Monday, November 30, 2020

Much More Than the Internal Revenue Code 

Over the years, I have written about the size of the Internal Revenue Code, mostly in response to absurd claims about the number of pages it fills, in many posts, beginning with Bush Pages Through the Tax Code?, and continuing with Anyone Want to Count the Words in the Internal Revenue Code?, Tax Commercial’s False Facts Perpetuates Falsehood, How Tax Falsehoods Get Fertilized, How Difficult Is It to Count Tax Words, A Slight Improvement in the Code Length Articulation Problem, and Tax Ignorance Gone Viral, Weighing the Size of the Internal Revenue Code, Reader Weighs In on Weighing the Code, Code-Size Ignorance Knows No Boundaries, Tax Myths: Part XII: The Internal Revenue Code Fills 70,000 Pages, Not a Surprise: Tax Ignorance Afflicts Presidential Candidates and CNN, The Infection of Ignorance Becomes a Pandemic, Getting Tax Facts Correct: Is It Really That Difficult?, Reaching New Lows With Tax Ignorance, Incorrectly Breaking Down the Internal Revenue Code, Is Tax Ignorance Eternal?, and So How Long Does It Take to Read the Internal Revenue Code?. If I were to write a commentary on every article or blog post that contributes to the overstatement of Internal Revenue Code length, I would have no time to do anything else. Chasing down and eliminating this misinformation is no less likely to succeed than chasing down and eliminating the claims of a flat earth and the thousands of political falsehoods. Fortunately, unlike political falsehoods, the misinformation about Internal Revenue Code size is the product of ignorance and not willful and deliberate mendaciousness. Nonetheless, its impact is no less troubling.

From time to time, reader Morris sends me links to more and more of the web sites where foolish claims about Internal Revenue Code size are made. Recently, he sent me a link to yet another exaggerated claim about Internal Revenue Code size. The commentary is from April of this year, but several things stood out. They have inspired me to return to this vexing issue of Internal Revenue Code size.

According to the author, “The version of the Code available online last year was slightly smaller, with 3.95 million words.” The authority cited in the accompanying footnote takes a reader to a House of Representatives web site. I downloaded title 26 of the United States Code, which also is the Internal Revenue Code. I discovered that what is in the document that allegedly contains 3.95 million words is much more than the Internal Revenue Code. It includes amending acts, text of the statute before each amendment, effective date provisions, language in amending acts that did not become part of the Internal Revenue Code, and other extraneous material. The extraneous material is not part of the Internal Revenue Code language enacted by Congress and codified, but includes editorial additions designed to assist the reader understand the history of each provision in the Code, as well as to show the reader what that provision looked like in prior years but that is no longer part of the Internal Revenue Code.

For example, for section 11, which contains 110 words, is followed by 3,216 words that are not part of section 11 but yet were included in the word count. Copied into Word, it fills six pages. It also appears that Word counts each section number, subsection designation, and so forth, such as (a), (1), and (iii), as words. Even setting that aside, a 3,216 to 110 ratio explains why people not understanding the difference between the actual Internal Revenue Code and the extraneous information are coming up with ridiculous word counts. Of course, there also are the folks who think that multi-volume sets from commercial publishers that contain the Internal Revenue Code, regulations, case annotations, practice pointers, and other material, constitutes the Internal Revenue Code, and who thus conclude that the Internal Revenue Code consists of more than 70,000 pages.

Yes, the Internal Revenue Code is big. But it is not the gargantuan beast that too many people claim that it is. Yes, it is bigger than it should be, but efforts to reduce its size ought not be based on exaggerated claims of its size. Yes, it should be simplified, but that’s a matter of eliminating the words that have been inserted to gratify the lobbyists and donors who complain about the tax law but are eager to use it to accomplish goals that should be pursued more directly than through the tax law.

Friday, November 27, 2020

Tax Return Preparer Fails to Evade the IRS 

In posts such as Tax Fraud Is Not Sacred, Another Tax Return Preparation Enterprise Gone Bad, More Tax Return Preparation Gone Bad, Are They Turning Up the Heat on Tax Return Preparers?, Surely There Is More to This Tax Fraud Indictment, Need a Tax Return Preparer? Don’t Use a Current IRS Employee, Is This How Tax Return Preparation Fraud Can Proliferate?, and When Tax Return Preparers Go Bad, Their Customers Can Pay the Price, I have described the indictments of tax return preparers who have altered their clients’ tax returns by inserting deductions and credits for which clients are not eligible, and by inflating numbers, who have failed to sign returns as preparers in order to make the fraudulent return appear to be the work of the client, and who have trained employees to file false returns. Now comes news of a tax return preparer not only for adding “fictitious or inflated” deductions and losses to her clients’ returns but who took steps to evade attempts by the IRS to shut her down.

According to the indictment, the tax return preparer used multiple names for her tax return preparation business. She did this working with two co-conspirators. When the IRS caught on and revoked the tax return preparer’s e-filing privileges, she used her co-conspirators’ e-filing identifiers. The co-conspirators let her do this in exchange for money and office space that she provided to them.

Sometimes when a person gets into a hole, they dig furiously to get out, but too often that makes the hole deeper and bigger. Usually, these sorts of situations arise outside of the tax practice world. For example, a driver is pulled over for an expired registration tag or expired inspection sticker, violations that usually generate a monetary penalty, but take off, leading police on chases that end up with accidents, deaths, injuries, and penalties far more stringent than a fine. A child is caught by a teacher stealing another student’s property, but when confronted by the parents, tells lie after lie, not realizing that there is ironclad proof of what was done. Sensible parents punish the child not only for the theft, but double or triple fold for the lies.

Unless the case goes to trial, and the defendant testifies, and the defendant is asked why she thought she could get away with using someone else’s IRS e-filing identifying information, and unless she responds, we will almost certainly never know why she thought what she did would work. Perhaps she did not understand how the IRS tracks and matches identifiers, but perhaps none of us really know much about IRS methods in these matters. Perhaps someone told her it would work. Perhaps we will find out. But we probably won’t, as the odds are that this case, like so many others, will settle with a plea of some sort.

Wednesday, November 25, 2020

Different, But Thanksgiving Nonetheless 

Tomorrow is Thanksgiving. For as long as I’ve been writing this blog, I’ve been sharing a Thanksgiving post to express my gratitude for a variety of people, events, and things. Aside from 2008, when I did not post and I don’t have any recollection of why or how that happened, I’ve dedicated a post on or around Thanksgiving. I started in 2004, with Giving Thanks, and continued in 2005 with A Tax Thanksgiving, in 2006 with Giving Thanks, Again, in 2007 with Actio Gratiarum, in 2009 with Gratias Vectigalibus, in 2010 with Being Thankful for User Fees and Taxes, in 2011 with Two Short Words, Thank You, in 2012 with A Thanksgiving Litany, in 2013 with “Don’t Forget to Say Thank-You”, in 2014 with Giving Thanks: “No, Thank YOU!” , in 2015 with Thanks Again!, in 2016 with Thankfully Repetitive, in 2017 with Never-Ending Thanks, in 2018 with Particularly Thankful This Time Around, and in 2019 with Quest'anno è il Ringraziamento.

As I stated the past seven years, “I have presented litanies, bursts of Latin, descriptions of events and experiences for which I have been thankful, names of people and groups for whom I have appreciation, and situations for which I have offered gratitude. Together, these separate lists become a long catalog, and as I have done in previous years, I will do a lawyerly thing and incorporate them by reference. Why? Because I continue to be thankful for past blessings, and because some of those appreciated things continue even to this day.” When I re-read those lists, I realized that the people, events, and things for which I am appreciative are far from obsolete.

So once again I will look back at the past twelve months, and remember the people, events, and things for whom and for which I give thanks. If some of these seem repetitive, they are, for there are gifts in life that keep on giving:

Fourteen years ago, in Giving Thanks, Again, I shared my Thanksgiving advice. I liked it so much that I repeated it again, in 2009 in Gratias Vectigalibus, yet again in 2013 in “Don’t Forget to Say Thank-You”, still again in 2014 in Giving Thanks: “No, Thank YOU!” , even yet again in 2015 in Thanks Again!, even still again in Thankfully Repetitive, yet once more in Never-Ending Thanks, yet even once more in . Particularly Thankful This Time Around, and last year in Quest'anno è il Ringraziamento. For me, it does not lose its impact:
Have a Happy Thanksgiving. Set aside the hustle and bustle of life. Meet up with people who matter to you. Share your stories. Enjoy a good meal. Tell jokes. Sing. Laugh. Watch a parade or a football game, or both, or many. Pitch in. Carve the turkey. Wash some dishes. Help a little kid cut a piece of pie. Go outside and take a deep breath. Stare at the sky for a minute. Listen for the birds. Count the stars. Then go back inside and have seconds or thirds. Record the day in memory, so that you can retrieve it in several months when you need some strength.
I am thankful to have the opportunity to share those words yet again. And I am thankful that even in a pandemic Thanksgiving it is possible for some of us to do all of those things, and for others of us to most of those things.

Monday, November 23, 2020

So It’s Not a Tax Case But It’s a Great One 

When I write about a television court show, I react to episodes that involve tax in some way or at least have some sort of tax angle. This time the America’s Court episode did not involve tax. Nor did it involve the First Amendment, legal education, music, model trains, chocolate chip cookies, genealogy. Perhaps, of all the things I profess to write about, at least occasionally, it involves, in some remote way, religion and theology. As in, perhaps, don’t do this.

The plaintiff, Samantha, began with the following story. She had been dating the defendant, Paul. She let Paul use her car while she was out of town. She returned to discover that Paul had been in an accident with the car, and that the car had been damaged. Her insurance paid for the repairs except for a $1,000 deductible that the plaintiff had to pay. Samantha and Paul agreed that Paul would pay half of the deductible, $500, to the plaintiff. Paul had not yet paid $500 to the plaintiff. The plaintiff then learned additional information that caused her to decide to sue Paul for the entire deductible.

The defendant began his story with an attempt to butter up the judge by saying, “Just as I am all about hustle and grind I appreciate the hustle and grind you bring to your courtroom.”

It gets better.

The judge asked Samantha, the plaintiff, “You agreed to $500, so why are you now suing for $1,000?”

Samantha replied, “I would like to introduce my witness, Miss Bennett, a friend.” The judge swore in Miss Bennett, and asked, “What’s your role in this case?”

Miss Elliott explained, “Samantha and I met several years ago on a shoot. We became friends. We are busy so we don’t see each other often. When we got together, she told me she had been dating a guy named Paul who had four kids, but things went bad when he borrowed her car and had an accident. So I said to Samantha, ‘Wait, I was on a date with a guy named Paul who has four kids and when I was with him on a date we were in an accident.’ Samantha took out her phone, and showed me a photo of Paul, and it was the same guy!”

The judge asked, “The defendant here, Paul?”

Miss Elliott replied, “Yes.”

The judge turned to the defendant Paul and asked, “You have four children?”

Paul replied, “Yes.”

The judge asked, “You see to it they are cared for, have what they need?”

Paul again replied, “Yes.”

The judge then asked Paul, “All with one woman?”

Paul replied, “No, four different women.”

The judge turned to Paul and remarked, “Mr. [can’t remember Paul’s last name], perhaps it is time to cool down your hustle and grind!”

The judge continued by asking Paul, “So what defense do you have, if any, to the plaintiff’s claim to the full deductible?”

Paul replied, “When the accident happened, I was running errands for the plaintiff.”

The judge asked, “Is Miss Elliott an errand?” Laughter erupted among the spectators the courtroom.

The judge concluded by saying, “I’ve heard enough. Judgment of $1,000 for the plaintiff.”

Perhaps stories like this are far more common than I am imagining. Yes, I’ve heard and read stories about two women discovering they are dating the same guy, or two guys discovering they are dating the same woman, but never in the context of one woman suing the guy and then having the other woman be the witness in litigation whose testimony makes the plaintiff’s case.

And the idea that the defendant considered dating the plaintiff’s friend to be running an errand for the plaintiff is just totally preposterous. And hilarious. I suppose if the defendant had taken on a date someone who was a stranger to the plaintiff, whose presence in the vehicle was demonstrated by a photo or a police report, and who was not in the courtroom, he would have come up with some excuse along the lines of just giving a friend a ride. Sure.

Friday, November 20, 2020

Another Tax Proposal That’s Off the Mark 

Not long after I had written Monday’s commentary, A Tax Proposal That Misses the Mark, but before it published, reader Morris shared with me his discovery of the very same proposal. The proposal, offered by Deutsche Bank, was a 5 percent tax on the “privilege” of working from home. In my commentary I explained why the idea wasn’t a good one.

Not long after my Monday commentary appeared, reader Morris alerted me to another Deutsche Bank tax proposal. This one, too, is deeply flawed.

The proposal is to impose a special tax on homes, stocks, and bonds when sold by “baby boomers.” The goal of the tax is to “narrow the millennial-boomer generational wealth gap.” The proposal claims to not be an “age-related tax,” but instead suggests taxing transactions that generate gains reflecting “luck and external forces.” The report identifies five areas that have created “luck and external forces” generating boomer wealth: “low interest rates, urbanization, pollution, cohort size, and education.” The report claims that boomers have benefitted from increased asset value due to low interest rates and inflated housing prices. The report notes that boomers did not pay as much for education as millennials do, nor will they bear the cost of environmental damage caused by “carbon emission-releasing companies in which they’ve invested.” The report also claims that the baby boomer generation “wins elections” because it is “larger in size,” but millennials as a group outnumber boomers though boomers vote at a higher rate.

There is no doubt that, as the report notes, the generational wealth gap is stark. The report, however, fails to identify the real reason that the gap exists. It exists because the oligarchs have been shifting into their own pockets income that in the pre-1980 economy would have flowed into the wallets of younger workers. One great example of this factor is the stagnation of the minimum wage, despite very recent efforts to fix that situation. Attempts to increase the minimum wage are met with objections from the oligarchs who claim that increased wages will require cutting jobs because the idea of cutting executive salaries and plowing profits into salaries rather than stock buy-backs is repugnant to those who fear trying to live on $5,000,000 a year instead of $6,000,000 a year would present insurmountable challenges. The report acknowledges that using constant dollars, millennials are paid 20 percent less than boomers did when boomers were the age millennials are now.

The basic flaw in the proposal is that it fails to focus on wealth even though wealth disparity is what it claims to be trying to fix. Why should age or generation have anything to do with fixing wealth gaps? Why should a middle class older person whose only significant asset is a residence pay a special tax when selling the residence in order to fund relocation to a retirement community or nursing home while young multi-millionaires and billionaires play games with private equity investments and dabble in the stock market, making even more income and further widening gaps?

Solving the wealth gap requires altering the income flows that exacerbate the gap. The gap grows because wealthy individuals and gigantic domestic and multinational businesses keep buying more and more tax breaks. The gap grows exponentially because of compounding.

The flawed reasoning is evident in the report, despite claiming not to advocate an age-based tax, suggests “a tax on baby boomers.” It states that "Younger generations have been hit particularly hard while older folk have reaped the benefits," but fails to recognize that there are impoverished boomers and wealthy millennials. It fails to understand that fixing a wealth gap requires a focus on wealth, regardless of age. There are studies indicating that taller people earn more money. Should there be a tax on tall people? Even tall people who aren’t making as much money as some not-so-tall people do? Measuring wealth and income is a matter of dollars (or marks or euros) and not a matter of inches or the number of years a person has been alive.

The report actually suggest several taxes. It suggests a tax on the profit from selling a house. I’ve already explained why that is a foolish idea. It proposes a tax on the purchase of a house. What impact would that have on the housing market and the housing construction industry? Would it be more likely to prevent a wealthy person or a struggling middle class family from buying a house? It proposes “additional taxes” on the sale of stocks and bonds “as boomers begin to sell those assets?” Why should a younger multi-millionaire making money in the stock market escape such a tax while an older person liquidating a much smaller nest egg be hit with it? Why not base the tax on the amount of the profit regardless of the person’s age? The report suggests a “super tax” on stocks to compensate for gains companies make on pollution. If taxing a company’s stock, rather than its profit attributable to cost reductions based on neglect of environmental responsibility, or a carbon tax measured in some other way, is the best way to deal with pollution, so be it, but it ought have nothing to do with the age of the investor, the CEO, the employees, the lawyers, or anyone else involved in the violation of environmental regulations or the repeal of those regulations in attempts to increase even more the wealth of oligarchs.

The report admits that these taxes are suggested in order to prevent raising income taxes because increased income taxes would “be an invasion on hard work.” Nonsense. Most jobs requiring “hard work” are low-paying jobs, and income tax rates on low-income individuals should be low and kept low. The notion that billionaires and oligarchs are “hard workers” is questionable. Certainly trust fund babies and wealthy individuals who have never held a job aren’t working hard in the sense of the hard work done by people who live hard work every day. The report worries that raising income taxes would disincentivize work, but hungry people must find work and do work in order to live, whereas very few oligarchs and trust fund babies are going to quit jobs because of higher income taxes because they either have no jobs to quit or engage in entrepreneurship because it’s their fun and hobby thing to do.

As I pointed out in A Tax Proposal That Misses the Mark, a better proposal would be to cut “the extravagant salaries of high-income employees where the ratio of top salary to bottom salary in a company exceeds what it was when the economy was in better condition.” In some ways, the boomer tax proposal, like the work-from-home proposal, “is both a distraction from the need to re-align compensation arrays as well as a reminder that existing compensation arrays are a major ingredient for current economic distress, worker unrest, fiscal problems, and political turmoil.”

Wednesday, November 18, 2020

Another Tax and Genealogy Story 

Last Friday, in Taking a Walk and Thinking About Genealogy and Tax, I shared a portion of the much longer story about the Maule family and Radnor Township, then in Chester County, now in Delaware County, Pennsylvania. I focused on the connections between tax and the history of the family in Radnor. Those, however, were not the only connections, though this next one is somewhat attenuated.

In 1988, five years after I returned to Villanova to teach primarily tax courses, in both the J.D. and LL.M. (Taxation) programs, the founding director of the Graduate Tax Program decided to step down and return to full-time teaching. That’s when Michael Mulroney became director of the program. His office was across from mine, we worked together on various aspects of the program, and as I got to know him I learned that one of his sons is Dermot Mulroney. From time to time Michael would mention that Dermot had been in, was in, or was going to be in a movie or television show. One evening, back when I subscribed to the weekly print TV Guide, I was scanning the evening’s programs to see if there was anything worth watching, and I noticed Dermot Mulroney’s name. One of the local channels was airing a movie made several years earlier in which Dermot was the first-named cast member. So I decided to watch. The name of the movie, Sin of Innocence did not deter me. So that’s the tax part of today’s post.

As I watched the movie, my first reaction, perhaps attributable to my upbringing, was along the lines of “Really?” Why that reaction? The plot of the movie builds on the marriage of a widower and a divorcee. The widower’s son and the divorcee’s daughter, both teenagers, become romantically involved. The widower and divorcee are uncomfortable with the situation and the divorcee’s former spouse, father of the daughter, is livid. My thought, “well, isn’t this a fine mess?” did not linger long as I realized that one of the sons of Thomas Maule of Radnor, the one from whom I descend, married his step-sister, and one of their children is my great-great-great-great-grandfather. Of course, the next time I saw Michael Mulroney, I told him I had finally watched a movie in which his son appeared, and told him that it wasn’t a far-fetched plot because of my step-sibling ancestors. Now to the genealogy part of today’s post.

Thomas Maule of Radnor, born in Salem, Massachusetts, came to Philadelphia with his widowed mother. He married, had four children, three of whom died as very young children, and then re-married, to Zillah Walker of the Great Valley. That’s another story I probably should tell, and perhaps I will, but not today. Thomas and Zillah lived in Philadelphia for three years, but then moved to Radnor Township, close to where Zillah and most of the Walker family lived, though they lived “over the hill” in what is now Tredyffrin Township. Thomas and Zillah had seven boys. About a year after the youngest boy was born, Thomas died, leaving Zillah with seven sons ranging in age from one year to eleven years. The fourth child of Thomas Maule of Radnor’s first marriage had died in Radnor at age 14.

Two years after Thomas died, Zillah remarried. She married Joshua Brown, who lived in Little Britain Township, Lancaster County, near the border with Chester County. Joshua was a widower, with nine young children. How did a widow from Radnor Township meet a widower from Little Britain Township, two places that are 43 miles apart as the crow flies, and roughly 54 miles apart using today’s roads? It is believed that Joshua Brown, a renowned minister of the Religious Society of Friends (Quakers), had stayed at the house of Daniel Walker, Zillah’s father, on one of his preaching journeys, and that while he was there he met Zillah.

When Zillah married Joshua Brown, she and her seven sons moved from Radnor Township to Little Britain. She rented out the farm, and eventually several of the sons would return to the farm and to adjacent properties in Radnor Township. Yes, that’s another story, or perhaps several stories. The pamphlet I mentioned in last Friday’s post, the one written for and funded by my great-great-great grandfather William Maule (grandson of the two step-siblings who married), says this about Joshua Brown (erroneously described in the pamphlet as Jeremiah Brown, father of Joshua) and Zillah Walker, widow of Thomas Maule of Radnor: “They had one daughter after their second marriage, making in all eighteen children, who all sat down at one table in the house of Jeremiah, at Little Britain.” The pamphlet is wrong when it states they had one daughter, because they had two. As many in the family have remarked, it must have been a very big table. And imagine cooking meals every day for 20 people.

The pamphlet continues: “Daniel Maule (one of the sons of Thomas and Zillah,) married Hannah Brown, one of the daughters of Jeremiah [sic] Brown, by his first wife.) There was no blood kin, although when their parents married a second time, they lived together and ate at the same table.” My guess is that the pamphlet writer relied on stories passed down orally, and that, as often is the case, someone confused names and mis-identified Joshua Brown, and forgot about the second child of Joshua and Zillah. So I doubt the pamphlet writer researched, or even had access to, the Quaker records I studied when I “updated” the pamphlet. What is more understandable is that the pamphlet writer would not have had the resources to determine that Hannah Brown and Daniel Maule, the step-siblings, were, among other things, 24th cousins because they both descend from Roger I of Sicily, 19th cousins once removed because they both descend from Friedrich III “Barbarossa” and Beatrix of Burgundy (Macon), 23rd cousins twice removed because they both descend from Alfonso VI “The Valiant,” 19th cousins once removed because they both descend from Alfonso VIII Sanchez, 19th cousins because they both descend from Alfonso IX Fernandez and Berengaria of Castile, 23rd cousins because they both descend from Ionnes (John) Komnenos and Anna Dalassena, 22nd cousins once removed because they both descend from Sophia of Hungary, 21st cousins because they both descend from Henry of Huntingdon and Ada De Warenne, 24th cousins because they both descend from Giselbert de Luxembourg, 23rd cousins twice removed because they both descend from Gui I De Montlhery and Hodierne De Gometz, 19th cousins once removed because they both descend from Henry II Plantagenet and Eleonore D’Aquitaine et Poitou, 14th cousins 3 times removed because they both descend from Edward I Plantagenet and Eleanor of Castile, and 138 other cousin relationships. The software needs 538 pages to enumerate and show the links. The shared ancestors lived in what is now Ireland, Wales, Scotland, England, France, Spain, Portugal, Belgium, the Netherlands, Luxembourg, Switzerland, Germany, Italy, Poland, Russia, Norway, Denmark, Sweden, Greece, Turkey, Albania, Yugoslavia, the Czech Republic, Slovakia, and the list could continue.

How surprising is it to discover that two people are related 150 different ways? To many people, very surprising. To genealogists and historians, not surprising at all. Consider connections at the 20th cousin level, 22 generations ago. A person has 2,097,152 ancestral “slots” in that generation, and, of course, many of those slots are filled by the same individuals so that there are far fewer than 2,097,152 individuals in that generation of a person’s ancestry. But even if there are only several hundred thousand individuals in that generation, it would not at all be unusual for any two people to share 300 of them as ancestors.

And to think that some folks were upset that step-siblings were romantically involved. Or married.

Monday, November 16, 2020

A Tax Proposal That Misses the Mark 

The headline probably will get twisted into a social media meme, but understandably so. When I read the headline to this report, the word “huh?” popped into my brain. The headline? “Deutsche Bank researchers call for a 5% 'privilege' tax on people choosing to work from home, with the money given to low-income staff”.

Of course, I didn’t stop there as some would. I read the details. First, the proposal would only apply to individuals whose employers offer them “permanent desks” at the workplace, so it would not apply to employees compelled to work at home. In other words, the tax would target those who could go to the office but choose not to do so. Second, the tax would not apply to self-employed individuals, nor would it apply to “low-paid staff.” Third, the tax would not apply if the government advises people to work from home.

The bank rationalized that people who work at home can afford to pay the tax because they would be spending less on “travel, food, and clothes” by working at home. That, of course, is an oversimplification. Yes, people working from home eliminate the cost of travel to the office, but that cost can range from very low if the office is nearby to rather high if the office is in a more distant location. Food costs, though, very easily could be the same because there are employees who pack their own lunches and thus are paying the same for their meal regardless of where they eat it. As for clothes, it depends on the job, because people who work from home but who must use videoconferencing to perform their duties must dress in the same way if they are expected to act and appear professional.

The bank noted that even after the pandemic ends more employees will be working remotely than before the pandemic. The bank refers to working from home as a “privilege.” It claims that people working from home “have gained many benefits, . . . such as convenience and flexibility.” Tell that to the people who are working from home while trying to help their children navigate remote learning. Tell that to the people who have had to re-purpose a living room or dining room to serve as an office. Tell that to the people who are working from home because a child is sick, or because the employee is too sick to go to an office and spread germs but who can manage to get some work done at home.

The bank claims that people working from home “are contributing less to the infrastructure of the economy while still receiving its benefits.” Clearly the bank failed to take into account the contribution to the environment by the elimination of pollution that would be caused by the employee’s use of a vehicle to commute. Clearly the bank failed to take into account the contribution of the work-at-home employee to the reduction of traffic congestion by not participating in rush hour commuting. Clearly the bank failed to take into account the fact that the employee would still direct net income to the purchase of goods and services, or investments in turn used to finance lending.

The bank justifies the proposal by pointing to the amount of revenue it could raise, and suggesting that the proceeds should be “used to support people on low incomes who cannot do their jobs remotely.” Of course it makes sense to increase the wages of underpaid low-income workers. But why do that by imposing the funding on employees whose wages might not be very much higher? If the response is that the tax would also fall on high-income employees, is that not support for a better proposal, which is cutting the extravagant salaries of high-income employees where the ratio of top salary to bottom salary in a company exceeds what it was when the economy was in better condition? In some ways, the proposal is both a distraction from the need to re-align compensation arrays as well as a reminder that existing compensation arrays are a major ingredient for current economic distress, worker unrest, fiscal problems, and political turmoil.

I should note that I have no horse in this race. The work I have done at home over the years was work as a self-employed writer and consultant. The work I have done as an employee has been done principally at the school, with three small exceptions. One, I am teaching at home because the university wants me to do that, and as soon as things revert to pre-pandemic conditions, I will return to the school to teach, assuming they still want me and my body and brain are still functioning well enough. Two, if I get an email from a student when I am at home, I will take a few minutes to read and answer it. Three, I have always found myself, while at home doing something mindless, thinking about my courses, curriculum, topics, and other things related to my teaching. So this proposed tax is not one, if adopted, that would affect me. It simply is an idea that highlights a problem but does not provide a solution because it rests on very shaky rationales and fails to take into account the entire picture of people working at home.

P.S. I wonder if anyone catches what I did with the title to this post in light of the source of the proposal. It wasn’t intentional. I noticed it after I started writing. That’s how bad it sometimes gets.

Friday, November 13, 2020

Taking a Walk and Thinking About Genealogy and Tax 

When I started this blog many years ago, I described it as “Prof. James Edward Maule's more than occasional commentary on tax law, legal education, the First Amendment, religion, and law generally, with sporadic attempts to connect all of this to genealogy, theology, music, model trains, and chocolate chip cookies.” Only on a few occasions have I written about connections between tax with genealogy. Nine years ago, in a series of posts, I described instances in which descendants of Thomas Maule of Salem, Mass., were involved in taxation as a tax reforming legislator (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part I), as an IRS official and Treasury official (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part II), as employees of IRS predecessor agencies (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part III), as employees of the IRS (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part IV), as local tax officials (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part V), as members of local tax boards (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part VI), as tax accountants (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part VII), as a tax return prepare (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part VIII), as members of the single tax movement (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part IX), and as owner of an interest in a trust that was the subject of a tax case decided by the Supreme Court (Taxation and the Descendants of Thomas Maule of Salem, Mass., Part X).

Today I share a long story about my family history research in which tax sits on the periphery. What brought this story to mind was a thought that popped into my head during my walk the other day. Usually I walk in my neighborhood, because going outside of the neighborhood requires either walking on one of two heavily traveled roads or driving somewhere to walk in a park or on a trail. So the other day I realized I could walk in another neighborhood by walking for a hundred feet along one of those major roads. The other neighborhood is simply a dead-end road with several houses, but it provides a change of scenery. As I walked I thought to myself, “I’ve been here before. Oh, wait. Conrad Wilson lived in one of these houses.” Who is Conrad Wilson? Now to the story.

My interest in family history was sparked by a pamphlet supposedly written by my great-great-great grandfather William Maule, though decades later I learned that he funded the research and publication of the pamphlet but did not write what was in it. My father read that pamphlet to us after dinner for several nights in a row when I was about 12 years old. When I finally started digging into genealogy ten years later I was puzzled by a reference to where Thomas Maule of Radnor lived. Thomas Maule of Radnor, a son of Thomas Maule of Salem, Massachusetts, though erroneously described in the pamphlet as his grandson, came to Philadelphia with his widowed mother, married, had four children, and after his wife died, remarried, to Zillah Walker, and had seven sons. When he remarried, it was to a woman from the “Great Valley,” which today includes parts of Upper and Lower Merion Townships, Radnor Township, Tredyffrin Township, and several others further west. After their marriage, Thomas and Zillah moved to the Great Valley. The pamphlet described the location of their home as “within a few yards of the Pennsylvania Railroad, about one mile east of the Eagle Station, and directly between the Railroad and Lancaster turnpike.” It also stated that the “venerable mansion which he erected 120 years ago is still standing in a state of good preservation.” Though by the time I started researching, the pamphlet was 110 years old, I wondered if their house was still standing. In these days before google maps, I could not figure out the location, so I wrote a letter to the Radnor Historical Society. Several weeks later I received a reply from Katy Cummin, a member of the Society and, it turned out, the author of “A Rare and Pleasing Thing: Radnor Demography (1798) and Development”, which had been published several months earlier. Her book analyzes the ownership and genealogies of the owners’ families, of each property enumerated in the 1798 property census taken for purposes of the unsuccessful Federal Direct Tax, which measured value by the number and size of windows. See the connection?

Katy invited me, on my next visit home, to accompany her to the site of the Thomas Maule – Zillah Walker home. So on my next trip home, I met her, she took me not only to see where the Thomas Maule home had been – more on that in a moment – but also to see the still-standing home of his son Jacob Maule, the location of where the home of Daniel Maule, another son of Thomas Maule and my 5-great-grandfather, had been located, the location of where the widow of Thomas Maule’s son John had lived, along with several other significant Radnor properties.

She then took me to the home of Conrad Wilson, another member of the Radnor Historical Society. He had a copy of my still-in-draft-form manuscript that became my 1981 now-out-of-print and unavailable ”The History and Genealogy of the Maules”, now in updated form at my family history web site. He had the copy because I had sent a copy to Katy after I had received her letter and by the time I made my visit, a month or so later, she had shared it with other members of the Society at my request. I remember walking into Conrad’s home and thinking, “This guy is definitely into books,” as every wall in the house seemed to be filled with bookshelves crammed with books, not unlike what is now in my house. I remember Conrad telling me, “I can fill in some of the branches in your family that apparently you’ve not yet found.”

And, of course, remembering my visit and tour of Radnor, I recalled my surprise when Katy showed me where the Thomas Maule house had been located. It was in the center of what is now the town of Wayne. I realized that when in college and working for H&R Block in Wayne, I was working as a tax return preparer in a building located on what was my 6-great-grandparents’ farm. See? A second connection! The house, which had been demolished, had served for some time as the manse of Wayne Presbyterian Church. Decades later, after learning that several law school colleagues sang in an Oratorio Society based at the church, and being encouraged by several choir members at my church who where in that Oratorio Society to attend a concert, I met the director at the time, and when I noted that the Church was built on the farm of Thomas Maule and Zillah Walker, he pointed out that he, too, was a Walker descendant. We figured we are about fifth cousins.

As for the other Maule properties, the still-standing house owned and expanded by Jacob Maule (brother of my 5-great-grandfather Daniel Maule) is one-half mile away as the crow flies. The house in which the widow of John Maule (another brother of Daniel) lived was located about 1,200 feet from my house as the crow flies. Daniel Maule’s farm, adjacent to his father Thomas Maule’s farm, is about a mile from my house. And Wayne is about 2 miles from my house as the crow flies.

So even while taking walks, genealogy and tax continue to wander around my brain. And then the story ideas percolate.

Wednesday, November 11, 2020

The List of What Not to Do As a Tax Collector Has Become Even Longer 

In a series of posts about the former Seminole County, Florida, Tax Collector, starting with A Reason Not to Run for Tax Collector (or Any Other Office)?, and continuing through Perhaps Yet Another Reason Not to Run for Tax Collector, Running for Tax Collector (or Any Other Office)? Don’t Do These Things, When Behaving Badly as a Tax Collector Gets Even Worse, Tax Collector Behaving Badly: From Even Worse to Even More Than Even Worse, What Qualifications Are Needed to Be a Tax Collector?, The Legacy of Misbehaving Tax Collectors, and Lengthening the List of What Not to Do As a Tax Collector, I reviewed the still-developing story about his alleged misdeeds while in office. Claims against him include stalking and impersonating a political opponent, impersonating a student, manufacturing fake IDs using information from drivers’ licenses surrendered to his office, sex trafficking a minor using information accessed through his office, spending public funds on a private enterprise he had formed, openly carrying firearms while wrongly claiming to be a revenue officer, making a traffic stop while driving his personal vehicle, and trying to produce fake concealed weapons permits. He also settled lawsuits brought by employees who alleged sexual harassment, racial discrimination, and First Amendment violations. As the allegations piled up, he resigned his office.

Reader Morris is as interested as I am in the activities of this former Seminole County tax collector. I should ask him if he thinks that at some point this guy’s story should be made into a movie. The chances have increased with two more things to add to the list, both brought to my attention by reader Morris.

The first story, from January of this year, describes allegations that the former tax collector asked one of his friends to attack the county’s computers and demand a half-million dollar ransom. The evidence behind the allegations comes from a network security specialist who had a contract with the former tax collector while the tax collector was still in office. Though the security specialist told his story to Florida authorities, they refrained from investigating because they considered it a case of one person’s word against another. Of course, the former tax collector denied the allegations, and countered with allegations that the security specialist threatened to shoot people and had been fired from a subsequent job with another state agency. State records show that those two allegations by the former tax collector were false. A year and a half after the security specialist stopped working for the tax collector, the tax collector allegedly summoned the security specialist’s mother, a 30-year employee of the tax collector’s office, confronted her along with his assistant, three lawyers and a court reporter. He allegedly tried to get her to give a sworn statement claiming that the security specialist and his girlfriend, also an employee of the tax collector’s office, had committed certain unspecified violations. Two days later, the tax collector fired both the mother and girlfriend of the security specialist. Since then, the taxpayers of Florida have paid $40,000 to settle a claim by the girlfriend, and will pay whatever comes out of negotiations with the mother. Allegedly, the former tax collector concocted the computer ransom plan to get revenge on a Seminole County Commissioner, who was falsely accused by the tax collector of fraudulently claiming a homestead exemption. In addition, the security specialist claimed that he gave the tax collector a key logger program to track the keystrokes of office employees.

The second story is from a few days ago. According to auditors examining the records of the tax collector’s office, the former tax collector used taxpayer dollars to purchase equipment and other items for himself and to reimburse legal fees he has incurred in defending himself against these various charges. The auditors also reported that the former tax collector used taxpayer money to install a cryptocurrency computer inside a private room in the office, and when it was moved to another location, it caused a power surge that started a fire. Insurance did not cover the damage because the cause of the fire was the negligence of the tax collector.

Will any of these allegations generate state or federal indictments. Perhaps. As I wrote in Lengthening the List of What Not to Do As a Tax Collector, “One would think that a tax collector should be collecting taxes. For some reason, in Florida, tax collectors also do other things unrelated to tax collection, such as renewing and replacing drivers’ licenses, issuing copies of birth certificates, issuing hunting and fishing licenses, issuing concealed weapons permits, and other services best confined to other agencies. Concentration of too much power and authority in one office or one person is dangerous. The situation with the former Seminole County tax collector is proof enough of the need to diversify who provides these services.” To that I add, enough with the nepotism. Enough with packing government offices, whether a local tax collector office or the White House, with family and friends.

Monday, November 09, 2020

Tax Payment Failure Exposes Auto Registration and Identity Fraud 

The number of television court shows continues to grow. I have watched several hundred episodes, of which just a few have provided me with material for posts such as Judge Judy and Tax Law, Judge Judy and Tax Law Part II, TV Judge Gets Tax Observation Correct, The (Tax) Fraud Epidemic, Tax Re-Visits Judge Judy, Foolish Tax Filing Decisions Disclosed to Judge Judy, So Does Anyone Pay Taxes?, Learning About Tax from the Judge. Judy, That Is, Tax Fraud in the People’s Court, More Tax Fraud, This Time in Judge Judy’s Court, You Mean That Tax Refund Isn’t for Me? Really?, Law and Genealogy Meeting In An Interesting Way, How Is This Not Tax Fraud?, A Court Case in Which All of Them Miss The Tax Point, Judge Judy Almost Eliminates the National Debt, Judge Judy Tells Litigant to Contact the IRS, People’s Court: So Who Did the Tax Cheating?, “I’ll Pay You (Back) When I Get My Tax Refund”, Be Careful When Paying Another Person’s Tax Preparation Fee, Gross Income from Dating?, Preparing Someone’s Tax Return Without Permission, When Someone Else Claims You as a Dependent on Their Tax Return and You Disagree, Does Refusal to Provide a Receipt Suggest Tax Fraud Underway?, When Tax Scammers Sue Each Other, One of the Reasons Tax Law Is Complicated, An Easy Tax Issue for Judge Judy, Another Easy Tax Issue for Judge Judy, Yet Another Easy Tax Issue for Judge Judy, Be Careful When Selecting and Dealing with a Tax Return Preparer, Fighting Over a Tax Refund, Another Tax Return Preparer Meets Judge Judy, Judge Judy Identifies Breach of a Tax Return Contract, When Tax Return Preparation Just Isn’t Enough, Fighting Over Tax Dependents When There Is No Evidence, If It’s Not Your Tax Refund, You Cannot Keep the Money, Contracts With Respect to Tax Refunds Should Be In Writing, Admitting to Tax Fraud When Litigating Something Else, When the Tax Software Goes Awry. How Not to Handle a Tax Refund, Car Purchase Case Delivers Surprise Tax Stunt, Wider Consequences of a Cash Only Tax Technique, Was Tax Avoidance the Reason for This Bizarre Transaction?, Was It Tax Fraud?, Need Money to Pay Taxes? How Not To Get It, When Needing Tax Advice, Don’t Just “Google It”, Re-examining Damages When Tax Software Goes Awry, How Is Tax Relevant in This Contract Case?, Does Failure to Pay Real Property Taxes Make the Owner a Squatter?, Beware of the Partner’s Tax Lien, and Trying to Make Sense of a “Conspiracy to Commit Tax Fraud”.

Though I enjoy watching these for several reasons, including the acquisition of material for this blog, I don’t have the time to view every episode of every show. In fact, because the recently added Judge Jerry show conflicts with Hot Bench in the schedule, I have seen only a handful of its episodes. But reader Morris has alerted me to an episode involving tax that aired very recently. This is at least the second time reader Morris has directed my attention to a television court show I had not seen.

In this episode, the defendant purchased a car using her sister’s identity. Her sister, the plaintiff, claimed that she did not give the defendant permission to use her identity. The defendant claimed that the plaintiff had handed her driver’s license to her, telling her to use it to purchase a car. Judge Jerry made it clear that with or without permission what the defendant did was a crime, and if the plaintiff participated in the deception she, too, committed a crime.

The plaintiff explained that she did not know about the deception until she tried to register her own car. Her attempt was rejected. The clerk told her that her attempt failed because she had failed to pay town taxes on another vehicle that she owned. The plaintiff, who did not own another vehicle, ascertained that the car being driven by her sister, the defendant, had been registered in her, the plaintiff’s, name. To be able to register her car in the town, the plaintiff needed the unpaid taxes to be paid, so she sued her sister for the amount of the taxes.

The defendant claimed that she had paid money to her sister but the plaintiff denied this claim. The defendant then claimed that her sister, the plaintiff, had let her use the plaintiff’s driver’s license because the defendant had done babysitting for the plaintiff and somehow this absolved any obligation. The defendant did not provide any evidence that she had paid the car taxes.

Judge Jerry explained that the babysitting and any other favors that the defendant did for the plaintiff were separate and not relevant. He concluded that the car belongs to the defendant, that the taxes on the car are the obligation of the defendant, and that the defendant’s failure to prove she paid the taxes required a decision that the defendant owed the plaintiff for the taxes.

The first tax lesson from this case is simple and obvious. The owner of a car must pay the taxes. The other lessons are just as important though they are not tax lessons. Do not register a vehicle using another person’s name. Do not present yourself using someone else’s identity documents. Do not pay someone to use their identity documents. Do not enter into agreements to commit identity fraud.

The second tax lesson from this case also is simple but perhaps not so obvious. Failure to pay taxes not only triggers audits and collection procedures, it also can reveal other activity by the taxpayer, and others, that is or borders on criminal violations as well as actions that justify civil judgments in favor of third parties. Worse, sometimes information on a tax return can alert authorities that the taxpayer is engaged in activities that raise suspicions and create referrals to the Department of Justice, U.S. Attorneys, state attorneys general, or local prosecutors.

Friday, November 06, 2020

What Happens to Employees When Employers Fail to Remit Withheld Taxes? 

After reading this story out of South Carolina, I thought it would be helpful to alert employees of yet another tax risk that they might encounter. According to the story, the owner of a chain of vision center stores in South Carolina has been arrested, charged not only with failing to collect, account for, or pay over withheld state income tax, but also with operating without a retail license. The retail license was revoked four years ago because the owner failed to pay business taxes. The owner issued forms W-2 to the employees, showing that taxes had been withheld, but those taxes, amounting to more than $131,000, were not remitted to the state.

A question popped into my head. What happens to the employees who file returns showing that they paid their taxes through withholding, as indicated on their Forms W-2, but who didn’t pay the tax because the employer failed to remit the withheld taxes? I thought I knew the answer, and checked to confirm I was correct. In South Carolina, under title 12 of South Carolina Code of Laws Unannotated, section 12-8-2010(B), “If a withholding agent fails to remit an amount withheld from a taxpayer under this chapter to the department, the taxpayer is allowed a credit for the amount of income tax withheld from him but not remitted.” In other words, the employee is not the one required to track down the employer and recover the unremitted tax; the state does that work. This provision tracks the result under Internal Revenue Code section 31(a)(1), and similar statutes exist in other states.

What is interesting to me is the contrast between what happens when an employer or other withholding agent goes bad, and when a tax return preparer goes bad. As I discussed in posts such as Tax Fraud Is Not Sacred, Another Tax Return Preparation Enterprise Gone Bad, More Tax Return Preparation Gone Bad, Are They Turning Up the Heat on Tax Return Preparers?, Surely There Is More to This Tax Fraud Indictment, Need a Tax Return Preparer? Don’t Use a Current IRS Employee, Is This How Tax Return Preparation Fraud Can Proliferate?, and When Tax Return Preparers Go Bad, Their Customers Can Pay the Price, taxpayers need to be careful when selecting a tax return preparer, because intentional or unintentional “mistakes” by the preparer are attributed to the taxpayer. In contrast, an intentional or unintentional “mistake” by an employer or other withholding agent with respect to remitting withheld taxes is not attributed to the taxpayer (unless, of course, the taxpayer was complicit). Why the difference? A taxpayer using a tax return preparer has the opportunity to review the return before signing it, whereas the typical employee does not have the opportunity to review the payments being made, or not being made, by the employer to the IRS and state revenue departments.

Wednesday, November 04, 2020

Pandemics: Financially Bad for Most People, Good for a Few 

Pandemics can reshape societies, nations, and governments, and sometimes pandemics can destroy them. The current pandemic has not only killed more than 200,000 Americans but also has left many more than that, probably millions, with long-term adverse health consequences ranging from myocarditis and scarred lungs to liver damage and failed kidneys. In addition to these life and health impacts, the pandemic has crushed many people financially. People have lost jobs. Sole proprietors have had to pull back from, or shut down, their business activities. Tax collections have dropped, imperiling those who rely on government for services such as fire protection, well-maintained roads and bridges, and public health oversight. But as bad as it has been for the typical, or average, or run-of-the-mill, or everyday American, the pandemic has had quite the opposite effect on a handful of Americans.

So who are the Americans who have not only survived through the pandemic but have prospered during its run? According to the U.S. Billionaires Wealth Growth spreadsheet, maintained by the Americans for Tax Fairness, the total net worth of America’s 644 billionaires increased 31.6 percent from March 18 through October 13. Their collective net worth rose from $2,947,500,000,000 (that’s $2.95 TRILLION) to $3,878,233,000,000 (that’s $3.88 trillion). That’s an increase of $930,733,000,000 (that’s $931 billion, or nearly a trillion dollars).

In the meantime, as Americans for Tax Fairness reports, the collective work in come of rank-and-file employees in the private sector, constituting the bottom 82 percent of the workforce, fell by 3.5 percent from mid-March through mid-September. Almost 62 million lost work during that same time period. As of mid-September 25 million were on unemployment. Almost 100,000 businesses, almost all of which are small outfits, closed permanently. Employer-sponsored health care coverage for 12 million Americans terminated. Sadly, for the period September 2 through September 28, 22 million adults, with 14 million children in their households, reported not having enough food. Roughly 15 percent of renters were behind in September rent payments.

So how is that “trickle down” economic policy working out? What good is “supply side” economics when there are fewer and fewer people able to afford whatever it is that is being supplied?

Sadly, we are reaping the results of the bad decisions that certain politicians and their admirers have advocated and sown. The rich play, and everyone else pays.

And to think so much of this was avoidable. I wonder if historians, assuming there are any in the decades and centuries ahead, will call this “The Era When Ignorance Triumphed.”

Monday, November 02, 2020

Tax Lies and Misleading Tax Claims 

It pops up all over social media. It shows up time and again on facebook. It’s a meme that says, “Biden wants to put a 3% annual federal tax on your home. Do you want him for POTUS?” A variant, somewhat more precise in its claim, states, “Biden wants to put a 3.0 % Annual (Yearly) Federal Tax on the Value of your Home.”

Biden has not made any such proposal. Every organization and individual that has fact-checked the claim has concluded it is baseless.

Why would someone claim that he has? It’s simple. When truth doesn’t work to their advantage, some people turn to lies. Consider this example from a long time ago:

Parent: “Stop chewing your fingernails.”

Child: “Why?”

Parent: “It looks bad, and if your nails are dirty it can be unhealthy.”

Child: “I don’t care.”

Parent, frustrated: “And, by the way, one of your nails, but no one knows which one, is poison and chewing on it will kill you.”

Because the truth didn’t work, rather than exerting effort to find another, honest, approach to dissuading the child from fingernail-chewing, the parent turned to a falsehood. And what happens when the child learns, later, that the parent lied?

A similar absurdity pops up in political ads favoring Donald Trump. The ads contain a clip of Biden saying, “I’m going to raise taxes,” and then cuts to several people bemoaning the horrors of increased taxes and complaining how that will hurt them. Of course, the ad took Biden’s statement, “I’m going to raise taxes on people with incomes over $400,000” and clipped off the second part of the sentence. Of course, the people in the ads complaining about tax increases are portrayed as individuals who surely are not earning more than $400,000 annually. The point of the ad is, again, fear generated by a false or misleading statement.

I wonder how the liars and manipulators would feel if they were asked, “Did you rob the bank?” and they replied “Absolutely not,” and then discovered that someone cropped their words so that when asked, “Did you rob the bank?” their answer would show up as “Absolutely.” I suspect they would be screaming foul more loudly than anyone reacting to their mendacious political advertising.

Of course, if Americans were sufficiently educated about everything that matters, took the time to do research, made the effort to think critically, and troubled themselves to engage in critical analysis, the lies and misleading statements would have no effect. The purveyors of these lies and misleading statements would either fade out of the picture or learn to tell the truth and construct arguments based on truth.

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