Pizza for tax evasion?

WebCPA reports:

"A Texas restaurant owner has been sentenced to two years in jail after he was convicted of trying to bribe an IRS agent by offering her free pizza and a job."

When the agent first figured the taxpayer was offering her a bribe, she reported it.

Subsequent conversations were recorded, during which the taxpayer "offered the agent $2,500 and delivered $2,000 in exchange for having his tax liability reduced from $49,000 to around $500. In addition to financial compensation, [he] repeatedly offered the agent pizza from his restaurant as part of the deal."

If she had taken the bribe, that could have led to one heck of an advertising campaign: "Our pizza is so good, people will destroy their careers and go to jail to get it!"

Unfortunately for the owner, I guess the pizza just wasn't good enough.

But hey, at least this guy didn't try to have the agent killed by a hit man named Reaper.

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Thanks guys and gals

Just wanted to say a quick thanks to the expert guys and gals who have mentioned me in their online writings. After all, the jury may still be out on whether I've got anything valuable to say. But for as long as it lasts, I'll just enjoy feeling like one of the cool kids (whether anyone else considers me one or not).

So thanks to:

• Rick Telberg of CPA Trendlines and the AICPA CPA Insider
• Joe Kristan of the Tax Update Blog
• Kelly Phillips Erb aka Taxgirl
• Robert D. Flach aka The Wandering Tax Pro

I appreciate you reaching out to an online rookie like myself. Now let's hope my two cents really are worth at least two pennies.

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Horse play

I enjoyed a recent post from Professor James Maule about possible tax-related names for horses. Apparently, the 6-year old brown gelding that won the National Hunt Cup was named "Tax Ruling." Maule then brainstormed a lengthy list of possible horse names to be found in the world of tax.

Here was the best part of his post:

"Imagine the track announcer informing the crowd, 'It's Tax Shelter following Passive Activity, but here comes Treasury Regulation with Deduction Limitation. It looks like Substantial Underpayment is back in the race. Capital Expenditure has fallen behind, and Revenue Neutrality has broken down. It's Treasury Regulation, gaining on Tax Shelter, and on the inside it's Jeopardy Assessment.' Yes, imagine how the tax law could saddle the horse racing industry."

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Yikes: Ohio to subsidize Hollywood

Joe Kristan wrote today about a troubling development in Ohio, my current state of residence: "The insane desire of states to subsidize Hollywood has spread to Ohio, where lawmakers are poised to subsidize 25% of the cost of films shot there. That's precisely half as stupid as Iowa's 50% tax-credit subsidy."

Why, as Joe asks, are we using taxpayer dollars to subsidize the film industry?

I realize the film industry employs a lot of people who are not famous or rich, including crew members, costumers, set builders, etc. But doesn't virtually every industry employ people who are not famous or rich? Why should all these others be forced to support the film industry?

If the film folks are not making money under current conditions, they need to deal with it. Try something new, call it quits, whatever. But don't demand taxpayer dollars.

I'm not being hypocritical in arguing that industries should adapt to the realities of the market. I recently posted about the misconception so many people have about tax professionals: that we all oppose tax simplification because complexity means job security. (The Wandering Tax Pro, Robert Flach, recently posted about this as well.)

The President has promised to simplify the tax code, and he set up an advisory board. Under the "let's save any industry in trouble" philosophy, I need to go to my legislatures and demand a "tax professionals credit" if the President is successful in making the tax law simpler.

Any lobbyists out there who want to help save the tax professionals? If you're not too busy getting film credits for Hollywood, that is.

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"Head of the Class" star owes big time

Forbes.com reports that the federal government is suing actress Robin Givens for $292,000 in "unpaid federal taxes, interest and penalties as far back as 1996."

Givens is most famous for her one-year marriage to Mike Tyson and her role as one of the stars of the 80's sitcom "Head of the Class."

So, another celebrity failing to pay tax is hardly surprising. I wish the feds luck in narrowing the celebrity tax gap.

Here's the bigger question that came to mind when I read this story:

Does anyone else marvel at some of the predictable, corny, painful sitcoms that were successful in the 80's and 90's? I admit to watching many of them, but can claim youth as an excuse (as I haven't yet hit age 30). And don't get me wrong, I think there have been a lot of great series over the years. But so many make me stop and ask: "Really?"

Long live "The Office" and "30 Rock." And to "Seinfeld," "Cheers," and "Malcolm in the Middle," I miss you.

(Hat tip: WebCPA)

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Tax madness

Tax Lawyer's blog post today includes tournament brackets for "Tax Madness: All Time Greatest Code Section."

Isn't the term "tax madness" redundant?

Anyhow, this is a fun exercise for us tax geeks. Pappas asks at the end of the post: "What code section do you think is the 'greatest?' "

Being obsessed with detail as I am, I immediately thought: "Well, what do you mean by greatest? Greatest in terms of saving taxpayers money, generating tax revenue, collecting tax revenue, or another definition altogether?"

I drove my professors crazy in college, as you can imagine. ("But what do you mean by this question?" "What if this exception applies?" "What if I read it this way instead?")

Pappas suggests the greatest code section is 3402, reasoning that: "Withholding is the chief administrative mechanism enabling the federal government to collect, without significant protest, sufficient private resources to fund an ever-expanding government."

So I agree that this is the greatest section in terms of tax collection.

I'm thinking "greatest" in terms of the impact on taxpayers, whether for good or ill. And though one could argue that the withholding section has the greatest impact, my inclination would be to crown the code section that imposes the tax in the first place. In general, that's code section 61 (which Pappas named as the runner-up to 3402).

Section 61 says: "Except as otherwise provided in this subtitle gross income means all income from whatever source derived."

Everything is taxable, unless we give you a special hall pass to exclude it. Casts a pretty wide net, eh?

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Obama targets multinational corporations

The President spoke today of his administration's plans to increase the amount of taxes paid by U.S.-based multinational corporations.

He began his remarks with this statement: "Let's begin with a simple premise: Nobody likes paying taxes, particularly in times of economic stress. But most Americans meet their responsibilities because they understand that it's an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being."

Agreed!

Here are a few key statements he made:

• "For years, we've talked about shutting down overseas tax havens."
• "I'm asking Congress to pass some commonsense measures."
• "These and other reforms will save American taxpayers $210 billion over the next 10 years."
• "We're beginning to restore fairness and balance to our tax code."

So what is the plan?

The White House released a Fact Sheet on its plan, which provides detail on the following goals:

(1) Replacing Tax Advantages for Creating Jobs Overseas With Incentives to Create Them at Home

• Reforming Deferral Rules to Curb A Tax Advantage for Investing and Reinvesting Overseas
• Closing Foreign Tax Credit Loopholes
• Using Savings To Make Permanent The Tax Credit for Investing in Research and Experimentation at Home
  

(2) Getting Tough on Overseas Tax Havens

• Eliminating Loopholes for "Disappearing" Offshore Subsidiaries
• Cracking Down on the Abuse of Tax Havens by Individuals
• Devoting New Resources for IRS Enforcement to Help Close the International Tax Gap
  

What's next?

We'll see how this all plays out with Congress. Here are a few links for more on the story...

The Tax Lawyer's Blog: Obama Vows to Close Foreign Tax Loopholes
TaxGirl: Obama Set to Shake Up Corporate Tax "Loopholes" Today
CNN Money: Obama plans corporate tax crackdown
Bloomberg: Obama Seeks End of Corporate Tax Break

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Bias disclosure

Since this blog is about tax developments, it will include government news. I hope the reader (if there is a reader out there) will not find it terribly partisan. I don't think of myself as political, as I tend to only read news about the economy and tax policy. (Although I did hear about the swine flu. My bubble is not entirely impermeable.)

Of course, I've got opinions. And I'm usually too quick to share them. In the spirit of full disclosure, I figured I'd share my philosophy on taxes. And I hope that I'm not breaking any copyright laws by stealing the idea from Tax Attorney and CPA Peter Pappas.

• Everyone should pay their taxes. “Taxes are what we pay for civilized society.” (U.S. Supreme Court Justice Oliver Wendell Holmes). “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.” (Franklin D. Roosevelt)


• No one should pay more than they are required. “The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.” (US Supreme Court, Gregory v. Helvering, 55 S Ct. 266, 1/7/1935)


• Figuring out your taxes shouldn't be so hard. The average taxpayer should be able to figure out their taxes, since the average taxpayer has to pay them.


• Raising taxes won't fix all our problems. If we are to encourage innovation, industry, and entrepreneurship, we must let people keep most of their income.
  

So that's my philosophy in a nutshell.

Back to tracking tax developments...

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