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Tax Update Blog: January 2004 Archives

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January 30, 2004

The Iowa Department of Revenue and Finance gave practitioners on its email list an unhappy surprise this afternoon with the following message:

"The department is directing taxpayers to file their returns assuming that the Section 179 limit is $25,000."

That statement is hard to reconcile with the announcement originally posted on the Department's web site June 24, 2003:

"Iowa is planning to adopt the provisions of the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 which relates (sic) to increasing the expensing amount under Section 179 of the Internal Revenue Code from $25,000 to $100,000 for assets placed in service during 2003, 2004 and 2005."

The Department e-mail says that if the legislature decides to go with the $100,000 deduction, you may file an amended return and claim a refund. They will be happy to send it to you in, oh, six months or so.

This news is sure to go over well with Iowans who may have recently purchased an SUV with the $100,000 number in mind.

The full text of the department email is available here .


The DOR e-mail probably is a signal that the Governor doesn't want to allow the $100,000 Section 179 deduction. In the face of the Governor's expansive interpretation of his item veto powers, the Legislature may not want to fight him on this issue. But then again, given the frosty relations between the Legislature and the Governor, they may want to fight over just about anything.

Still, we have returns to file. What to do? That depends on your own situation. Some thoughts to keep in mind:

The Iowa Legislature is in session, and they usually adjourn around April 30 - which just happens to be the deadline for Iowa individual and corporate returns. Taxpayers taking a Federal Section 179 deduction over $25,000 on their 2003 returns have to choose whether to file now or wait to see whether the lawmakers will help them out.

If you owe tax on your 2003 Iowa return, the answer is easy: you sit tight and see whether the Legislature acts to allow the $100,000 deduction by April 30. By then we should have a pretty good idea whether the $100,000 deduction will be allowed on Iowa returns, even if the legislature isn't quite finished. There's no point filing a balance-due return early anyway; if you file early and the $100,000 deduction is allowed, you will have to file an amended return and wait six months for a refund.

Taxpayers expecting a big Iowa refund regardless of their Section 179 deduction who are ready to file before, say, March 15, probably want to go ahead and file anyway. If you have, say, $50,000 coming back from Iowa, you don't want to delay just because you might get an additional $6,735 from your Section 179 deduction. If your return isn't ready by, say, March 15, and it looks as though the legislature might allow the $100,000 deduction, it may make sense to wait to file to avoid the need to file an amended return. This is especially true if you file electronically - electronic refunds take only two weeks or so, while amended return refunds take six months.

Taxpayers who have only a small Iowa refund, or who will only have an Iowa refund if the Iowa Section 179 deduction is increased to $100,000, also probably want to wait until the legislature sorts things out.


Individuals need their K-1 forms from "pass-through entities" - S corporations and partnerships - to prepare their Iowa individual returns. Shareholders and partners can get impatient for their K-1s, especially when they expect a refund, so pass-throughs can't really wait to see what the lawmakers will do.

Their best solution may be to report Iowa information using the lower Section 179 limit, while also providing pro-forma K-1 information showing what the Iowa income (and related items) will be if the legislature decides to permit the full $100,000 deduction. This should enable the pass-through entity to avoid the amended returns while giving owners the information they need for their 1040s.

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January 30, 2004

The IRS announced yesterday (Notice 2004-16) that the 2003 and 2004 Honda Insight and the 2004 Honda Civic Hybrid are eligible for the "Clean Fuel Deduction."

The deduction - $2,000 for vehicles bought in 2003 and $1,500 for 2004 purchases - is taken on line 33 of form 1040 by entering "clean fuel" next to the line and entering the deduction on the line. No separate form is required, and the deduction is available both to itemizers and non-itemizers.

The IRS has already certified the 2004 Toyota Prius for the deduction.

2004 Honda Insight

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January 29, 2004

In hindsight, it's hard to credit the executive team of WorldCom with clairvoyance. A management team with the ability to foresee the future should have been able prevent the company's collapse, bankruptcy and accounting scandal. Maybe clairvoyance is part of a Faustian bargain -- a gift given only in tandem with catastrophic incompetence.

But we do know WorldCom management had clairvoyant powers. We know because WorldCom subsidiaries paid royalties of up to $20 billion from 1998 through 2001 to their parent company for "the foresight of top management."

The first definition of "foresight" at is

Perception of the significance and nature of events before they have occurred.

We know that the second definition of foresight, "Care in providing for the future; prudence," didn't apply at WorldCom, so we can only conclude that WorldCom management truly possessed occult powers.

This insight into this previously unsuspected aspect of Bernard Ebbers' management style comes from a 500-page report issued by WorldCom's bankruptcy examiner, former Attorney General Richard Thornborough.

Summoning the spirits?

The report says that the payments were really part of a scheme to save on state income taxes. The report says subsidiaries would reduce their taxable income in the states in which they operated by paying the royalties to a parent located in a no-tax state, artificially reducing their state taxes on operations. This strategy, says the examiner, "was highly aggressive and seriously vulnerable to state challenge."

The tax advisor that set up the plan, however, insists that "Our corporate tax work for WorldCom was performed appropriately, in accordance with professional standards and all rules and regulations, and we firmly stand behind it." The conclusion that the top executive team at WorldCom truly had foresight is inescapable; otherwise, the $20 billion in royalties could be difficult to justify under professional standards.

You can find more insights into the mysterious powers of WordCom management in the examiners report; it is a huge pdf file, so it will take awhile to download.

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January 29, 2004

The Senate passed a bill yesterday to make technical repairs to defined benefit plan laws required by the elimination of the 30-year Treasury Bond. The bill also waives make-up contributions for underfunded plans.

The bill still has to be reconciled with a House version passed last year. The BenefitsBlog has the scoop.

This bill is one of the few pieces of tax legislation with bright prospects for passage before the election.

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January 26, 2004

This week's "Carnival of the Capitalists" is up at the "Winds of Change" weblog. The Carnival is a weekly summary of web postings on economics and business-related issues. One interesting post derides the ability of the "Iowa Electronic Market" for political futures to predict political winners.

Check it out.

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January 26, 2004

A quick overview: taxpayers can deduct accrued employee compensation within 2 1/2 months after the end of the tax year, except when they can't, unless they are cash basis taxpayers, when they can't anyway, or unless they are accrued to related parties, for which they have to be on a cash basis.

Got that? OK, we can't blame you; let's take it a bit slower.


Accrual-basis taxpayers can normally deduct salaries accrued at year-end if they are paid within 2 1/2 months. If salaries are paid later than 2 1/2 months after year-end, they are only deductible when paid. Among the common items affected by this are bonus plans and accrued vacation pay arrangements.


If compensation is accrued to a "related" individual, the deduction can only be taken in the year the compensation is actually paid. For this purpose, "related" means:

C CORPORATIONS: 50% owners and their siblings, spouses, ancestors and lineal descendants.

S CORPORATIONS AND PARTNERSHIPS: Any owners, and their siblings, spouses, ancestors and lineal descendants. Oh, and their sublings, spouses, ancestors and lineal descendants, too.

"Attribution" rules can limit deductions further - for example, if you own a trust that owns corporate stock, you may be considered "related" for these purposes.


Cash basis taxpayers don't have to worry about this sort of complication; if it hasn't been paid, it's not deductible.


That's a different matter. Both cash-basis and accrual-basis taxpayers can deduct qualified plan contributions for a year that are paid by the due date of that year's tax returns. You can give yourself more time to pay the plan contribution simply by extending the return. Be careful if you do this - if you file an extension, you need to file the extended return after its original due date or the extension may be invalidated.

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January 25, 2004

What else can this be:

Des Moines Rocks!
Jan. 23, 2004 12:15:04 PM

Following Howard Dean's impassioned speech after his disappointing third-place ranking in Iowa, Internet wags have begun circulating an altered photo that depicts the Democratic presidential contender onstage at a punk rock concert, complete with stage-diving fans. -- Karla Miller

The above is an entire entry from the new Tax Analysts blog, "Tax Analysts Alive." Why is it a cry for help? The poor poster clearly would love to link to the "altered photo," but for whatever reason - maybe the primitive blogging interface, or perhaps bureaucratic indifference - apparently no linkage is possible. Gotta love the headline, though.


Tax Analysts Alive (We'll call it "TAA") could become the definitive tax blog. With some of the smartest commentators around, a Tax Analysts blog could affect the terms of the national tax debate. That's why TAA is so far such a disappointment. Of course, their blog is still new, and maybe they are looking to learn and improve. While the Tax Update makes no claims to being a model blog, we offer some suggestions:

LINKS! A blog without links is like a tavern without beer. As Glenn Reynolds, famous blogger, has intoned, "A blog that doesn't have links is less interesting." Why? With links, " can follow the link and make up your mind for yourself."

For example, the TAA entry above begs for a link to the picture it talks about.

AUTHORS. Tax Analysts is the home of Lee Sheppard, Gene Steurle, Martin Sullivan, Bill Raby, and a host of other noted tax authors. It would be great if they would chip in. Real-time commentary on developing tax bills, speeches, or new rulings and cases from these folks would be fascinating.

CONTENT. So far, the posts in TAA are mostly news snippets. There's nothing wrong with that, but it would be so much more fun if authors told us how the piece of news they relate illuminates the tax world. For example, this entry in TAA:

All Smiles . . . for Now
Jan. 21, 2004 01:21:52 PM

House Ways and Means Committee Chair William M. Thomas, R-Calif., on January 21 spoke jovially to reporters off the House floor but issued this caveat about his friendly attitude:

"Don't worry. It won't last. I just got here on Monday." -- Patti Mohr

It would be nice if the poster would put this in context: is Mr. Thomas notoriously grumpy? Might he call the Capitol Police to arrest impertinent reporters by the end of the session? Enquiring minds want to know!

PERMALINKS. On most blogs, every entry has it's own URL, enabling other blogs to link to the post specifically - like this. You can find the one for this post by clicking on the little "link" dohickee at the bottom of the page.

Permalinks encourage other blogs to reference to you. Without permalinks, all you can do if you want to tell folks about a great post is to link to the site itself and say "scroll down." That's dark ages stuff - so 2001.

COMMENTS When a blog has good comments, they can be really good. It would be great to see, say, B. John Williams respond to a post by Lee Sheppard about the Bush administration's approach to tax shelters.

Not all blogs allow comments, and some that do maybe shouldn't; the comments can descend to juvenile name calling. If a bunch of tax protestors - ahem, members of the "Tax Honesty Movement" - started making inane comments by the dozen, that wouldn't add a lot of insight. Still, for a blog just building a following, comments can add a lot of interest.

MAKE IT EASY. We don't know what software Tax Analysts uses for TAA, but it appears to be the same package it uses for the rest of their site, Posting to the site probably involves HTML coding, chisels, and a cuneiform stylus.

TAA should hire a skilled weblog designer to set up a Movable Type weblog. This would enable the blog members to post from their homes, offices, or handy wireless hotspots anywhere. Movable Type is so easy, even we can use it; if it isn't easy, busy people won't use it. If they chose to set it up in the morning, they could probably be posting in Movable Type tonight.

For an idea of what TAA could be, visit the Volokh Conspiracy (, a group weblog of legal scholars. For what TAA is now, go to their handy and easy-to-rembember URL:

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January 23, 2004

The best-fielding shortstop in the world has no job security if he bats .173. In the majors, it means you are either a pitcher or on the cusp of new opportunities in a different line of work.

At the IRS, it means you prepare tax returns for the general public.


The IRS offers free tax preparation service for lower-income taxpayers at walk in "Taxpayer Assistance Centers." The Treasury Inspector General for Tax Administration (TIGTA) had 23 dummy returns prepared at these walk-in centers. Four were done correctly. Not that that's a bad thing, if it's your return. Of the 19 honked-up returns, 17 had excessive refunds totalling about $32,000.

The errors indicate a surprising, if misguided, attempt by the IRS preparers to help their customers. Most of the errors allowed taxpayers excessive earned income credits, child tax credits, or dependent deductions. The preparers refused to let mere facts stand in their way:

"For example, TIGTA auditors presented to the IRS employees how many months qualifying children had lived with them. The number of months presented did not qualify them for the EITC. However, IRS employees modified the number of months to a sufficient number needed to be eligible for the EITC"


In a way, the .173 batting average overstates the IRS preparer's performance:

"For one correctly prepared tax return, an IRS employee tried to use the tax preparation software to allow (an erroneous earned income) credit. However, the tax preparation software would not allow the credit."

The IRS preparers' proclivity for excessive refunds may explain another odd fact in the TIGTA report. Even though the walk-in centers are only supposed to prepare free returns for lower-income taxpayers, they did returns for 102 taxpayers with income over $100,000 for 2002 - including 4 returns with income over $200,000. The report doesn't say whether they got the earned income credit.

The TIGTA report is available here.

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January 22, 2004

The President's State of the Union address included a number of tax proposals. These included:

-A deduction for high-deductible health insurance used with Health Savings Accounts;

-Making the already enacted tax cuts permanent. Almost all are slated to expire by 2011, including the repeal of the estate tax.

These proposals, and an expected proposal for "Lifetime Savings Accounts," seem unlikely to go anywhere before the elections. The budget deficits and election year realities will probably stop any action on these provisions, which are highly unpopular among congressional Democrats.

Congress seems likely to pass only relatively technical and non-controversial bills this year, and then only when it feels a lot of heat.


Perhaps the hottest item on Congress' plate is the need to repeal the Extraterritorial Income Regime (ETI). The World Trade Organization has declared this tax benefit for exports an illegal export subsidy, and $4 billion in trade sanctions are set to kick in March 1 if the ETI regime isn't repealed.

Congress finished 2003 stalemated between a revenue-neutral Senate bill benefitting production activities of all taxpayers; and a revenue-losing House bill skewed towards C corporations and purchasers of capital assets. While the leaner Senate bill seems more likely to pass, House Ways and Means Chairman Thomas has been unwilling to budge; he also seems willing to play chicken with the European Union over the March 1 sanctions date. Tax Analysts reports:

Noting that the European Union has already set its deadline back once, from January 1 to March 1, Thomas said the concession "tends to make people believe you're going to draw another line in the sand."


The other hot problem for congressional taxwriters is the expiration of a number of important provisions, including:

-The reseach credit (expires 6/30/2004)
-The ability to deduct personal credits, like the child credit and the HOPE credit, against alternative minimum tax (expired 12/31/2003)
-The Work Opportunity Credit and Welfare to Work credits for new hires (expired 12/31/03)

Congress is likely to extend these provisions through at least 2004 - retroactively, if necessary.


Finally, Congress needs to make a technical fix to the pension tax laws because of the Treasury's discontinuance of the 30-year bond.


Other provisions seem unlikely to pass unless they can be included in one of the three "hot" bills. A package of pension reforms seems like a likely candidate for attachment. A bill of "technical corrections" without controversial provisions or significant revenue effects could also pass.

Otherwise, Congress is likely to mostly focus on election-year politics. The parties will fight over the President's health care and savings proposals to stake out their election year turf, but significant legislation will probably have to wait for the election returns.

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January 20, 2004

Tax Analysts, the "nonprofit corporation whose mission is to help the country tax its citizens fairly, simply, and efficiently," has started a blog: "Tax Analysts Live." It's available to non-subscribers, at least for now.

It has only three posts at this writing, all from Timothy Catts, but it looks like it is set as a group blog. Will we see Tax Analysts luminaries like Gene Steuerle, Bill Raby, and (heaven help us) Lee Sheppard chime in? Will they allow comments? Most importantly, will they start a blogroll and link to us? We'll link to them, anyway. Welcome to the world of weblogs, guys!

P.S. Hopefully the posts will be a bit more, well, balanced than the first three:

Bush's Tax Humor Isn't Funny To Democrats

Democrats Blast Bush

Daschle and Pelosi Launch Pre-emptive Attack on State of the Union

They could also use permalinks and trackbacks, but hey, it's only three posts old.

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January 20, 2004

The IRS has issued (Rev. Rul. 2004-9) the minimum interest rates for loans made in February 2004:

Short Term (demand loans and loans with terms of 1-3 years): 1.62%
Mid-Term (loans from 3-9 years): 3.44%
Long-Term (over 9 years): 4.94%

Historical AFRs are available on the “Links” page at

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January 19, 2004

And not just because of the caucuses. The weekly "Carnival of the Capitalists" is up at, with smart and timely discussions of business and economics. It's always well worth a visit.

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January 16, 2004

Some of us spend our lives up against deadlines. We file our tax returns on April 15 (OK, October 15), we renew our drivers licenses 60 days after our birthday, and so on. It's not healthy, but it happens.

The new year is a great time to beat the deadline habit with your IRS savings. If you start putting money in your IRA now, your earnings start to build up tax-free right away; if you waid until April 15, 2005 to make your 2004 IRA contribution, you lose 15 months of tax savings.


If you participate in an employer 401(k), you should start your savings there, at least to the amount that the employer will match.

After maxing out your 401(k), you should maximize your Roth IRA participation, if you are eligible. Eligibility phases out for joint filers with adjusted gross incomes over $150,000 and for single taxpayers with AGI over $95,000. The maximum annual contribution is $3,000 ($3,500 if you are 50 or older).

If you don't qualify for a Roth IRA, a traditional IRA isn't a bad deal, even if it's non-deductible. For taxpayers coverd by a qualified plan at work, deductibility phases out for incomes over $65,000 ($45,000 for single taxpayers).

Once you have fully used your 401(k) and IRA, deferred annuity products may offer worthwhile tax savings. As they are generally more costly that the 401(k) and IRA arrangements, annuities should usually be used only after the 401(k) and IRA plans have been funded for the year.

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January 15, 2004

Senator Charles Grassley, Chairman of the Senate Finance Committee, has floated a new proposal to tax some employer-owned life insurance. This proposal replaces one passed by the Committee last year, but never enacted. Life insurance proceeds are normally tax-free; the old provision, which would have taxed the proceeds of life policies on former employees if they left service more than one year before death, threatened to kill the market for "key-man" permanent life policies.

The new plan is more narrowly targeted at so-called "dead peasant" policies. The new version would tax life insurance proceeds on employees unless they consent to the coverage in writing. Even with consent, the proceeds will be taxable unless:

- The employee was employed with the beneficiary in the past 12 months, or
- The proceeds were used to fund a purchase of the decedent's equity, as in a buy-sell arrangement; or
- The employee was a director or a "key person" for the company.


This bill is a reaction to the use of "dead peasant" insurance arrangements. In such arrangements, an employer puchased life insurance on large numbers of its rank employees. The employer's goal was not to derive ghoulish profits from the deaths of employees; with a large pool of insureds, insurance companies price policies to collect more in premiums than they pay out in proceeds. The employer's real goal was to take advantage of a perceived tax shelter.

The tax shelter tried to exploit the tax-free build-up of investment value in life insurance policies. The plan was for the employer to deduct the interest on the borrowing while excluding the interest-like return on policy investment build-up. The income and expense would offset before tax, but the deduction for the expense would make the arrangement profitable after-tax.


The IRS never liked these arrangements, and it has been, with a single exception, successful in court fights against these arrangements. Congress settled the issue going forward with legislative changes in the '90s. Still, the myth of heartless employers gleefully profiting from employee deaths has pushed Congress into taking further action against such policies, according to one observer.

The new proposal has a long way to go before becoming law; even if ultimately approved, it will only apply to policies purchased after enactment. In any case, the traditional tax advantages of employer owned "key man" policies appear to be safe.

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January 14, 2004

Governor Vilsack, like governers nationwide, is looking for revenue, and not just from accountants. In yesterday's "condition of the state" address, he mentioned another target:

"A number of corporations, particularly non-Iowan, out-of-state corporations shift income and expenses to avoid paying millions of state taxes owed here...This corporate loophole should be closed..."

Iowa's 12% top corporation rate is the highest in the country, so sensible corporations structure their affairs to avoid Iowa income. We assume that the Governor plans to again ask the legislature to require corporations to report their income in Iowa on a "combined" basis. This would subject income of some otherwise Iowa-exempt C corporations to Iowa income tax if a related corporation has Iowa operations.

Out of state corporations don't vote here, so they are popular targets of tax increases. If any tax increase passes this year, this might be it. Still, this idea was floated last year and died. It's unclear whether the legislature would vote a parking spot for the Governor after his item veto of the Republican parts of last year's budget "compromise."

No legislative language is yet available for the proposal, but you can go here to see what it might look like.

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January 14, 2004

OK, we're biased. We're accountants ourselves. Still, this seems very wrong:

"The governor proposed:

* "Updating the sales tax system to pay for education. This includes making more services subject to Iowa's 5 percent sales tax, including engineering, surveying, accounting and consulting. Vilsack, an attorney, said the proposal would create an estimated $131 million for schools next year alone. The governor's aides said attorney fees are not included in services that would be taxed." (Emphasis added)

We accountants are naturally opposed to any price increase for our services, at least those we don't get to keep; still it does seem unjust to make clients pay sales tax when they buy services from us, but not when they buy the same services (you know - wills, contracts, divorces, etc - JUST KIDDING, GUYS!) from lawyers. Maybe this is part of "Grow Iowa Values," and we just value attorneys highly.

Or maybe there's a darker explanation. Think about it: Governor Vilsack, the state's ranking Democrat, is an attorney; who is Iowa's highest-ranking Republican state official?

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January 09, 2004

Many visitors arrive at the Tax Update web site via search engines, such as Google, Teoma, Yahoo, etc. Our web hosting service tells us what queries were used to find our site. Most of these are not surprising; "section 179 suv" and "dead peasants insurance" are fairly typical.

Some, however, are just scary - like this one:

"last plumbers sex pc of 2003"

What's really scary: two visitors got to our site with that query.

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January 08, 2004

Only 51 weeks left for your 2004 tax planning!

Sure, you are just starting to get your 2003 1099s in the mail, but if you are serious about your income taxes, now is the time to take action.

For most taxpayers, the easiest way to reduce taxes is to increase their 401(k) deferral from each paycheck. Even so, about 20% of eligible employees have nothing in their 401(k) account, according to one recent report. Many employers match at least part of each employee's 401(k) deferral. If you don't at least defer what the employer will match, you both

-increase your taxes, while

-turning down free money from your boss.

Two poor choices in one!

Even if the boss doesn't match your 401(k) contribution, the IRS might. Lower-income taxpayers can get a credit for part of their 401(k) deferral.

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January 08, 2004

In the old game show "Let's Make a Deal," contestants regularly faced a dilemma: to keep the prize they had already won, or to trade it for an unknown prize - potentially better, but potentially much worse - behind one of three doors.


Plea bargaining resembles this game: a defendant who rejects a plea bargain to go to trial may go free if the jury sees things his way, but the result can be much worse if the jury finds the prosecutor more persuasive.

Richard Simkanin picked the wrong door.

When we last checked in with Mr. Simkanin, he was awaiting sentencing after pleading guilty to one felony tax count. Mr. Simkanin had ceased withholding income and employment taxes on the employees of his business, asserting that there was no legal requirement to do so. The plea bargain required him to post the plea agreement on his web site, where he had previously posted anti-tax items.

The plea agreement turned out to have an error. The maximum penalty for the count in the agreement is five years, but the agreement had said it was only three years. The judge permitted Mr. Simkanin to withdraw the agreement, and the case went to trial.


Mr. Simkanin based his defense on the Supreme Court's Cheeks decision, which holds that a good faith belief that you aren't violating the tax laws is a defense against tax crimes. Following the Supreme Court's decision, Mr. Cheeks was allowed to argue that he really believed he wasn't subject to the income tax laws; he was again found guilty.

When Mr. Simkanin went to trial in November on 12 felony counts, the judge declared a mistrial after the jury deadlocked.

The IRS reloaded for a new trial, charging Mr. Simkanin with 27 felony counts and four misdemeanor tax violations. The jury yesterday found Mr. Simkanin guilty on 25 felony counts and four misdemeanor counts. They deadlocked on two other counts.


Mr. Simkanin now faces a maximum of five years in prison on each of the 25 felony counts, and a year for each misdemeanor. The door Mr. Simkanin chose now could get him a 129-year sentence. The 5-year maximum in the original plea agreement is no longer available.

Maybe that's why they're called plea "bargains."


Mr. Simkanin's unhappy result is a defeat for the "Tax Honesty" movement. This movement, as one account gently puts it, "questions the validity of the nation's tax laws." More accurately, they "question" the validity of the tax laws like Cub fans "question" the wisdom of Steve Bartman's attempt to catch that 8th-inning popup. The Tax Honesty folks "questions" had no more effect on the result than those of the Cub fans.

It's unlikely, though, that Mr. Simkanin's convictions will change the minds of folks who have somehow convinced themselves that the tax laws are invalid.

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January 05, 2004

The IRS marked the end of 2003 by taking aim at accountants and attorneys involved in the tax shelter business. The initiatives include stricter reporting requirements, higher standards for opinions, and a list of "best practices" in tax opinion writing.

We will ponder what these will mean. For some solid preliminary analysis, visit this post at the Corp Law Blog and this roundup at the BenefitsBlog. The Corp Law Blog also provides some fast facts on the issue:

- The average corporate audit takes 38 months to complete.

- IRS auditors are still finishing work on corporate tax returns from 1997.

- In 1970, corporate tax revenue was 17% of total tax revenue. It has fallen steadily since then, and is expected to be around 7% this year.

- The largest 1,300 corporations are basically audited every year. The 148,000 mid-sized corporations, on the other hand, are audited on average once every 20 to 25 years.

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