Tag Archives: taxes

Tax Complexity

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A Private Letter Ruling is a letter the IRS issues to a particular taxpayer—corporate or business—to provide specific instructions/clearance to a specific taxpayer about that taxpayer’s particular circumstance.  PLRs set no precedent for any other taxpayer; even if that other has a substantially similar circumstance.  The price for such a Letter, charged by the IRS to the Letter’s recipient, ranges from $2,200 to $28,300.

The procedure for getting a PLR is set out in Internal Revenue Bulletin:  2016-1, which runs past 260 .pdf pages (the Table of Contents runs nearly 6 pages).  There’s a hint there.

Here’s another hint, from the opening paragraph of 2016-1‘s Section 1, which lays out the purpose of this procedure:

This revenue procedure explains how the Service provides advice to taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions and Products), the Associate Chief Counsel (Income Tax and Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel (Passthroughs and Special Industries), the Associate Chief Counsel (Procedure and Administration), and the Associate Chief Counsel (Tax Exempt and Government Entities). It explains the forms of advice and the manner in which advice is requested by taxpayers and provided by the Service. A sample format for a letter ruling request is provided in Appendix B. See section 4 of this revenue procedure for information on certain issues outside the scope of this revenue procedure on which advice may be requested under a different revenue procedure.

Seven different tax specialist head lawyers are needed by the IRS to explain the IRS’ own tax rules to prospective tax advice seekers.

Hmm….

Tony Blair Misunderstands

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Great Britain’s Ex-Prime Minister Tony Blair has sensed danger from the Brits’ vote to leave the European Union.

Blair said in a Friday column in The Daily Telegraph that the future of the United Kingdom is at stake as the country faces negotiations on the terms of leaving the European Union.

Of course there’s danger—there always is when a change as large as this is embarked on.  But Great Britain didn’t get to be as great as it was and still is by being timid.  This move is a great opportunity for the nation, much more so than it is a risk, however real that risk is.

Blair also worried:

Britain is dangerously divided, with “profound dismay” felt by many of the 48 percent who wanted to remain in the EU.

He’s missing the other question, though: would Great Britain be any less divided had they voted to Remain?  Not a bit.

Look forward, not backward.

EU and Taxes

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The European Union agreed Tuesday on a set of rules and standards aimed at closing loopholes that allow wealthy multinationals to shift profits and avoid footing large tax bills.
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“Today’s agreement strikes a serious blow against those engaged in corporate tax avoidance,” said Pierre Moscovici, the bloc’s tax affairs commissioner.

Notice that.  There’s not the slightest glimmer of a concept of discouraging corporate tax avoidance by lowering tax rates.  No, it’s not the corporation’s money; it’s the EU’s, and they’ll decide how much of the money gained by a corporation the EU will permit it to retain.

IRS Shenanigans

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The IRS, after three years of stonewalling and after a Federal judge’s explicit order to stand and deliver, has at last released the list of the organizations it claims to have targeted for blocking from tax exempt status.  “Claims” because the list has grown, from the 298 avowedly conservative organizations originally identified by the Treasury Department’s IG to a total of 426 that the IRS finally listed for the judge.

Edward Greim, a lawyer for NorCal Tea Party Patriots, a party to the suit demanding the IRS give up its list, had this about the difference in size between the list Treasury released three years ago and the list the IRS released:

Based on these changes, which to date remain unexplained, a very real possibility—if not probability—exists that the IRS modified its targeting in light of the investigations, packing its own internal lists of targeted groups to support its preferred narrative, including by adding ideologically diverse groups[.]

It would be interesting to see the dates of something representing the initial delay applied to each of these groups.

States Competing for Corporations

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Competition is at the heart of America’s economic success, but not every type of contest benefits society.  Consider the growing trend of businesses cajoling states and politicians to compete for who can dole out the most corporate welfare.  It’s especially frustrating because there are already plenty of ways to promote job growth without robbing taxpayers.

And

States could start with eliminating tax carve outs and replacing them with lower-overall tax rates and lighter regulatory burdens.  Federal lawmakers could also do their part by lowering America’s highest-in-the-developed-world corporate tax rate.

And

Embracing these policies would protect taxpayers…multinational firms with multimillion-dollar profit margins.

You bet.  Lower-tax rate policies, among other things, would directly increase those entities’ profit margins by reducing the size of a cost center.  They also would let these entities lower their prices (if only slightly), which would increase their sales (if only slightly), which would then increase their profits if not their profit margins.

In the end, States compete better on the basis of who has the lower tax and regulatory rates over all rather than who gets to the better carve-outs and special treatments.  In fact, the carve-out/treatment path, among other things, leads to an enormously byzantine tax structure within which it’s increasingly difficult to measure which State’s carve-outs/treatments are better.