friday’s Tax Day Tea Party Protest at the Denver Capitol Building seemed more like crossword puzzle hour at Golden Meadows than a politically-charged rally to action. There was even a row of lawn chairs up front near the steps for the severely fatigued. Many a lackluster punch-line received half-hearted titters of laughter, and the crowd had already thinned significantly afMaher, conservative blogger for WhoSaidYouSaid.com, opened with, “Tax the Rich! Tax the Rich! Oh, wait… wrong rally.” Onlookers were momentarily confused; possibly thinking, “Wait… does that mean she goes to Obama rallies, too?”


Then Michelle Morin, a Mom for freedom, warned her audience that there was a “long, black train coming.” (That is, a Marxist, Obamacare train.) She managed to pry a few vacillating yeah’s and whoo’s from the group with her passionate anti-Marxism sentiments. And let’s face it; trains are scary. Especially black ones.

Unfortunately, the awkward moments just kept coming. One speaker suggested that one of the Tea Party mottos should be, “Get your hands off my lollipop!” The confused hush and mumbled responses reinforced the impropriety of hands, suckables and unwanted advances.
Denver’s Tea Party was once a fiery bunch of outraged, impassioned citizens demanding acknowledgement and consideration. Sadly, this get-together packed little of the previous fiscally-conservative punch found in rallies past.

Although this humble protest began with all the necessary elements of a minority uprising, its moxie was deflated prematurely. At one point, we were encouraged to “party like it’s 1773.” (Get it? The Tea Party?) Upon examination, it seemed that we were indeed partying with all of the puritanical, long-faced sobriety of the 1700’s. All we needed now was a crumpet.

Atlas Shrugged also opened on Friday.

The rally was a formal occasion for some.

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Some people got a jump start on the early spring lawn chair sales.

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Somewhere in Denver, someone needs an editor.

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Either someone is ready to go home or doesn’t know which direction east is.

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Last Minute Tax Help Ideas: Advice From Gary Busey

With just over 24 hours until the tax filing deadline, some taxpayers may be getting desperate and many CPAs are too swamped to take any last minute clients. Faced with such a dilemma, some people are freaking out since it’s rumored that any non-compliance with the IRS will inevitably lead to interrogation techniques approved by the Bush Administration. To avoid this, you’ll need someone that is impervious to physical pain, high stress and has a smile that will frighten yet calm the most anxious of procrastinating taxpayers.


To wit: