Dog Owners of Tribeca

Photo by Taro the Shiba Inu. CC BY 2.0

My favorite news story from last week: it turns out that ten years ago, a group of dog owners in Tribeca installed a lock on a public New York City dog park, and started charging people a membership fee—$120 a year—if they wanted to use the (public!) park. They created a list of rules, most of which focused on keeping others out, and, if you violated the rules, you were kicked out, and apparently had to let your dog play with other proletariat dogs. (N.b.: this state of affairs lasted ten years, until the city finally cut the lock and reopened the park to the public.)

This story has everything: self-absorbed and self-righteous New Yorkers; a funny thing I read on Twitter while sitting in church Sunday; a bit on this week’s Wait Wait Don’t Tell Me. And, perhaps more importantly, a tax angle. See, these snooty, selfish New Yorkers did something more than hijack a public space—they formed a tax-exempt organization to manage it. Continue reading “Dog Owners of Tribeca”

The Parsonage Allowance in Brief(s)

By Sam Brunson

I’ve blogged several times about the Freedom From Religion Foundation’s suit over the parsonage allowance.[fn1] Quick refresher: Section 107(1) allows “ministers of the gospel” to exclude church-provided housing from their gross income, while section 107(2) allows them to exclude housing stipends. The Freedom From Religion Foundation sued and won in the district court. The Seventh Circuit found that FFRF didn’t have standing, so two of its executives claimed a refund for the portion of their salary that had been designated a housing allowance and sued again. Again, the district court held that section 107(2) was unconstitutional.[fn2]

Now we’re in the briefing stage. And a week and a half ago, the government and intervenors filed their most recent briefs in Gaylor v. Mnuchin.

I’m not going to analyze the full briefs, but I do want to respond to a central point that the government mentions, and that the intervenors find critical in their opening brief: the idea that the parsonage allowance is part of a series of provisions that relax the default exclusion rule. Continue reading “The Parsonage Allowance in Brief(s)”

#TaxNerd: Tax Day in the Supreme Court

Today may be the most perfect #TaxNerd day possible. Not only are federal tax returns due, but the Supreme Court is actually hearing a tax case today! (For lots of great Surly coverage of Wayfair, check out Adam’s posts.)

In honor of today, I decided to wear my Illinois sales tax cufflinks. And how did I get Illinois sales tax cufflinks? Well, I was looking on Etsy for tax-related cufflinks, as one does, and came across them.

Buying them made me curious, though: what exactly are sales tax tokens? Continue reading “#TaxNerd: Tax Day in the Supreme Court”

PyeongChang 2018!

I love the Olympics. Like, a lot. I mean, I realize that hosting the Olympics is basically a gigantic financial sinkhole. And I understand that the Olympics aren’t part of a massive geopolitical power struggle anymore. But the athleticism! the competition! the near-perfect score on a third run, after you lost a ski on your first two! I love it.

And, of course, I love the tax aspect to the Olympics, a tax aspect that has changed significantly for the last two. See, medalists don’t just get a valuable medal and an adorable stuffed tiger: the U.S. Olympic Committee pays Olympians $37,500 for a gold, $22,500 for a silver, and $15,000 for a bronze.

And, since the Rio Olympics in 2016, (most) medalists don’t have to pay taxes on that prize money. Continue reading “PyeongChang 2018!”

Private IRS Debt Collection: A Surly Taxsplainer

By Sam Brunson

Picture by John Biehler. CC BY-NC-SA 2.0

You may have heard that the IRS spent $20 million last year on private debt collection, and managed to raise … almost $7 million.[fn1] So what’s up with that? A number of things.

First things first, though: in 2015, Congress mandated that Treasury enter into one or more debt collection contracts with private debt collectors. The IRS missed its initial deadline, but started the program in April 2017.[fn2] Initially, the IRS contracted with four debt collection agencies, assigning them about $920 million of inactive tax receivables.[fn3] (“Inactive tax receivables” basically means tax debt that the IRS has stopped trying to collected, and where it has had no contact with the taxpayer-debtor for at least a year.) The debt collectors receive a fee of up to 25 percent of the amounts they collect. (They seem to be paid additional amounts, too, as I’ll lay out later.) Continue reading “Private IRS Debt Collection: A Surly Taxsplainer”

The Expanded Child Tax Credit Is an Imperfect Replacement for Personal Exemptions

By Sam Brunson

Picture courtesy of Pixabay. Used under a CC0 1.0 Universal license. (It’s surprisingly hard to find a picture of a family of five without copyright restrictions!)

The conference tax bill follows both the House and the Senate bills in drastically increasing the standard deduction (from current law’s $13,000 in 2018 to $24,000). At the same time, it gets rid of personal exemptions. As Stephanie Hoffer pointed out eight months ago, eliminating personal exemptions would essentially increase taxes on families of four or more people; the more children a family had, the bigger its tax increase.

To fix that problem, the bill doubles the child tax credit from $1,000 to $2,000 per child. In addition, to get Marco Rubio’s vote, the bill provides that up to $1,400 of each child tax credit is refundable.

So do the child tax credits alleviate the problem of eliminating personal exemptions? Sometimes. Continue reading “The Expanded Child Tax Credit Is an Imperfect Replacement for Personal Exemptions”

Tax Reform in an Age of Sexual Harassment

Tax reform is, in many ways, a product of its time. So I guess it shouldn’t surprise anybody that the late-2017 tax reform effort would somehow intersect with the post-Weinstein revelations of rampant sexual harassment and assault by powerful men.

And yesterday it happened: Senator Ken Buck introduced an amendment to H.R. 1. Under his proposed amendment, businesses would no longer be permitted to deduct payments for legal settlements, costs, fines, and fees associated with sexual harassment or sexual assault.  Continue reading “Tax Reform in an Age of Sexual Harassment”

Tax Reform, Tuition Waivers, and Economic Mobility

By Michael Austin and Sam Brunson

“Before any great things are accomplished, a memorable change must be made in the system of education and knowledge must become so general as to raise the lower ranks of society nearer to the higher. The education of a nation instead of being confined to a few schools and universities for the instruction of the few, must become the national care and expense for the formation of the many.”—John Adams

There has been much ado recently (including on Surly) about the fact that the current version of tax reform before the House of Representatives repeals Section 117(d) of the Internal Revenue Code. As a general rule, you have to pay taxes on anything of value your employer gives you. Section 117(d) is an exception to this rule; among other things, it exempts graduate students from paying taxes on tuition waivers. With that subsection excised from the Code, graduate students would be taxed on tuition waivers that they receive (usually in addition to a very modest stipend) when they worked as teaching and research assistants as part of their program.

If this repeal were to become law, students without personal or family resources would have a very difficult time pursuing graduate education. But while the plight of graduate students has gotten huge amounts of attention, it is not the worst thing about the repeal of Section 117(d). Continue reading “Tax Reform, Tuition Waivers, and Economic Mobility”

The GOP Tax Plan and Divorce

By Sam Brunson

CC BY-SA 3.0 Nick Youngson

Well, it has finally arrived. This morning, the House GOP gave us a 426-page bill (and an 82-page section-by-section summary).

There’s a lot going on here, and it’s hard to say how much attention we should pay. After all, now lobbyists, Democrats, and interest groups can read the bill and start arguing against (or for) it. Moreover, this is just the House; the Senate still has to release its bill,[fn1] which may differ substantially. And the fact that we have a bill doesn’t in any way indicate that (a) it will be enacted, or (b) the enacted law will look anything like the bill.

Still, we have a bill! Continue reading “The GOP Tax Plan and Divorce”

Parsonage Allowance Update 1: Briefing Remedies

By Sam Brunson

So #TaxWeek isn’t going quite the way we expected;[fn1] the House is now expecting to release its tax bill tomorrow. (Or maybe not.) Which means we’re not bringing any coverage of the tax bill today.

But that’s okay! It gives me room to slot it some follow-up to last month’s decision that section 107(2) violated the Establishment Clause. Remember, Judge Crabb found it unconstitutional, but ordered the parties to provide supplementary briefing about the appropriate remedies. Should she enjoin the IRS from providing benefits under section 107(2)? Or should she expand the set of taxpayers who could benefit from section 107(2)? Or something else entirely?

The initial briefs were due (and were filed) Monday. And, unsurprisingly, they all agreed on a lot: Continue reading “Parsonage Allowance Update 1: Briefing Remedies”