Category: Tax Compliance

Whistleblowers and Disinformation — Roundtable #2: The Public Sector

By Diane Ring

We are back again this week looking at the role of misinformation and disinformation in democracy, good governance, and well-grounded decisionmaking! On Friday, we are hosting the second Roundtable in the Whistling at the Fake research project (with Dr. Costantino Grasso as PI, and funded by NATO’s Public Diplomacy Division). In our first Roundtable, we focused on disinformation in the private sector.

This Friday February 25, 2022 at 10:00am EST, the subject is Disinformation and the Public Sector.

The Roundtable includes three sessions: (1) Democracy and Disinformation – the Political Level; (2) Disinformation and Public Administration; and (3) Special Issues and Final Recommendations. The international panel includes experts from law, media, government, and civil society, along with whistleblowers. To join this exciting Roundtable session, register here!

Taxing Venmo?!?

By Samuel D. Brunson

Over the last couple weeks, I’ve seen people in a couple very disparate groups worry about the 1099s they’re going to receive. (One group is saxophone enthusiasts who occasionally sell instruments and mouthpieces on eBay and Reverb.)

And why are they worried? Basically because the American Rescue Plan Act of 2021 makes it much more likely that they’ll receive 1099s, even for casual selling. Section 6050W of the Code requires companies like Paypal and Venmo (and other non-credit card payment processors) to report payments made, both to the payees and to the IRS.

Continue reading “Taxing Venmo?!?” →

Whistleblowers and Disinformation: “Whistling at the Fake” Roundtable

By Diane Ring

Information lies at the heart of a sound democracy, good governance, and well-grounded decision making, whether at the individual, community, business, or government level. Yet every day we see how misinformation and disinformation undermines all of these goals.

In response to this problem, a new research project, Whistling at the Fake (with Dr. Costantino Grasso as PI, and funded by NATO’s Public Diplomacy Division) aims to address the gap in the public’s understanding of the full scope and impact of misinformation and disinformation, and to empower the general public and regulators with tools, suggestions and recommendations for the future. The project focuses in particular on the role of whistleblowers and other informed insiders in “exposing misleading and hostile information activities and increasing public resistance to acts of this nature.”

As part of its project, Whistling at the Fake is hosting Roundtables on zoom– the first of which is this Friday, January 28, 2022 at 10:00am EST. The Roundtable, “Disinformation and the Private Sector” includes three sessions: (1) Exploring the Phenomenon, (2) Disinformation and Corporate Power and Wealth, and (3) Special Issues and Recommendations. The international panel includes experts from law, media, business, research, along with whistleblowers. To join what should be an amazing zoom Roundtable, register here!

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Why Do Non-OECD, Non-G20 Countries Pursue International Tax Cooperation? Shu-Yi Oei Investigates in an Empirical Study of Membership in the BEPS Inclusive Framework

by Diane Ring

A dominant theme of international taxation over the past 15 years has been that of cooperation and consensus—from the BEPS Project to the new Multilateral Instrument to the new BEPS Inclusive Framework. Regardless of one’s assessment of nations’ true commitments to such cooperation and consensus, it is clear that notable changes in the framework of international tax engagement are afoot.

Yet, countries themselves remain very different in terms of the wealth, GDP, natural resources, tax revenues, commercial base, infrastructure, technological capacity, and financial systems. It is not obvious that cooperation and consensus are uniformly in countries’ interests, particularly in light of who is drafting the agenda. Most pointedly, it is reasonable to ask why non-OECD, non-G20 countries would be willing to commit to global tax cooperation.

In a new empirical paper, “World Tax Policy in the World Tax Polity? An Event History Analysis of OECD/G20 BEPS Inclusive Framework Membership,” Shu-Yi Oei tackles this question by studying the OECD/BEPS Inclusive Framework, which currently has a total of 140 member states, of which 96 are non-OECD, non-G20 countries. Using event history regression methods, Oei seeks to answer the question of how these states came to join the Inclusive Framework. She posits a series of hypotheses regarding membership drivers and tests them against a new database that she has constructed. In a paper that is accessible to both international tax policy makers and empiricists, Oei provides a compelling answer to the question. Not surprisingly, the actions and initiatives of international organizations and blocs play a the significant role in the story. In fact, many of the findings prove consistent with earlier work that Oei and I have written (both separately and together) including analyses of international relations dynamics in international tax, the scope of actors shaping international tax policy, the potential for disjuncture between international agreement and domestic action, the potential influence of nonstate actors, and the ability of powerful states to draw other nations into specific tax policy choices. Oei’s new empirical paper propels this research agenda forward by allowing greater insight into the world of international tax.

International Symposium: “The Professionals: Dealing with the Enablers of Economic Crime”

By Diane Ring

Just as summer is in full swing, the VIRTEU Project is back with a close look at a less than sunny side of economic life — the role that professionals (read lawyers, accountants and auditors) can play in enabling economic crime. This coming Wednesday July 21, 2021 (starting at 10:15am ET) join us in a three-panel zoom symposium that investigates how and why professionals may play this enabling role, and what responses and solutions we might consider. We will look carefully at real life case studies and talk with experts from various sectors as we explore this ongoing issue.

Register here to join us for this zoom symposium.

Advance Payments of the Child Tax Credit

By: Sam Brunson

Yesterday my neighbor texted me to mention that three pieces of my mail had been left in his mailbox; he dropped them off in front of my door. Two were just standard junk mail but one is potentially important: a letter from the Department of the Treasury.

Perhaps you also got this letter: it has some important information about the way the the child tax credit now works. In short, the American Rescue Plan, a law signed in March, makes a number of significant changes to the child tax credit.

Two of those changes are particularly notable. First, it increases the amount of the credit to $3,000 for most children and $3,600 for children five and younger.

Second, it makes allows the IRS to make advance payments of the child tax credit. Essentially, unless parents choose otherwise, starting in July the will receive monthly payments of $250 or $300 per child (depending on the child’s age).

Third, the credit is fully refundable. Even if a parent doesn’t have enough income to owe taxes, they will receive the full amount of the child tax credit.

Finally, the age limit for the child tax credit has been increased from 16 to 17. (Note that currently these changes are all temporary–they only apply to 2021, though the may be extended as some point.)

Continue reading “Advance Payments of the Child Tax Credit” →

Tax Return of the Jedi

By: Leandra Lederman

It started on Twitter with the following tweet from Prof. Musgrave:

I replied with what became my most popular tweet to date. (The bar was not high.)

As Twitter replied with funny comments, the idea quickly became fodder for Break Into Tax, the YouTube channel that Allison Christians and I launched last month. So, here it is: TAX RETURN OF THE JEDI: UNOFFICIAL PARODY TRAILER. Don’t miss the Circular 230 disclaimer at the end!

Institutional Corruption and Avoidance of Taxation: Final VIRTEU Roundtable

By Diane Ring

The most recent Roundtable session in the series of four VIRTEU [Vat fraud Interdisciplinary Research on Tax crimes in the European Union] sessions this spring focused on the limited success we have seen with the formal regimes of gatekeepers tasked with ensuring that taxpayers accurately meet their reporting and taxpaying obligations. The session then explored the role that whistleblowers play in remedying the resulting enforcement gaps. (A recording of this 3rd Roundtable is available here). Building on that discussion, the 4th and final Roundtable session, to be held Friday March 12, 2021 at 12:30pm EST (5:30pm GMT), will turn to the related topic, Institutional corruption and tax avoidance.

This March 12th discussion will examine corruption broadly understood to encompass not only the most direct forms of corruption (e.g. bribes) but more indirect forms (including implicit deals with officials), on to questions of undue influence, conflict of interest and the power of lobbying. Attention will be given to not only government actors, but also structural and institutional features that impact corruption and avoidance of taxation, including the role of large corporations, wealth, and power bases. For more information on the Roundtable, see below. To join us for the discussion, please register here.

VIRTEU Roundtable #3: Whistleblowing, Reporting, and Auditing in the area of taxation

by Diane Ring

We do not yet live in a world in which taxpayer compliance can simply be assumed. Instead, we must rely on the interplay of reporting requirements, internal and external auditing, and ultimately whistleblowing, to help ensure compliance with the tax system. How do they fit together? What can we expect from reporting and auditing? When do they breakdown, and why? How does whistleblowing–both the actual cases and the “threat” of whistleblowing–shape law, taxpayer behavior, and society’s understanding of compliance. And when does this tax noncompliance intersect with government corruption and fraud? What recommendations and options might we consider for the future?

Next week, the VIRTEU Roundtable Series tackles these questions in its 3rd Roundtable: “Whistleblowing, Reporting and Auditing in the area of taxation.” (VIRTEU [Vat fraud: Interdisciplinary Research on Tax crimes in the European Union]). This session builds on the first two Roundtables which gathered experts from around the world to discuss tax crime, corruption, CRS, and business ethics, and which can be viewed online: (1) Roundtable #1: Exploring the Interconnections between tax crimes and corruption; and (2) Rountable #2: CSR, Business Ethics, and Human Rights in the area of taxation.

The 3rd Roundtable, on “Whistleblowing, Reporting and Auditing in the area of taxation,” will be held Friday February 26, 2021 at 5:30-7:00pm GMT (12:30-2:00pm EST). For more information on the panel, see below. To join us, visit the registration link here.

CSR, Business Ethics & Human Rights through a Tax Lens: VIRTEU Roundtable Series Continues

by Diane Ring

Last month, the VIRTEU Roundtable Series launched with a discussion I had the opportunity to moderate on the basic connections between tax crime and corruption.  (VIRTEU [Vat fraud: Interdisciplinary Research on Tax crimes in the European Union]). Clearly, we were only just getting started — the discussion ended because time was up but the questions continued. This week’s roundtable takes a closer look at the role that CSR (corporate social responsibility), business ethics and human rights can, should, or do play in business conduct, in tax enforcement strategies, and in the design of tax law itself.

These three frames for regulating (business) behavior are regularly examined and debated in the corporate and regulatory literature, but their application to the tax system remains under explored. If you are interested in thinking more about the tax side, join us this Friday February 12, 2021 at 5:30-7pm GMT (12:30-2:00pm EST). For more information on the panel, see below. To join, visit the registration link here.

Tax Crime and Corruption: VIRTEU Roundtable Series and Research

by Diane Ring

It is no surprise to those working in the tax field, whether in government, private practice, academia or the nonprofit sector, that not all taxpayer mistakes are innocent. Some taxpayers affirmatively engage in fraud, and sometimes that fraud is wrapped up with corruption. The high profile spate of tax leaks beginning in 2008 helped put a more public face on many aspects of an old problem.

As part of an effort to better respond to tax crimes and corruption, the EU has funded an interdisciplinary and comparative research legal research project — VIRTEU [Vat fraud: Interdisciplinary Research on Tax crimes in the European Union]. This project is aimed at exploring connections between tax fraud and corruption. Focused in part on VAT fraud, the relevant issues and the kinds of questions that must be asked are universal across the tax system.

VIRTEU, for which I am a special advisor, is hosting a Roundtable Discussion Series this spring that brings together experts from academic institutions, nongovernmental organizations, and the private sector to engage in topical discussions around the general problem of tax fraud and corruption. Along with the the VIRTEU project’s Principal Investigator Dr. Costantino Grasso and Co-Investigator Dr. Lorenzo Pasculli, I will be organizing and hosting the series, which is also sponsored by Boston College Law School, Coventry University Research Centre on Financial and Corporate Integrity, and OLAF (the European Anti-Fraud Office).

The first session, “Exploring the interconnections between tax crimes and corruptions“, will be held via Zoom on Friday January 29, 2021 (at 11:00am EST/ 4:00pm GMT). Here is the registration link. See below for more details – and join us for what promises to be an invigorating discussion of the connections between the legal and policy frameworks for corruption and for tax crimes.

Superman, Tax Evader?

By: Leandra Lederman, with thanks to my in-house comics expert, Nickolas Cole

Nick, who’s been a Superman fan since childhood, got me the Oct. 1961 issue of the Superman comic for Christmas. It’s got a story in it billed as “Superman Owes a Billion Dollars” in taxes! Here’s the splash panel:

The basic premise is that a new Revenue Agent “at the Internal Revenue Bureau in Metropolis,” Rupert Brand,* discovers “no record that Superman has ever paid taxes!” (In case you’re wondering, nope, the IRS was not called the “Internal Revenue Bureau” back then. In 1953, it changed its name from the “Bureau of Internal Revenue” to the “Internal Revenue Service.” Perhaps a clue that not to rely on any of the tax statements in the story!)

Brand figures out the quickest way to reach Superman about this apparent delinquency, and explains that even the President of the United States pays taxes (cf. these blog posts), and so must Superman!

Why does Superman owe tax? Well, the story explains that “each year, Superman captures countless criminals, collecting a fortune in reward money!” And not just that, “whenever he digs up buried treasure” [treasure trove, anyone?] “or squeezes coal into diamonds, he earns more untold millions! All that wealth is income!”

Continue reading “Superman, Tax Evader?” →

Why Tax Losses Matter (for Pres. Trump’s Taxes and Everyone Else’s)

By: Leandra Lederman

Tax losses pose a special problem for the federal fisc. I’ll get to that in a minute, but first some set-up as to how tax noncompliance differs on the income side versus the deduction and credit side. The overall purposes of this post are to address some questions I’ve gotten and pull together some tax enforcement themes that are implicated by the recent NY Times reporting on Pres. Trump’s returns.

The Importance of Third-Party Reporting

A lot of tax noncompliance occurs with respect to income. Not for folks with mainly wage and salary income who maybe earn a little bit of interest from a bank account. All of that is reported by third parties (the payors) to the IRS, on information returns like Form W-2 or Form 1099. The taxpayer/payee receives a copy the information return and that both simplifies reporting and communicates what information the IRS has about the transaction. As Joe Dugan and I argue in a forthcoming article, third-party reporting is very effective. With the IRS able to do simple return matching to catch any incorrect reporting (intentional or otherwise), IRS figures like this bar graph show that there’s not a lot of noncompliance where there’s substantial third-party information reporting.

Where much tax noncompliance occurs is with respect to income earned by the self-employed and small businesses, where there’s much less third-party reporting and also more use of untraceable cash. (I added the red circle to the IRS image below.)

Continue reading “Why Tax Losses Matter (for Pres. Trump’s Taxes and Everyone Else’s)” →

#TrumpTaxLimericks

By: Leandra Lederman

I was inspired last night while watching the debate to write some limericks about President Trump’s tax returns. I’m sharing them here to collecting them in one place. It would be great to see others add to the collection, too–there may not be as much love as on #TaxValentines Day–but #TaxLimericks could be a broader genre!

Continue reading “#TrumpTaxLimericks” →

#TrumpTaxReturns

By Sam Brunson

Image from 401kcalculator.org. CC BY-SA 2.0

For the last several months, I’ve been meeting a guitarist and sometimes other musicians at a Chicago park to play outdoor socially-distanced jazz. This Sunday, driving home, my wife asked me if we knew what Trump had paid in taxes. “Of course not,” I confidently responded. “It looks like we do now,” she said.

And with that, my work goals for this week changed. I’m sure everybody reading this has seen Sunday’s New York Times story (and probably also its follow-up from yesterday). Along with a ton of other tax people, I’ve been trying to make sense of and contextualize the story, both to myself and to the public. And I’ve largely been doing my thinking in real-time on Twitter.[fn1]

I thought that I’d assemble a lot of those Twitter threads here into one place. At most I’ll lightly edit them and I’ll link to the actual threads on Twitter, too. Because over there I included GIFs on almost every tweet and I think I outdid myself. The relevant content will be here, though. Continue reading “#TrumpTaxReturns” →