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Most Recent Posts

Seventh Circuit Kicks Parsonage Can Down The Road – Some Commentary

Seventh Circuit Kicks Parsonage Can Down The Road – Some Commentary

But the Establishment Clause isn’t the end-all, be-all of constitutionality: the Constitution is just as clear about the standing requirement. And in this case, the FFRF didn’t do anything at all to meet that bar; ultimately, they just argued that, because they would have been denied, standing was irrelevant. And the stupidity and laziness of that argument is underscored by the Seventh Circuit’s footnote 3: all they had to do, for standing purposes, was file their returns claiming the section 107 exclusion. Or file an amended return claiming it. Sure, they lose and they have to pay the unpaid taxes with interest. But they also overcome the bar to having their suit adjudicated.

I know that things like “standing” don’t really resonate with the general public (and I’ve read a couple blogs that treat this like it’s a substantive victory for the pastoral housing exclusion). But to a large degree, the validity of our judicial system rests on its procedural fairness—maybe the courts get things wrong sometimes, but at least they follow a fair, knowable procedure, giving litigants a legitimate shot at justice. By attempting to circumvent that (constitutionally-prescribed) procedure, the FFRF and the district court risked not only the precise decision that the Circuit delivered, but also undermining the very Constitution they try to enforce.

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Kent Hovind And Creation Science Evangelism – How Not To Run A Ministry

Kent Hovind And Creation Science Evangelism – How Not To Run A Ministry

According to Gallup 42% of Americans believe that God created humans pretty much as they are now less than ten thousand years ago.  That is a little disturbing, but when I asked a friend of mine with biological training if there were things that we use that wouldn’t work if you didn’t believe in evolution, he didn’t come up with anything.  Leaders in the “creation science” movement have been encouraging Kent Hovind to give up fighting the IRS and focus more on creation science.  The prosecution motivates Kent to keep up the tax fight and possibly drag some part of the 42% into sovereign citizen tax defiance.  Even though I believe in evolution and that the world is billions of years old, I would rather have Kent Hovind trying to convince people that the world is 6,000 years old than encouraging crackpot tax theories.  I think the latter are more harmful.  That’s why I think the current prosecution might not be a good idea.

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What’s In A Name? Should Naming Rights Reduce Charitable Deductions?

What’s In A Name? Should Naming Rights Reduce Charitable Deductions?

The story raises the question of whether   you should be able to take a full charitable deduction for a donation if, as a legally binding condition of the donation, you get to have a landmark building named after you.  It is worth noting that the Fisher family actually ended up making a profit, although rather a modest one on the whole deal.  I computed the pre-tax return to the family as being roughly 0.85%, which is really anemic, unless you compare it to what is being paid on contemporary deposit balances.  If you assume that Mr. Fisher took a charitable deduction with a 70% benefit in 1973 and the family paid capital gain tax on the Lincoln Center payoff, the after tax return comes to 3.88%, which is not great, but still better than getting poked in the eye with a sharp stick.

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Interview With Former Judge Central To Kansas Property Tax Consultant Controversy

Interview With Former Judge Central To Kansas Property Tax Consultant Controversy

These kinds of arrangements inevitably lead to “horse trading”—i.e., compromising the interests of some taxpayers to gain advantages for other taxpayers (or even the tax consultant himself). They also lead to the practice of flooding county assessor offices with masses of appeals and using sheer volume as leverage to extract nuisance settlements. An entrepreneur can make a tidy profit each year aggregating and leveraging the appeal rights of thousands of taxpayers and settling claims within the margins.

Conduct such as this has been widely reported by county officials. For example, during a formal legislative hearing in September 2013, one county official testified that it was indeed a “truism” that such conduct occurs regularly, in addition to frivolous filings, unauthorized representation, discovery misconduct, and even physical intimidation and verbal abuse.

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Do Property Tax Consultants Need To Be Reined In?

Do Property Tax Consultants Need To Be Reined In?

This legislation was sold on the notion that COTA had become broken: inefficient, untimely and unfair to taxpayers. I served nearly a decade at COTA and I can report, without reservation, that COTA’s efficiency, timeliness and fairness was probably as good or better than it had been for years. COTA had recently implemented a new paperless case and document management system (with private grant money no less!), and it had cut its staff nearly in half. COTA also was about as caught up on its case load as it had been at any time during my tenure. Ironically and disingenuously, the only cases that were delayed were cases in which an attorney affiliated with a tax consultant had filed a motion with COTA for an extension to submit post-trial briefs. With respect to the claim of unfairness to taxpayers, COTA ran the numbers and found that it had decided cases in taxpayers’ favor approximately 49% of the time, a percentage generally consistent with previous years. All of this was presented to, but ignored by, the legislature. By then, the narrative was firmly rooted, and facts weren’t about to change anything

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Clergy Housing Tax Break Withstands Challenge – Atheist Group Lacks Standing

Clergy Housing Tax Break Withstands Challenge – Atheist Group Lacks Standing

The legal problem with challenging the exclusion has always been standing.It is hard to argue in court against a tax break that somebody else is getting.  The judges tell you that it is no skin off your nose and that you should write your Congressman. Of course, the judges put it much more eloquently, but that’s the gist of it.

In order to obtain standing Freedom From Religion Foundation started paying a couple of its officers a housing allowance.  Since they would rather have you call them late for breakfast than “minister of the gospel”, they did not exclude the allowance from their income when they filed their returns.  Judge Barbara Crabb thought it would be silly to require the FFRF officers to file refund claims that they IRS would deny in order to have standing to sue.  The Seventh Circuit did not agree:

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Tax Court Goes To Webster For Definition Of Construction – And Watch That NAICS Code

The reference to the Webster’s II New Riverside University Dictionary made me wonder if that is somehow the official Tax Court dictionary. I found that it has been cited by the Tax Court 20 times which is twice as often as the Oxford English Dictionary.  The higher courts seem to favor OED.  Still you can get a copy from Amazon for one cent.  Well, it’s four bucks when you throw in the shipping.  Still, I decided to order myself a copy.

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Kansas Property Tax Consultant War – A Sign Of Things To Come?

Kansas Property Tax Consultant War – A Sign Of Things To Come?

This situation may create what I am going to call the Tea Party Paradox.  There is a desire for less government and lower taxes in general, but also a sense that what government there is should be more local and state than federal.  So now we have the situation where the people who want to slash the federal government are positioned to slash the levels of government, that they view as more benign, although perhaps still in need of pruning.

Then there is what I will call the Lois Lerner Effect.  Anti-tax zealots are using misbehavior in one of the more obscure, less significant parts of the IRS to condemn the entire system and advocate an entirely new system.  What happened in Kansas with the Court of Tax Appeals indicates that zealous legislators can restructure a system relatively quickly once they get a head of steam up.

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Technology Officer Denied Capital Gain Treatment On Sale To Google

Technology Officer Denied Capital Gain Treatment On Sale To Google

Clearly Mr. Brinkley would have helped himself with the penalties if he had given all documents to his advisers.  Should he have made more of a fuss about the W-2? There you get into business judgement.  You wouldn’t want tax issues to screw up the deal.  If I could have changed one thing, I would have separated the transfer of rights from the employment letter.  I hope Mr. Brinkley appeals this decision.  It may be right on the capital gain issue, although there is still an argument there.  And I think it is wrong on the penalty.

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