The Tail, the Dog, and Gig Workers

By: Diane Ring

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New legislation has just been introduced in the Senate that creates a “safe harbor” for independent contractor status. The proposed legislation provides that if a worker relationship satisfies certain criteria, then that worker can bypass the sometimes messy, multi-factor test for distinguishing between employees and independent contractors, and will be classified as an independent contractor for tax purposes. What prompted action now to address what has been a decades-old classification challenge for workers, businesses and the IRS alike? The gig economy. (Hence, the not-so-catchy title for the legislation: The New Economy Works to Guarantee Independence and Growth (NEW GIG) Act of 2017 (S. 1549).)

The legislation’s sponsor, Senate Finance Committee member John Thune, (R-S.D), described the impetus for the legislation as follows: “My legislation would provide clear rules so that these freelance style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS.”

Is this really what gig workers are worrying about? . . . Continue reading “The Tail, the Dog, and Gig Workers”

What My Noisy New Hobby is Teaching Me about Tax

Shu-Yi Oei

While Sam was out there visiting the National Parks, I went and acquired a noisy new hobby.

drums

So far, I’ve only had two drum lessons but am completely hooked. What took me so long to pick up the drums? If you love music, get a kick out of repetitive motion, and enjoy making a big noise, I highly recommend it.

Learning the drum set is a matter of first impression for me. [FN1] So the actual noise making aside, it’s given me an unexpected midsummer opportunity to revisit what it feels like to learn a new skill for the first time, which of course makes me think about the fundamentals of teaching and writing in tax.

Here are some newbie observations:

  1. Assembling the Drum Set

I went out and bought a cheap drum set so I could practice at home. What really surprised me was the amount I learnt about the drums simply by virtue of assembling the drum set. Things I know now that I didn’t know before:

  • That restaurant in New Orleans called the High Hat? Turns out it probably isn’t named after an actual hat.
  • Who knew you had to tune the drums? It’s almost as if it’s a musical instrument or something.
  • The crash cymbal and high hat sit much lower to the ground than I had ever imagined.
  • You can actually turn the snares on a snare drum on and off. Did I know that? Nope.

The experience of assembling my own drum set was so useful that it got me thinking about how one might get one’s tax students to do the equivalent of assembling a drum set. Continue reading “What My Noisy New Hobby is Teaching Me about Tax”

Online Shopping and Tax Privacy

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By Adam Thimmesch

The privacy implications of online commerce are complicated and fascinating. On the one hand, it allows individuals to protect their privacy by shopping for sensitive items without the knowing glances of store clerks, fellow patrons, or those passing by. On the other hand, it creates a digital trail that can connect them to a particular vendor or purchase in perpetuity. This can occur with respect to items that are politically, medically, or sexually sensitive and with respect to items that they’d just prefer to keep a secret. (For example, if you forget to browse in private mode, you might find that your wife’s Facebook feed now includes ads for the items that you were searching out for her birthday. Woops. Sorry dear.)

Your online shopping habits might also soon be known to your state revenue authority. Given states’ limited jurisdiction to require online vendors to collect sales taxes from consumers, some states have taken a new approach—requiring those vendors to, instead, rat out their customers to the state. Continue reading “Online Shopping and Tax Privacy”

Tax at the National Parks: Great Smokey Mounains Edition

By Sam Brunson

This will be the third in my series of tax-in-the-National-Parks posts. (I’m as surprised as you.)[fn1]

We spent a couple days camping at Great Smoky Mountains National Park. At the Oconaluftee Visitor Center, there were a series of displays about Appalachian life.[fn2] As I was looking at the moonshine still, I noticed this sign: Continue reading “Tax at the National Parks: Great Smokey Mounains Edition”

House Appropriations Bill

By: David Herzig

With all the diversions this week, it was easy to miss that the House Committee on Appropriations posted on June 28th the Appropriations Bill for FY 2018.  The bill seems to include a couple items that not many were expecting.  So, I thought I would highlight some of the key provisions.  Since it is Friday before a Holiday weekend, I’ll keep it short for now.  There are four main provisions I will address: (1) IRS Targeting/Johnson Amendment; (2) ACA Penalties; (3) Conservation Easements; and (4) 2704 (Estate/Gift Tax).

I. IRS Targeting/Death of Johnson Amendment

First, is a clear response to the “targeting” of groups from the Lois Lerner Administration. In three separate sections (107, 108 and 116), the bill attempts to regulate the IRS, not Continue reading “House Appropriations Bill”

President Trumpeting Marketplace Fairness?

By Adam Thimmesch

Hello everyone! I’m excited to be joining the Surly Subgroup and appreciate the opportunity to share some of my thoughts in thus forum. I’ve been at the University of Nebraska College of Law since 2012, and I teach Individual Income Tax, State and Local Tax, Corporate Tax, Corporate Finance, and Business Associations. Much of my research to date has focused on state-tax issues, though I’ve recently been spending time also thinking about how our tax systems intersect with individual privacy interests. I am looking forward to blogging about these issues—and maybe a good tax-and-soccer scandal from time to time.

This is a particularly good week to enter the blogging world as a state-tax guy. I woke up yesterday ready for a regular day of summer research and writing when this happened:

Now, I’m generally inclined to not give much attention to our current President’s tweets, but it isn’t often that state-tax issues get presidential attention, so it seemed like a good opportunity to dig into the tweet a bit more. (Plus it gave me the opportunity to use a terrible Trump pun right off the bat as a blogger.)

The Tweet

Although the President’s tweet is difficult to interpret (and that’s being gracious), it appears that he was primarily attempting to criticize The Washington Post as “fake news.” That came a day after the paper reported on the fact that several of his golf clubs had posted fake Time magazine covers on their walls. Trump made this criticism, though, through an oddly constructed reference to the paper’s relationship with Amazon and Amazon’s position with respect to “internet taxes,” which most likely is a reference to the collection of use tax on online sales. (The Washington Post and Amazon are not related, of course, except that Jeff Bezos—the founder, chairman, and CEO of Amazon—purchased the paper in 2013.)

Continue reading “President Trumpeting Marketplace Fairness?”

Welcome to Surly, Adam Thimmesch!

Great news: Adam Thimmesch of the Nebraska College of Law has agreed to come aboard as a Surly blogger. You may remember Adam from last year, when he gave us a great (and popular!) post on Pokémon Go.

While Adam will provide a fuller introduction of himself in due time, let me say: we’ve been sadly deficient in our SALT expertise, and Adam will capably fill that slot, as well as blogging about whatever other tax issues he finds interesting. So welcome, Adam!

Tax at the National Parks: Grand Portage Edition

By Sam Brunson

A year ago, the National Parks surprised me with a tax name-check. I mean, realistically, there shouldn’t have been anything surprising about encountering a picture of Al Capone at Alcatraz, but I didn’t think I’d see taxes there.

So consider this the second year in a row where the National Parks have surprised me with tax. My family was at Grand Portage National National Monument (which is incredibly cool, btw) learning about the Ojibwe and the North West Company and the thriving fur trade. In one room, there was a display about hatmaking. And, on the wall, was this cartoon:

Continue reading “Tax at the National Parks: Grand Portage Edition”

Mortgage Interest Deduction

By: David J. Herzig

The Trump and Republican tax plans have circled around the idea of repealing the mortgage interest deduction.  Although I’m not convinced it will happen (see e.g., Treasury Secretary Mnuchin’s remarks).  The mere threat of the repeal has garnered a fair amount of attention.

For example, the other day this chart was making its rounds on twitter.

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I have not verified the methodology of the chart or the data.  I interpret that the chart examines (in absolute numbers) how many mortgages exist at $1,000,000. The implicit conclusion of the chart is that homeowners in states like D.C., Hawai’i, California and New York have the most at stake in retaining the deduction.

Why?

Because there seems to be evidence that the mortgage interest deduction contributes to housing inflation.  Back in 2011 the Senate held hearings on incentives for homeownership. [1]  It has been suggested that the elimination of the deduction will drop home prices between 2 and 13% with significant regional differences. [2]  So, if the mortgage interest deduction is eliminated, then the aforementioned states might have numerous problems, including a smaller property tax base.

What exactly is the Mortgage Interest Deduction?

Continue reading “Mortgage Interest Deduction”

Prognosticating Estate Tax Repeal using State Interests

By: David Herzig

Last week Tax Foundation tweeted about the states that have either a state level estate or inheritance tax.

Screen Shot 2017-06-01 at 8.29.10 AM

The map and subsequent conversations I have had reinvigorated my interest in the prospect of an estate tax.  Briefly in this post, I wanted to say a couple things about the state level estate or inheritance tax, the map, and the effect of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRAA“) on the prospects of the elimination of federal estate tax.

I’ll readily admit that it has been a while since I did an estate tax return.  So, I needed some refreshing regarding the idiosyncrasies of the interaction between the state and federal taxes.  Some recent history is not only necessary but illustrative of the prospects of permanent federal estate tax repeal.

Brief History of Switch From Credit to Deduction

Prior to the enactment of EGTRAA, the federal estate tax provided an tax credit for an amount paid because of a state level estate tax.  The mechanics of credit was essentially a revenue sharing agreement for the tax collected between the federal government and the states – essentially, up to 16% of an estate’s value.  The credit applied whether or not the state had an independent estate tax.  This tax was known as a “pick-up” or “sponge” tax.

Continue reading “Prognosticating Estate Tax Repeal using State Interests”