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Hungary's Orban shelves Internet tax after demos

Yahoo Tax - Fri, 2014-10-31 13:10

Hungary's prime minister on Friday shelved plans to introduce an Internet tax that had sparked major demonstrations and further concerns about civil liberties in the EU member state. The new levy on online data transfers "cannot be introduced in its current form", the right-wing Viktor Orban, 51, said in a morning radio interview. Orban also said that a "national consultation" on the Internet and taxes would start in January. The Economy Ministry Friday evening -- just as a third demonstration in a week was about to start -- initiated the withdrawal of the proposed levy, it said in a statement.


Categories: Tax news

Extra Money Could be Bittersweet Next Tax Season Due to the Affordable Care Act

Tax Foundation - Fri, 2014-10-31 11:30

The National Association of Enrolled Agents recently released a warning that the Affordable Care Act Marketplace may complicate tax returns. The NAEA is an organization of tax professionals that are specially licensed through the Department of Treasury and can represent individuals directly to the IRS. According to the group, insurance subsidies could cause of some major problems on tax returns this year.

Subsidies for the ACA were given to those who had estimated household incomes between 100 percent and 400 percent of the federal poverty level for their family size.  They were:

One person: household income between $11,490 and $45,960 Family of two: household income between $15,510 and $62,040 Family of four: household income between $23,550 and $94,200

The problem lies when actual income differs from previous estimates. If, for instance, a family got an unexpected bonus or raise, pushing them out of the household income range, the full amount of the subsidies would have to be repaid on their income tax return. This can be a substantial and unexpected change in tax liability. Earning $1 more can lead to an infinite marginal tax rate for disallowed taxpayers.

While not all taxpayers will face this issue, it is a potential problem with the bill’s subsidy structure. As we have previously written, these subsidies are expected to become the largest refundable tax credit, as much as all other refundable tax credits combined. For those who did make more than expected this year, the extra income could be bittersweet.

Follow Josh on Twitter 

Categories: Tax news

Market Volatility Alone Can Cause Inequality

Tax Foundation - Fri, 2014-10-31 10:15

A new paper by French economists Emmanual Saez and Gabriel Zucman discusses a new technique for using tax returns to estimate top wealth shares. They find that wealth inequality has been increasing such that the top 1 percent now control about 40 percent of all household wealth, as the chart below illustrates.

The authors attribute the rise of wealth inequality to all sorts of evils, including low taxes on the wealthy and financial deregulation. They also buy into the notion that the wealthy enjoy higher rates of return on their wealth, a theory without evidence that Thomas Piketty also has advanced. Like Piketty, Saez and Zucman call for higher, more progressive taxes on wealth, such as estate taxes.

However, the authors fail to mention the role of market volatility, and particularly the role that central banks have in creating volatility. For instance, today the Central Bank of Japan announced a huge monetary stimulus that sent both Japanese and American stock markets to new highs.

To test the role of market volatility alone, I ran an experiment using a simple excel spreadsheet. If you take 100 individuals and give them each a random rate of return every year for 100 years, it turns out that market volatility alone generates a tremendous amount of wealth inequality.

The chart below shows what happens when this random rate of return is in the range of plus or minus 30 percent a year. Lest you think that is unrealistic, the S&P 500 rose 30 percent last year. That sort of volatility eventually generates a situation where the top 1 percent control about 40 percent of all wealth – the same wealth inequality now found in the U.S., according to the French economists.

In contrast, if the range of the random rate of return is reduced to plus or minus 10 percent a year, the top 1 percent wealth share never exceeds 4 percent.

These results are generated strictly by volatility, without assuming any privilege at all. In other words, this is a perfectly egalitarian society in that everyone has the same chance of winning. All it takes is randomly distributed rates of return and property rights, so people get to keep their wealth.

Of course, the French economists’ solution is to take away the property rights, i.e. confiscate the wealth through taxation. However, a much more beneficial approach is to reduce volatility. That means getting the Federal Reserve under control, principally. The Fed's loose and novel policy innovations over the last 15 years or so have almost certainly contributed to inequality, by blowing bubbles in the housing and stock markets. Policy makers should address that problem first, before wrecking the economy with higher tax rates.

Follow William McBride on Twitter

Categories: Tax news

New taxes or not, Pennsylvania's next governor faces fiscal morass

Yahoo Tax - Fri, 2014-10-31 04:06

By Hilary Russ NEW YORK (Reuters) - The Democrat who could oust Pennsylvania's Republican governor in November wants to reshape the state's personal income tax system to make it more progressive. But if he wins, Tom Wolf, who was Revenue Secretary under former Democratic Governor Ed Rendell, probably could not get the plan past the Republican legislature, one that did not even support most proposals from a fellow Republican, incumbent Governor Tom Corbett. Whichever candidate prevails, he faces a fiscal mess with few easy fixes. ...


Categories: Tax news

2015 Federal Income Tax Rates, Retirement Contribution Limits, Kiddie Tax ... - Forbes

Google IRS Federal Income Tax - Thu, 2014-10-30 16:27

2015 Federal Income Tax Rates, Retirement Contribution Limits, Kiddie Tax ...
Forbes
Today the IRS announced changes to several inflation-adjusted tax items, including the 2015 federal income tax brackets and rates that will impact your 2015 tax return. Earlier in the week, the IRS also announced changes to 2015 retirement plan ...

and more »
Categories: Tax news

IRS Announces 2015 Estate And Gift Tax Limits - Forbes

Google IRS Federal Income Tax - Thu, 2014-10-30 14:49

IRS Announces 2015 Estate And Gift Tax Limits
Forbes
The Internal Revenue Service announced the 2015 estate and gift tax limits today, and the federal estate tax exemption rises to $5.43 million per person, and the annual gift exclusion amount stays at $14,000. These numbers, adjusted annually for ...

Categories: Tax news

IRS Announces 2015 Tax Brackets, Standard Deduction Amounts And More - Forbes

Google IRS Federal Income Tax - Thu, 2014-10-30 11:59

USA TODAY

IRS Announces 2015 Tax Brackets, Standard Deduction Amounts And More
Forbes
Kiddie Tax. For 2015, the threshold for the kiddie tax – meaning the amount of unearned net income that a child can take home without paying any federal income tax – is $1,050. Adoption Credit. For 2015, the credit allowed for an adoption of a child ...
Estate Tax Exemption for 2015 Is AnnouncedWall Street Journal (blog)
IRS announces tax guidance concerning Ebola outbreakWestmoreland County Times

all 23 news articles »
Categories: Tax news

Here's Yet Another Reason to Abolish the Income Tax and IRS: Civil Asset ... - Reason

Google IRS Federal Income Tax - Thu, 2014-10-30 07:12

Daily Mail

Here's Yet Another Reason to Abolish the Income Tax and IRS: Civil Asset ...
Reason
The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money ... “The federal government does,” the article replies. Three brothers ...
IRS Can Seize Your Assets Even If It Just Suspects You Committed a CrimeThe New American
IRS uses drug trafficking and terror laws to seize bank accounts from ...Daily Mail

all 89 news articles »
Categories: Tax news

Former Kansas City Woman Admits to IRS Income Tax Refund Scheme - Kansas City infoZine

Google IRS Federal Income Tax - Thu, 2014-10-30 06:06

Former Kansas City Woman Admits to IRS Income Tax Refund Scheme
Kansas City infoZine
Between February 2010 and February 2011, Tyler prepared and filed false income tax returns using false and stolen information for approximately 70 individuals. Tyler prepared and electronically filed false income tax returns through Turbo Tax. She ...

and more »
Categories: Tax news

IRS Offers Tax Breaks for Ebola Charity and Medical Expenses - Accounting Today

Google IRS Federal Income Tax - Wed, 2014-10-29 11:53

IRS Offers Tax Breaks for Ebola Charity and Medical Expenses
Accounting Today
The Internal Revenue Service issued two items of guidance Wednesday in response to the need for charitable and other relief due to the Ebola outbreak in West Africa. The first piece ... For example, if an employee living in Guinea receives ...

Categories: Tax news

Tens of Thousands Protest Internet Tax in Hungary

Tax Foundation - Wed, 2014-10-29 08:30

Tens of thousands of Hungarians rallied to protest a proposal to create a tax on internet usage in Hungary. In response to the first protest on Sunday, the Hungarian government limited its proposal.

The original proposal would create a tax on internet usage of 150 forints per gigabyte transfer of data (about $0.62) levied on internet providers.

The government presented a new proposal on Monday that would place a cap of 700 forints per month (about $2.89) for individuals and a cap of 5,000 forints per month ($20.61) for businesses.

According to the Wall Street Journal, the government said that the tax is needed to “make up for revenue lost due to the widespread use of the Internet and its free-of-charge communication that substitutes more traditional voice connections.”

It doesn’t appear that the new proposal satisfied protesters with the largest protest yet at around 100,000 people according to Reuters.

Opponents of the tax say that “the ideal amount of the internet tax is not 700 or 5,000 forints but exactly zero” and that the tax will “hamper economic development.”

The European commission also came out against the measure.

“If Hungary becomes a precedent in this instance, it can become a problem in a lot of other member states and can be a problem for Europe’s wider economic growth,” the spokesman of the EU’s digital commissioner said, according to the Guardian.

In December the U.S. Congress will likely consider a bill that would permanently extend the long standing moratorium on internet taxation.

Categories: Tax news

Most of the Private Sector Workforce is Employed by Pass-through Businesses

Tax Foundation - Wed, 2014-10-29 07:45

In the past three decades, the importance of “pass-through” businesses has grown substantially. The combined net income of sole proprietors, LLCs, Partnerships, and S corporations has increased fivefold and now accounts for more than 50 percent of all business income. C corporations now earn less than half of all business income.

Another way to look at how pass-through businesses have increased in importance is their role as employers. Not only do they account for more than 50 percent of net business income in the United States, they account for more than 50 percent of employment too.

According to 2012 census data, 54.8 percent of all business employment (employment excluding non-profits and governments) is pass-through business employment. This represents approximately 66.6 million workers and sole proprietors. C corporations comprise the remaining 45 percent, or 54.9 million workers.

The importance of pass-through business employment varies by state. In some states such as Delaware (48.5 percent) and Hawaii (47.3 percent) pass-through businesses accounted for less than 50 percent of business employment. In contrast, states such as Idaho (62.9 percent), Maine (61.7 percent), Montana (66.9 percent), South Dakota (64 percent), and Vermont (60.1 percent) had pass-through employment as a share of total business employment of greater than 60 percent.

Due to the fact that these businesses pay taxes through the individual income tax code, it is important to understand their economic impact and how changing the individual tax code could influence these employers.

(Click map to enlarge)

Categories: Tax news

Magyar Telekom flags austerity if Internet tax passes

Yahoo Tax - Tue, 2014-10-28 19:40
BUDAPEST (Reuters) - Hungary's market-leading telecommunications firm Magyar Telekom may be forced to cut back investments or review its staffing if a planned new Internet tax takes effect, Chief Executive Chris Mattheisen was quoted as saying on Tuesday. He told the business portal portfolio.hu that the tax burden in Hungary was limiting the Deutsche Telekom unit's profitability and its shares' dividend potential, a big factor in their attractiveness. The center-right government of Prime Minister Viktor Orban has followed years of sectoral surtaxes with a new plan to tax data transfers. ...
Categories: Tax news

Nevada Voters to Consider Economically Damaging Gross-Receipts-Style Tax, a Type Only Five Other States Have

Tax Foundation - Tue, 2014-10-28 14:00

Next Tuesday, Nevada voters will decide whether or not to give the go-ahead to the margin tax—an economically damaging tax that falls in the gross receipts tax family. Gross receipts taxes (GRTs) only exist in a handful of states across the country (and even that’s too many).

Gross receipts taxes are complex business taxes that are imposed at a low rate but on a wide base of transactions (even intermediate goods and services). This results in tax pyramiding as taxes pile up on one another as goods move through the production chain. This is non-neutral, non-transparent, and complicated—the opposite of smart tax policy.

Four states have pure gross receipts taxes (Delaware, Ohio, Virginia, and Washington), and one (Texas) has a “modified” gross receipts tax—basically a combination of the two worst state-level taxes: GRTs and state corporate income taxes. In the words of Indiana University Professor John Mikesell,

[The Texas margin tax] is…a badly designed business profits tax, like those that emerged in the newly independent states of the former Soviet Union...combin[ing] all the problems of minimum income taxation in general—excess compliance and administrative cost, penalization of the unsuccessful business, undesirable incentive impacts, doubtful equity basis—with those of taxation according to gross receipts.

Most states do without a gross receipts tax (see map below). Click to enlarge and share.

But where did these nasty gross receipts taxes come from? The first emerged in West Virginia in 1921, followed by Washington in 1933, which enacted the tax as an “emergency measure during the Great Depression” (unfortunately this tax has stuck around). Several states enacted GRTs for similar reasons. Luckily, the trend reversed as time went on (from our 2006 piece on the topic):

As the fiscal pressures of the Depression waned, interest in gross receipts taxes faded. Most gross receipts taxes enacted in the 1930s ultimately proved to be short lived…By the 1950s and 1960s, gross receipts taxes began to fade from state tax policy debates. During the full second half of the 20th Century, no state would enact a new broad-based gross receipts tax…By the late 1970s state and local lawmakers began yielding to the advice of economists, repealing gross receipts taxes in favor of less harmful revenue sources.

Unfortunately, the 2000s saw a resurgence in interest (see here for more information on this).   

We’ve written many times in the past about the issues with gross receipts taxes. Though margin taxes are technically “modified” GRTs, they are still plagued by many of the same issues. As I pointed out last year, there are the two compelling economic reasons that a margin tax is poor tax policy:

First, it’s complicated to calculate and drains economic resources due to high compliance and administrative costs. Second, it isn’t neutral, treating certain business types, industries, and operations differently. Both of these lead to economic distortions that would not be present in the absence of such a tax.

I’ll dig more into these two issues over the next few days in a blog post series on the Texas margin tax experience and what a similar tax could mean for Nevada. Stay tuned!

More on gross receipts taxes here. More on Texas here. More on Nevada here. Follow Liz on Twitter @elizabeth_malm.

 

Categories: Tax news

White House Claims U.S. Effective Corporate Tax Rate is Competitive

Tax Foundation - Tue, 2014-10-28 10:00

Last month, while Treasury was rolling out new rules to clamp down on corporate inversions, the Chair of the President’s Council of Economic Advisors, Jason Furman, gave a speech at NYU titled Business Tax Reform and Economic Growth. Furman acknowledged that the U.S. corporate tax rate, at 39 percent, is the highest in the developed world. However, he then argued that “more generous depreciation allowances and other structural features of the U.S. tax system combine to result in effective marginal tax rates on U.S. investment roughly in line with, and even slightly lower than, other G7 countries,” and referred to the following chart.

The first thing to note is that the effective tax rates shown are from 2011. Since then 8 developed countries have cut their statutory corporate tax rates, including Japan, Canada and the UK. Japan’s tax cut is what moved the U.S. from second-highest to highest statutory corporate tax rate in the developed world.

However, Furman’s estimated effective tax rates even for 2011 do not square with what other researchers have found. Jack Mintz and Duanjie Chen, of the University of Calgary, find that the U.S. has the highest marginal effective tax rate on corporate investment in the developed world, and it has been the highest since 2007. Further, Mintz and Chen find the approach used by the White House and Treasury improperly accounts for how sales and property taxes fall on corporate investment.

Other academic studies using different techniques come to similar conclusions as Mintz and Chen, i.e. they find the U.S. has the highest or nearly the highest effective corporate tax rate in the developed world.

The first step in corporate tax reform is acknowledging the problem, which is that the U.S. has an uncompetitive corporate tax system that gets less competitive every year. Thus far, the Obama White House has been unwilling to make that first step.

Follow William McBride on Twitter

Categories: Tax news

New Report: 2015 State Business Tax Climate Index

Tax Foundation - Tue, 2014-10-28 07:15

I wanted to make sure you saw our new State Business Tax Climate Index, released today.

The Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index uses over 100 variables in the areas of individual income tax, corporate income tax, sales tax, unemployment insurance tax, and property tax to show how well states structure their tax systems, and provides a road-map to improving these structures. The 2015 Index reflects law as of July 1, 2014.

The top states in the 2015 Index are Wyoming, South Dakota, Nevada, Alaska, Florida, Montana, New Hampshire, Indiana, Utah, and Texas. The absence of a major tax is a common factor among many of the top ten states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax. But this does not mean that a state cannot rank in the top ten while still levying all the major taxes. Indiana and Utah, for example, have all the major tax types, but levy them with low rates on broad bases.

The bottom states are New Jersey, New York, California, Minnesota, Vermont, Rhode Island, Ohio, Wisconsin, Connecticut, and Iowa. The states in the bottom ten suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates. New Jersey, for example, suffers from some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance and an estate tax, and maintains some of the worst structured individual income taxes in the country.

Notable changes in this year's report include:

North Carolina. In this year's edition, North Carolina has improved dramatically from 44th place last year to 16th place this year, a 28-rank jump. The state improved its score in the corporate, individual, and sales tax components of the Index, and as the 2013 reform package continues to phase in, the state is projected to continue climbing the rankings. North Carolina’s largest improvement was in the individual income tax component section, where legislation restructured the previously multi-bracketed system with a top rate of 7.75 percent to a single-bracket system with a rate of 5.8 percent and a generous standard deduction of $7,500. The corporate income tax rate in North Carolina is also phasing down, from 6.9 percent last year to 6 percent this year. The rate is subject to a trigger mechanism that will further reduce the rate in future years when state general fund revenues are healthy, to as low as 3 percent by 2017. Finally, the state improved its sales tax structure this year by disallowing localities the ability to set their own tax bases, improving simplicity for sales tax filing.
  Kansas. Despite income tax cuts that are phasing in, Kansas dropped three rankings overall, from 19th to 22nd, as North Carolina jumped several spaces, and West Virginia’s score continued to improve as property tax and corporate tax improvements phased in. The state’s decision to carve out pass-through income from taxation, while increasing spending, has caused budget uncertainty. Although these policies are not entirely captured by the Index, a better path for Kansas tax reform would be the one set out by states like North Carolina, Indiana, and Nebraska.
  Maine fell five rankings overall, from 28th to 33rd, primarily due to a sales tax rate increase but also partly due to improvements in the relative rankings of North Carolina and Nebraska. 
  Nebraska improved five ranks overall, from 34th place to 29th, due to improvements in its corporate and individual income tax systems, including reform of corporate net operating loss carryforwards, a repeal of the individual alternative minimum tax, and indexation of the brackets of the individual income tax code. 
  New York's corporate income tax ranking improved from 24th to 20th as a result of corporate tax reform passed this year that is starting to phase in. Once fully phased in, the package will lower the corporate rate from 7.1 to 6.5 percent, eliminate the capital stock tax and corporate alternative minimum tax, extend net operating loss carrybacks from 2 to 3 years, and remove the carryback cap. Once fully phased in, the corporate tax component of the Index is expected to improve to 4th place. 
  North Dakota improved from 27th to 25th overall due to a cut in the top individual income tax rate from 3.99 percent to 3.22 percent. 
  Wisconsin. Though Wisconsin’s overall rank did not change for this edition of the Index, the state repealed its inventory tax on rental property, improving its property tax component score from 36th to 31st, and conformed mineral depletion to federal schedules, improving its corporate tax component score from 34th to 33rd. 

Additionally, the Index report discusses positive changes scheduled to take effect but not yet in law on July 1, 2014 in Arizona, Illinois, Indiana, Kansas, Missouri,New Mexico, New York, North Carolina, Pennsylvania, Rhode Island,West Virginia, and the District of Columbia.

Check out the full 2015 State Business Tax Climate Index report here and download a PDF copy here.  

Categories: Tax news

2015 State Business Tax Climate Index Released Today!

Tax Foundation - Tue, 2014-10-28 07:15

This morning we released our 2015 State Business Tax Climate Index, which enables business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare.

While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems, and provides a road-map to improving these structures. The Index looks at over 100 variables in the individual income tax, corporate income tax, sales tax, unemployment insurance tax, and property tax to reduce these many complex considerations to an easy-to-use ranking.

The 10 best states in this year's 2014 Index are Wyoming, South Dakota, Nevada, Alaska, Florida, Montana, New Hampshire, Indiana, Utah, and Texas. Many of these states score particularly well because they go without one of the major taxes, but this does not mean that a state cannot rank in the top ten while still levying all the major taxes. Indiana and Utah, for example, have all the major tax types, but levy them with low rates on broad bases.

The 10 lowest ranked, or worst, states in the 2014 Index are New Jersey, New York, California, Minnesota, Vermont, Rhode Island, Ohio, Wisconsin, Connecticut, and Iowa. The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates. New Jersey, for example, suffers from some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance and an estate tax, and maintains some of the worst structured individual income taxes in the country.

This edition is an exciting one for the Index, because North Carolina has improved dramatically from 44th place last year to 16th place, the single largest rank jump in the history of the Index. The state improved its score in the corporate, individual, and sales tax components of the Index, and as the reform package continues to phase in, the state is projected to continue climbing the rankings. See page three for details.

Nebraska improved five ranks overall, from 34th place to 29th, due to improvements in its corporate and individual income tax systems, including reform of corporate net operating loss carryforwards, a repeal of the individual alternative minimum tax, and indexation of the brackets of the individual income tax code. The legislature there is considering more impactful tax reform next year as well. See page four for details.

Maine is the only state to enact a rate increase in one of its major taxes since last year, as the sales tax rate went from 5.0 to 5.5 percent. This, combined with North Carolina and Nebraska leapfrogging up in the rankings, resulted in Maine falling five rankings in this year’s edition.

We also saw notable changes in North Dakota, New York, and Wisconsin, which are listed on pages four and five.

The report even has a list of forthcoming changes you can expect in future editions. Beneficial reforms that are phasing in on other states include the District of Columbia and Indiana, which are phasing in corporate and individual income tax rate reductions; and Arizona, New Mexico, New York, and Rhode Island, which are phasing in corporate rate reductions.

Illinois, Kansas, Missouri, and Pennsylvania will be important to watch too, as those states have all seen high profile budget battles in the last year.

We hope that this information helps you gauge how your tax system compares and provides a roadmap for improving the business tax climate. Each year, the Index report is downloaded over half a million times and is referenced in hundreds of major media articles and in several State of the State addresses. The rankings are used in other organization's rankings as the tax component, and recent academic evidence found correlation between Index component ranking and state wage and economic growth.

The 2015 Index represents the tax climate of each state as of July 1, 2014, the first day of the standard 2015 state fiscal year. Read the 75-page report by Scott Drenkard and Joseph Henchman and the results at http://taxfoundation.org/index 

 

Overall Rank

Corporate Tax Rank

Individual Income Tax Rank

Sales Tax Rank

Unemployment Insurance Tax Rank

Property Tax Rank

Alabama

28

27

23

41

25

10

Alaska

4

30

1

5

24

32

Arizona

23

24

19

49

4

6

Arkansas

39

40

28

44

39

19

California

48

34

50

42

14

14

Colorado

20

12

16

43

35

22

Connecticut

42

32

34

31

20

49

Delaware

14

50

33

1

2

13

Florida

5

14

1

12

3

16

Georgia

36

8

42

17

36

30

Hawaii

30

9

37

15

28

12

Idaho

19

21

24

22

46

3

Illinois

31

47

11

34

38

44

Indiana

8

22

10

10

7

5

Iowa

41

49

32

23

33

38

Kansas

22

38

18

30

9

28

Kentucky

26

29

30

11

45

17

Louisiana

35

23

27

50

6

24

Maine

33

45

22

9

42

40

Maryland

40

16

45

8

21

41

Massachusetts

24

37

13

21

48

45

Michigan

13

10

14

7

47

27

Minnesota

47

44

46

37

29

34

Mississippi

18

11

21

28

8

33

Missouri

17

4

29

29

12

7

Montana

6

18

20

3

18

8

Nebraska

29

31

25

27

13

39

Nevada

3

1

1

39

43

9

New Hampshire

7

48

9

2

44

43

New Jersey

50

41

48

48

32

50

New Mexico

38

35

35

45

10

1

New York

49

20

49

40

31

46

North Carolina

16

25

15

33

11

29

North Dakota

25

19

36

20

16

2

Ohio

44

26

47

32

5

20

Oklahoma

32

7

40

38

1

11

Oregon

12

36

31

4

30

15

Pennsylvania

34

46

17

24

50

42

Rhode Island

45

43

38

26

49

47

South Carolina

37

13

41

18

40

21

South Dakota

2

1

1

35

41

18

Tennessee

15

15

8

47

26

37

Texas

10

39

6

36

15

36

Utah

9

5

12

19

22

4

Vermont

46

42

44

16

17

48

Virginia

27

6

39

6

37

26

Washington

11

28

6

46

19

23

West Virginia

21

17

26

25

23

25

Wisconsin

43

33

43

14

27

31

Wyoming

1

1

1

13

34

35

District of Columbia

45

38

35

42

27

44

 

Source: Tax Foundation.

 

Categories: Tax news

EU slams Hungary Internet tax plan as bad precedent

Yahoo Tax - Tue, 2014-10-28 07:06

The European Union on Tuesday denounced Hungary's plan for an Internet tax as a new threat to political freedom in the country and also for broader EU economic growth. EU digital commissioner Neelie Kroes believes it is a "particularly bad idea" and will continue to support protests like those against the proposed levy held Sunday in Budapest, her spokesman Ryan Heath said. He was referring to the government of Hungarian Prime Minister Viktor Oban, which has cracked down on media regulation and the justice system. "If Hungary becomes a precedent in this instance, it can become a problem in a lot of other member states and become a problem for Europe's wider economic growth," Heath said.


Categories: Tax news

IRS Promises to Curtail Property Seizures After Abuses Come to Light

Tax Foundation - Tue, 2014-10-28 05:15

Over the weekend, the New York Times reported the case of Iowa restaurant owner Carole Hinders:

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.[…]

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.

The Institute for Justice, a libertarian public interest law firm, is representing Hinders in her challenge, and notes that the IRS is making hundreds of such seizures a year but pursuing criminal action in only a fifth of them. IJ is representing clients in a number of similar cases.

The IRS responded to the New York Times:

After a thorough review of our structuring cases over the last year and in order to provide consistency throughout the country (between our field offices and the U.S. attorney offices) regarding our policies, I.R.S.-C.I. will no longer pursue the seizure and forfeiture of funds associated solely with “legal source” structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level. While the act of structuring — whether the funds are from a legal or illegal source — is against the law, I.R.S.-C.I. special agents will use this act as an indicator that further illegal activity may be occurring. This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.'s mission and key priorities. The policy involving seizure and forfeiture in “illegal source” structuring cases will remain the same.

I’m skeptical of how much the IRS is conceding here. As Professor Jack Townsend notes, the government position has generally been that they use forfeiture only in extraordinary circumstances and offers remedies to return the property. Now that we know this hasn’t been true, we shall have to wait and see if IRS actions appreciably change or if they just keep doing what they were doing.

Categories: Tax news

IRS Reaches Conclusion On Bank Transaction With Federal Financial Assistance - Mondaq News Alerts (registration)

Google IRS Federal Income Tax - Mon, 2014-10-27 12:41

IRS Reaches Conclusion On Bank Transaction With Federal Financial Assistance
Mondaq News Alerts (registration)
Sec. 1.597-1(b)) as the receiver. Failed Bank owned a single-member limited liability company (Bank LLC) that was treated as a disregarded entity for federal income tax purposes under Treas. Reg. Sec. 301.7701-3(b). Bank LLC held the regular and ...

Categories: Tax news
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