If you are friends with any corporate tax attorneys, kindly forgive them their grumpiness. They get a pass right now. That’s because the government recently dropped an abnormally dense set of income tax regulations on their desks – the ones dealing with debt recharacterization under Internal Revenue Code section 385
Tax Analysts Blog
Harsh words for the state commissioner of revenue from the Minnesota Tax Court in a recent opinion involving utility assessments. The case, CenterPoint Energy Resources Corp. v. Commissioner of Revenue, stemmed from CenterPoint’s appeal of the commissioner’s valuation of its gas transmission pipeline as a single economic unit.
The section 385 regulations on the distinction between debt and equity are now final, and despite what tax advisers and Congress have been saying for months, the world did not come to an end. In fact, the barrage of negative comments and nasty letters from lawmakers profoundly affected Treasury, and the once-sweeping regulation package was significantly carved back. In a few years, when the U.S. tax base is even further eroded, the government will almost certainly rue this guidance as a profound missed opportunity.
When it come paying taxes, how much is too little? The answer depends on whether you're running for president. Ever since someone leaked portions of Donald Trump’s 20-year-old state tax returns, people have been speculating about the taxes he paid – or didn’t pay, as the case may be.
Tax Analysts recently obtained the field audit manual of the Maryland Comptroller of Public Accounts. We had submitted a public records request under Maryland law requesting the manual. Initially, the state was willing to release only 55 pages of the 283-page document, claiming that the remainder qualified as an intra-agency memorandum and was therefore exempt from disclosure under GP section 4-344. After Tax Analysts filed suit, the Maryland attorney general’s office determined that the state had a weak case and quickly released the entire document..
On June 23 British voters decided to leave the European Union. For the better part of the following week, turmoil reigned in the U.K. political system. Prime Minister David Cameron abruptly – and appropriately – resigned. Curiously, the leaders of the victorious Leave campaign – including UKIP head Nigel Farage and putative Cameron successor Boris Johnson – followed him to the exits. All three have since left public life – normal for the loser, bizarre for the winners.
By now virtually everyone is aware that Donald Trump claimed a $916 million tax loss on his 1995 returns. We know this because The New York Times obtained a partial copy of Trump's state returns and published a story speculating that Trump has been using this loss to avoid paying any income taxes for years (18 years is the number being thrown about). The Trump campaign is going to have to do a lot of damage control to mitigate the political effect of the Times' revelations, but a real estate developer claiming huge losses isn't all that remarkable from a tax perspective.
In January 1953 President Dwight Eisenhower crossed party lines and named a Virginia Democrat to be the new commissioner of internal revenue. T. Coleman Andrews brought several virtues to the job, including a reputation for toughness and a set of strong convictions. Among other things, he was committed to bureaucratic reform, fiscal austerity, and vigorous enforcement of the revenue laws.
The two-year battle between the United States and the European Commission over the latter’s state aid investigations harkens back to legendary boxing matches, like the 1975 “Thrilla in Manila” between Joe Frazier and Muhammad Ali. During their third and final match, the two heavyweights slugged it out until Frazier’s corner threw in the towel before the start of the 15th round. Ali won a technical knockout, but both fighters emerged battered and bruised.
My colleague Maria Koklanaris recently wrote an excellent article on the pension debt held by state and local governments. It’s worth a read. Those in state and local government should be well aware of the level to which pension plans are underfunded. According to Koklanaris’s article, which was published in State Tax Today on September 20, there “isn’t a pension fund in America that can earn its way out of its liabilities.”