Tax Law

    • 14 Aug 2015

    International Tax Reform and the Patent Box

    Patent or innovation boxes have been a part of the United Kingdom’s tax system since 2013. [1] With Congress focused on international and business tax reform, the concept of a patent or innovation box has emerged as a possible addition to the United States’ tax regime. While there has been a tax credit for research and development for decades, a patent box would be a novelty in the United States. Let’s...
    • 7 Jun 2015

    Alcohol Taxes and Incentives - The Spirit of the Law and What's Hoppin'

    by Daniel G. Mudd * Basics of Federal Excise Tax on Alcohol Federal taxation of alcohol generally follows the same tax structure and controls as is used with other commodities and products sold in the United States which are subject to excise tax ( e.g. , tobacco, gasoline, etc.). Accordingly, there are Federal Excise Taxes (“FET”) related to the production, importation and sale of alcohol, which includes...
    • 4 Nov 2014

    Navigating the IDR Process for U.S. - Based Multinational Enterprises

    By Paul DeNard, Anthony Russo, Tien Do and Elizabeth Sweigart The new information document request (IDR) process is aimed at supporting a systematic, issue-focused approach to examinations. A year into the new IDR creation approach -- and six months into the new enforcement process -- the results in practice have been mixed for both taxpayers and the IRS... Over the course of the last few years, senior leadership...
    • 9 Jul 2014

    Voluntary Tax Return Preparer Certification in Wake of Loving v. IRS

    Loving v. IRS In February 2014, the D.C. Circuit of the U.S. Court of Appeals issued its decision in Loving v. IRS , 742 F.3d 1013 (D.C. Cir. 2014) , regarding the IRS’ authority to license tax return preparers. The D.C. Circuit upheld the decision of the lower court ( Loving v. IRS , 917 F. Supp. 2d 67 (D.D.C. 2013) ), and affirmed that the IRS does not have the authority to issue and enforce tax return preparer...
    • 3 Feb 2014

    Medical Marijuana Business Expenses

    by Joel S. Newman * ... Legal and Illegal [business enterprises] are treated the same way [for tax purposes] because of Comm'r v. Sullivan, 356 U.S. 27 (U.S. 1958) . In Sullivan , the Commissioner denied salary and rent deductions to an illegal gambling enterprise. Justice Douglas wrote: If we enforce as federal policy the rule espoused by the Commissioner in this case, we would come close to making this type of...
    • 26 Jun 2013

    I Am Not Ayn Rand, But What About Me?

    My friends at the Center on Budget and Policy Priorities recently took issue with my friends at the Tax Foundation. The subject was whether tax increases harm economic growth. The Foundation published a piece written by Will McBride in December 2012 which concluded that "nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal finds that tax increases harm economic growth...
    • 26 Jun 2013

    DOMA Doomed by Estate Tax Refund Claim

    The United States Supreme Court has struck down the Defense of Marriage Act (DOMA) as an unconstitutional violation of the "equal liberty" protections of the 5th Amendment. The dispute in U.S. v. Windsor * began when Edie Windsor filed a claim for refund of estate taxes paid after the death of her same-sex spouse, Thea Spyer. Though the court makes little mention of the $353,053 refund claim in its historic...
    • 25 Jun 2013

    Questions About Pfizer's Taxes

    Over the last five years American pharmaceutical giant Pfizer earned on average over $10 billion of annual worldwide pre-tax profits. How much of this profit was attributable to its U.S. operations? Answer: none. In fact, according to annual reports filed with the Securities and Exchange Commission, Pfizer had losses in the United States in every year since 2007. ... There is absolutely no reason to believe Pfizer...
    • 20 Jun 2013

    Are Republicans Throwing in the Towel on Tax Reform?

    ... [I]n the modern era of divided government, tax reform is almost certainly going to be a bipartisan enterprise - or no enterprise at all. Which makes it all the more illuminating that House Republicans have floated the idea of passing a tax reform bill without help from Democrats... ... ... [A] single party bill certainly gets you closer to the legislative finish line than no bill at all. But that's not saying...
    • 13 Jun 2013

    The IRS: It's Bad Enough

    ... Over the years there have been high-ranking IRS officials who conveniently forgot that they were public servants who were supposed to serve, you know, the public. And there have been high-ranking tax administrators who have had trouble with the balance between enforcement and service (let's face it, it's a challenging balance) or who just flat-out preferred the enforcement power - kind of like the cop who...
    • 12 Jun 2013

    It's Time to Stop Talking About Tax Reform

    Enough already: it's time to stop talking about tax reform. Not about necessary and useful changes to the tax code - by all means, let's talk about them. But let's do away with anodyne invocations of "tax reform" as a useful shorthand for this debate. The phrase probably meant something once, but it doesn't anymore. And its feel-good connotations obscure the real hurdles to improving the tax...
    • 29 May 2013

    TIGTA Report Implies A Lot, Proves Little, About Bias at the IRS

    The Treasury Inspector General for Tax Administration's report that is at the center of the current firestorm over potential political bias at the IRS... examined the names of... 296 [501(c)(3) and 501(c)(4)] organizations] and found that 98 of them had either "Tea Party", "Patriots," or "9/12 Project" as part of their name... What does this... tell [us] about political bias at the...
    • 24 May 2013

    A World Without 501(c)(4)s

    Should we get rid of 501(c)(4)s? Last week, the New York Times put that question to a range of tax experts and got back (predictably) a range of reasonable answers. Most involved some sort of intermediate reform involving the political activities of "social welfare" organizations. One expert, however, took the bait and called for complete elimination of 501(c)(4). Which sounds like a good idea to me. In his...
    • 6 May 2013

    Fast Track to Nowhere

    Although the formal expiration of the debt limit is May 19, the ability of the Treasury Department to juggle some internal accounts is likely to extend the effective deadline until late summer . Nothing is certain, but the real deadline is likely to crop up in September or even October. This sets the stage for an ugly debt limit debate that may not be resolved for another five months... ... Tax reform-whether on...
    • 30 Apr 2013

    When Tax Reform Means Soaking the Rich

    Tax reform has evolved into one of the emptier platitudes of U.S. politics. Politicians support "tax reform" in the same way that they support "a strong national defense," "fiscal responsibility," and "pro-growth economic policies." It's a brave statement in search of a challenge. Is anyone ever against tax reform? In practice, tax reform is defined by what it's not: It's...
    • 25 Apr 2013

    Let's Stop With the Revenue Neutrality

    For decades, most people have believed that the success of tax reform is dependent on the reform being revenue neutral. That is, whatever happens, the tax system has to raise approximately as much revenue after as it did before. Proponents of reform want to seem pure in thought. They profess to care only about the principles of sound taxation. They use lofty terms like efficiency and equity. They are not hacks pursuing...
    • 8 Apr 2013

    Unkind to Charity

    There's a new whipping boy on Capitol Hill and it's not the bankers who brought down the economy, the fossil fuel companies that are heating up the planet, or the gun lobby that has figured out how to increase sales every time there's a mass shooting of schoolchildren. The new black hats - donors to charities. File this under Example No. 501 of Washington dysfunctionalism. Almost from the start of the tax...
    • 4 Apr 2013

    'Commissioner-Less'

    The Internal Revenue Service is currently without a Commissioner. Douglas Shulman, the 47 th IRS Commissioner stepped down last November . And from what I'm starting to hear, the IRS may not have a new Commissioner for as long as close to two years. That is not a good thing. The IRS is not leaderless. Steven Miller, a high-caliber IRS employee, is "acting" commissioner . And from all reports he is doing...
    • 2 Apr 2013

    Spam and Taxes

    ... On the surface, taxing [Internet] spam is a wonderful idea. Spam clogs the Internet, wastes our time just deleting it and continues because it makes money since you only need a few people so gullible or addled that they believe some Nigerian wants to share $25 million with them or buying a pill will "enhance" a male organ. The problem is that nobody has ever figured out how to make a spam tax work. As...
    • 29 Mar 2013

    'Legal Enemies of the State'!

    How does that old Wall Street saying go? Bulls make money; Bears make money; Pigs get slaughtered. Bulls in this context are easily defined, and so are Bears. Money can be measured. But it seems to me that piggy behavior is in the eyes of the beholder. In Tax Notes this week I wrote about abusive transfer pricing and other techniques being used by multinational corporations and their brilliant tax advisors to avoid as...
    • 20 Mar 2013

    It's Not Too Late for a War Tax

    In case you needed another reason to support a special war tax, try this on for size: The United States is still paying veterans' benefits to the children of Civil War soldiers. According to the Associated Press , two survivors are each receiving $876 dollars a year. Meanwhile, 10 children are still drawing benefits for their fathers' service in the Spanish-American War, at an annual cost of $50,000. Benefits...
    • 18 Mar 2013

    America May Be on the Wrong Track, But Is Paul Ryan's the Right One?

    ... [S]adly for today's GOP, they have more than a few [bad ideas]. Take Paul Ryan's budget plan , for instance. ... Ryan runs into serious problems when he starts suggesting ways to make the tax code simpler. In particular, his emphasis on rate reduction and bracket consolidation is misconceived. To begin with, "flatter" doesn't mean "simpler." Even people filling out their tax returns...
    • 13 Mar 2013

    Things to Read, Sites to Visit

    I decided to share some of my favorite tax resources on the web. The Minnesota Taxpayer's Association has changed its name (after 87 years!) to the Minnesota Center for Fiscal Excellence . The MTA under the direction of Mark Haveman has been one of the most influential organizations in state and local public finance. It has a reputation for doing honest, unbiased research and its commitment to sound tax policy is...
    • 1 Mar 2013

    A Moral Obligation to Aggressively Lobby

    In the United Kingdom a great debate is taking place about aggressive tax avoidance. On one side, David Cameron, the Conservative prime minister, says it is immoral . On the other side, most executives say they have a duty to their shareholders, and most practitioners say they have a duty to their clients, to minimize taxes as long as they do nothing illegal. As one UK accountant is quoted as saying: "Directors have...
    • 1 Mar 2013

    The True Meaning of Sequestration

    [Sequestration] is not about spending cuts; the White House doesn't want spending cuts. Sequester is about taxes, and, specifically, tax increases. President Obama wants rich people to pay more because they don't pay their fair share - whatever that is - and it has become clear that's all he ever wants. But revenue is only part of the problem; Social Security, Medicare, and soaring health care costs are the...