Did Taxes Bring Us Ghostbusters?

By Sam Brunson

Ethan Doyle White at English Wikipedia [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)%5D, via Wikimedia Commons
Sadly, no. But it helped bring several B horror movies that I’ve never seen (and you probably haven’t, either).

Back in the 1970s, film tax shelters were big enough that the Ways and Means Committee got a report on the subject.[fn1]

But the US wasn’t the only market that allowed for film tax shelters. In 1974, Canada raised its Capital Cost Allowance from 60% to 100%. Investors could deduct 100% of the money they put into Canadian-produced movies. How important was this increased deduction limitation? In 1974, only three movies were produced in Canada. In 1979, the number had increased to 77. Continue reading “Did Taxes Bring Us Ghostbusters?”

The Manafort Indictment

By Sam Brunson

After a late night watching baseball, I woke up this morning to news of Paul Manafort’s indictment.[fn1] And the 31-page indictment is filled with tax evasion. But, after laying out the fact of and ways in which Manafort evaded taxes, none of the counts seem to charge him with tax evasion. (I find that puzzling, though I’ve never been a litigator, much less involved in criminal tax cases, so I don’t really have any experience with which to judge the strangeness or not of not charging him with tax evasion.)

Even without charges, though, there’s a fascinating romp through tax haven-aided tax evasion here. Continue reading “The Manafort Indictment”

Chris Long, Philanthropist

On NPR this morning, I heard that Chris Long, a defensive end for the Philadelphia Eagles, is donating his entire year’s salary to various charitable organizations that provide scholarships and support to underserved youth. (He already donated his salary from the first six games of the season to fund two seven-year scholarships at his alma mater in Charlottesville.)

That is unequivocally a good thing, and a generous thing. But it’s not without tax consequences.

When I think about charitable gifts, the first thing that comes to mind is their deductibility. But it turns out that the deduction for charitable contributions comes with a couple limitations. First, of course, is that only taxpayers who itemize get to deduct charitable contributions. Of course, given that this is a $1 million plus (more on that in a minute) donation, Long will definitely itemize. Continue reading “Chris Long, Philanthropist”

Remedies and the Parsonage Allowance

By Sam Brunson

On Friday, the Western District of Wisconsin ruled (again) on the constitutionality of the section 107(2) rental allowance for “ministers of the gospel.”[fn1] The litigation between the Freedom From Religion Foundation and the IRS has been going on for a long time—I first blogged about it in 2013—so I’m not going to spend a lot of space here discussing the specifics of the case. If you want to look at what’s been going on, you can check out this post and the posts I’ve linked to in it.[fn2] Long story short, this is the second time the court has ruled the rental allowance is unconstitutional. The first time, the Seventh Circuit reversed on the grounds that the plaintiffs had never tried to claim a tax-free rental allowance, so they had no standing. This time, they did claim a refund, which the IRS refused, the court found standing, and, in a well-written and extremely persuasive opinion, it again found section 107(2) unconstitutional.

Although the court declared that section 107(2) violated the Establishment Clause, it didn’t order a remedy. The opinion explains that in the first round, all of the parties assumed that the only relief available was to declare the provision unconstitutional and enjoin its enforcement. This time, though, the Freedom From Religion Foundation suggests that there may be two other remedies available. The first is to refund a portion of plaintiffs’ taxes and order the IRS to “extend benefits under the statute to those excluded.” The second is to declare section 107(1) (that is, the in-kind provision of tax-free housing to “ministers of the gospel”) also unconstitutional. Continue reading “Remedies and the Parsonage Allowance”

Appealing Chamber of Commerce v. IRS?

By Sam Brunson

Last Friday the District Court for the Western District of Texas issued a decision in Chamber of Commerce v. IRS.  In its decision, the court held that the IRS violated the Administrative Procedure Act in issuing Treas. Reg. § 1.7874-8T. The most interesting part of the case was that the Chamber got past the standing and Anti-Injunction Act hurdles; the substantive decision was that Congress didn’t eliminate the notice-and-comment requirement by expressly permitting time-limited temporary regulations. For a great substantive discussion of the case, take a look at Andy Grewal’s post on Notice & Comment.

The question on everybody’s mind now is, will the government appeal? On the one hand, as Andy explains, the court’s opinion is fairly summary; it may be right that the Anti-Injunction Act doesn’t bar the suit here, but it hasn’t done the work to make the holding bullet-proof.

On the other hand, the IRS takes a risk appealing to the Fifth Circuit. I’m not a close court-watcher, but I’ve heard talk that the Fifth Circuit is less than totally favorable to the IRS. Continue reading “Appealing Chamber of Commerce v. IRS?”

FY 2018 Appropriations Bill and the IRS

Last Thursday, the House passed an appropriations bill by a vote of 211 to 198. At this point, it’s anybody’s guess how much of the appropriations bill will survive the Senate, but, just in case, it’s worth taking a look at it. And, it turns out, the House really wants to use the appropriations bill to regulate the IRS. Some of the provisions strike me as warranted. Some innocuous. Some strike me as bizarre, payback, perhaps, for long-held grudges. And some strike me as downright insidious. In this post I’m going to focus on the last two categories because frankly, they’re more fun to write about.

The provisions that regulate IRS behavior can be found in sections 101-116 of the appropriations bill. And what provisions are bizarre payback or downright insidious? Continue reading “FY 2018 Appropriations Bill and the IRS”

Boredom and Taxes

I’ve been known to occasionally get bored at work, notwithstanding my job being the best job in the world and taxes being one of the most interesting topics in the world. For better or worse, when I’m bored, I can always turn to the internet for entertainment. Of course, as we know, that wasn’t always the case.

I’ve been looking at nineteenth-century tax assessment lists for a project I’m working on. The lists are fairly sterile, mostly a series of names, with the amount of income and various types of property that each individual had. Copying the various assessments to the formal assessment book must have been relatively mind-numbing work, especially for assistant assessors who were grossly underpaid.[fn1] Also, they were overworked:

Perhaps the most burdensome administrative tasks fell on the assessors, the workhorses of the collection staff. Their offices were kept open at all hours. They were required to issue a summons after notice to make returns had been issued, to hear appeals, examine taxable property, accept income tax returns, and audit returns for correctness.[fn2]

Continue reading “Boredom and Taxes”

Responding to the SPLC “Exposé”

By Sam Brunson

Last week, the Free Beacon ran an exposé of the Southern Poverty Law Center, making four principal claims. First, the Free Beacon said, the SPLC was keeping literally tons of money in offshore tax haven investment funds and bank accounts. Second, it spends too much on fundraising. Third, it overpays its executives. Fourth, it underspends on its mission.

The problem with the exposé? At best it misunderstands what’s going on, and at worst, it is flagrantly wrong.

I’m usually not interested in doing fact-check-style responses, but I’m going to nonetheless. The accusations Schoffstall levels sound plausible, so it’s worth explaining why and how they’re wrong.[fn1] Continue reading “Responding to the SPLC “Exposé””

The Zelda Tax

Yesterday, the House Republicans posted “What Do the The Legend of Zelda and the American Tax Code Have In Common?”

Sadly, by the time I read about it on Twitter, the post had been taken down.

Why did the post come down? Probably because it was instantly and ruthlessly scorned, mostly because it claimed Nintendo had been founded in 1985 (it was founded in 1889). It has now been reposted with the dates corrected.

Unfortunately, the GOP didn’t correct the bigger flaw in the post: it promised something awesome and failed to deliver. See, what do Zelda an the Internal Revenue Code have in common? Zelda was released in 1986 and the last fundamental tax reform happened in 1986. Continue reading “The Zelda Tax”

Slurpees and the Cook County Sweetened Beverage Tax

Me with my Slurpee.

By Sam Brunson

Today and tomorrow are 7-Eleven’s annual Bring Your Own Cup Day. In case you’re not familiar with it (or your Facebook feeds aren’t filled with bizarre containers of florescent sugar-ice), on #BYOCupDay, you can bring any container in your house to a 7-Eleven and, as long as it fits in the Slurpee machine, you can fill it up for $1.50.

After my wife and kids spent the day on the beach watching the Air and Water Show rehearsal, they were ready for some Slurpee. So, when I got out of work, we walked the three blocks to the nearest 7-Eleven. (Last year, we took berry-picking buckets; this year, we were much more modest and just brought cups my father-in-law bought when we took him to a Cubs game a couple years ago.)

When we got to the store, we were greeted by this sign: Continue reading “Slurpees and the Cook County Sweetened Beverage Tax”