Income Tax News

New York State Comptroller Tom DiNapoli offers his remarks after taking the oath of office at the Empire State Plaza Convention Center during the 2023 inauguration ceremony on Jan. 1.

After warning state lawmakers to reign in spending during next year’s state budget process due to an expected budget deficit, the state’s monthly crash report shows further signs of a slowing economy ahead.

A report released Tuesday by state Comptroller Tom DiNapoli’s office showed state tax receipts totaled $51.5 billion through the first six months of fiscal year 2023-24, which was $1.7 billion higher than the original estimates released by the state Department of the Budget’s July update. Despite this, tax receipts were still $6.9 billion lower than the first half of the previous fiscal year.

“The economy exhibited resilience in the first half of the year,” DiNapoli said in a statement. “Continued job gains, wage growth, and easing inflation were all contributing factors to higher-than-expected tax receipts. However, global unrest, labor strikes, and a potential federal government shutdown could slow the economy, adding to existing budget challenges that include significant out-year budget gaps.”

The state’s Budget Director Blake Washington in September sent a letter to state agency commissioners warning them that their budget requests for the next fiscal year must not exceed last year’s funding levels under the state’s $229 billion budget, excluding one-time investments. The state’s budget is due April 1 of each year

DiNapoli in April first warned state lawmakers they would have to reign in spending in the next budget cycle due to a projected drop in revenues and expiration of temporary federal aid due to the COVID-19 pandemic.

In other financial news this week, the federal Internal Revenue Service (IRS) and Gov. Kathy Hochul also on Tuesday announced a plan to launch a new free tax filing program, called Direct File. New York is one of 13 states to pilot the new program starting in 2024, including Arizona, California and Massachusetts.

“Thanks to this first-of-its-kind partnership, New York is taking a major step toward modernizing our tax system and making it even easier for New Yorkers to access their tax benefits,” Hochul said in a statement. “No one should have to navigate complex processes or pay out of their own pocket to file their taxes, and starting next year, we’re equipping New Yorkers with a new, innovative, free tool to give taxpayers more choices to file.”

The program will allow eligible taxpayers to electronically file their taxes with the state’s Department of Taxation and Finance. The IRS expects eligibility will be limited to taxpayers reporting certain types of income and credits, including W-2 wage income, Social Security, railroad retirement income, unemployment compensation and interest of $1,500 or less. The credits will include the Earned Income Tax Credit, Child Tax Credit and credit for other dependents. Also under the pilot program, eligible taxpayers will be able to file for a standard deduction, student loan interest deduction and educator expenses.

The state’s tax department will coordinate with Code for America to develop the e-filing tool and taxpayers will have the option to share their federal return information with third-party state filing software after they finish filing their federal returns using Direct File. Code for America will then prepare most of the state return using the federal return data. It aims to allow taxpayers to answer fewer questions to complete their state tax return.

“While our low-income families are struggling to make ends meet, the last thing they should be worrying about is the intricacies of the tax filing process or access to tax refunds,” Senate Majority Leader Chuck Schumer said in a release. “With this new direct-filing tool, eligible New Yorker taxpayers can save millions in annual e-filing fees by filing with the government at no cost.”

Originally Appeared Here

More than 20 years ago, during Frank Keating’s second term as governor, he proposed replacing the state’s individual income tax, its sales tax on groceries and its business franchise tax with a 5.9% tax on some 200 additional business activities, from hair cuts to house sales.

Oklahomans liked the idea of no income tax, but not as much as they disliked the idea of paying higher sales tax and paying it on more stuff. So Keating’s fundamental overhaul of the state tax system didn’t happen.

But the subject keeps coming up, largely driven by advocacy groups promising greater economic growth — and usually representing interests in higher income tax brackets. Most recently, Gov. Kevin Stitt renewed the call to phase out Oklahoma’s individual income tax.

Oct. 3, 2023 video. Gov. Kevin Stitt called for a special session to consider cutting taxes. Video via Youtube

In all likelihood, further reductions in state income tax rates, or tax relief of some kind, will be a major issue in the 2024 legislative session.

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Before getting into whether zero income tax actually does spur economic growth, it should be noted that state and local taxes are almost always considered together because of state-to-state variations in responsibility for government functions. For instance, Oklahoma’s state government has assumed a large share of the responsibility for funding common education, while other states leave more of the burden on local governments.

The result is that Oklahoma distributes its public school dollars more evenly than most states, but some complain that it penalizes communities that are willing and able to spend more on their schools.

Also, tax and revenue systems are like trees. They grow and adapt to fit the environment — atop boulders, through sidewalk cracks, around iron spikes and knot holes and squirrel nests. Just as trees find nourishment wherever they can find it, so state and local governments tend to seek out cash from all available nooks and crannies.

States that don’t get money from income taxes get it from somewhere else — property taxes or sales taxes or things not called taxes that nevertheless walk, quack and look like taxes.

Some have higher college tuition. Some charge more for a barrel of whiskey or gallon of gasoline. Some might take longer to process birth certificates or repair a road.

Also like trees, established tax systems must be pruned with care. When Kansas tried to rip out its existing tax system in the 2010s, its state government nearly collapsed.

Fact is, most states without income taxes never had them, or had them in such a diminished form that eliminating them altogether was not such a drastic leap as it would be today. Florida discontinued its individual income tax in 1855 (yes, 1855). South Dakota zeroed out its levy in 1943. A flood of oil and gas revenue allowed Alaska to repeal its individual income tax in 1980.

Oklahoma adopted its state income tax in 1915, shortly after passage of the 16th Amendment made a federal income tax practical. It accounts for 35% to 40% of state tax revenue and, with a 1% state sales tax approved in 1933, allowed the elimination of the state property tax assessment.

Economic growth claims

So then, is there really a link between no individual income tax and economic growth?

Jared Walczak of the venerable Tax Foundation is a “yes” on the question.

“States without an income tax have grown twice as fast over the past decade as those that do,” Walczak said in a recent interview. “Income taxes are a tax on investment and labor.”

Four of 2022’s five fastest growing states, in terms of gross product, have no income tax.

Others say the growth claim is a mirage. Several reports over the past decade by the left-leaning Institute on Taxation and Economic Policy say studies linking state income tax policy to economic policy are skewed.

And the same data that ranked zero income tax states Tennessee, Florida, Nevada and Texas as Nos. 2-5 for 2022 economic growth listed no-taxers South Dakota and Wyoming in the bottom 10 (with Oklahoma) and Washington just outside it.

Richard Auxier, an analyst with the left-center Urban Institute, says states without income taxes tend to shift the burden from higher to lower earners.

“The income tax is the only tax that allows what’s called vertical equity,” Auxier said. “All other taxes are regressive.”

By “regressive,” Auxier means taxes assessed uniformly regardless of income or available resources. So, an 8% state and local sales tax or 19-cent per gallon gasoline tax hits someone with $10 a lot harder than someone with $1,000. Many people argue that consumption taxes, and especially some sales taxes, are patently unfair.

Income taxes, by comparison, are more closely tied to ability to pay. In theory, the amount paid in taxes increases with income. Most income taxes are also graduated to some extent, meaning a higher tax rate on higher income. Some argue that that is unfair, too.

In any event, the higher the income, the more likely someone is to oppose income taxes, and the lower the income the louder the argument for repeal of such things as sales taxes on groceries and other necessities.

A basic tenant of government fiscal policy is that taxation should have a broad base and low rate. In most states, that involves some combination of sales, property and income taxes, with a host of other taxes, many of them designated for specific purposes, supplementing the top three.

But some conservatives argue that income and property taxes are not necessary for a fair or balanced tax system. The Tax Foundation’s Walczak says a consumption tax-based system extended to a broader range of goods and services can be just as equitable.

But as Frank Keating learned, persauding people to pay taxes they aren’t paying now is very difficult.

“The problem with the idea of having a broad sales tax is that it just pisses people off,” said the Urban Institute’s Auxier.

No major effort to reform Oklahoma’s 4.5% state sales tax has been attempted since Keating, except for discussions about actually narrowing it by exempting groceries.

In the meantime, the top income tax rate has been chipped down from a high of 7% in the 1990s and 6.65% at the time of Keating’s proposal to 4.75% now. And the franchise tax Keating wanted to abolish will be gone next year.

Tax system comparisons

So how does Oklahoma’s tax system stack up with other states’?

Probably the best-known yardstick is the Tax Foundation’s annual state tax burden report. It computes both the average amount paid in state and local taxes and state and local tax rates as a share of economic output.

In the latest edition, none of the top four for combined state and local tax rates — Alaska, Wyoming, Tennessee and South Dakota — has a personal income tax. Texas is No. 6.

Oklahoma’s rate of 9% ranked 10th, more than 2 percentage points behind the national average.

In terms of actual taxes paid, however, Oklahoma’s average tab was about $400 less than Texas’.

The Urban Institute doesn’t issue rankings, but it does publish data. It also takes into consideration some things the Tax Foundation and many others don’t. College tuition, for instance, and various fines and fees.

For fiscal year 2021, it estimated that Oklahoma spent less per capita on common education, health and hospitals, public welfare, corrections and policing than the region and the nation as a whole. State and local government expenditures were $8,616 per capita, compared to $11,087 nationally.

State and local general revenue was $9,785 per capita, compared to $12,277 nationally.

Texas state and local governments, by comparison, took in and spent about $1,000 more per person than Oklahoma.

The Institute on Taxation and Economic Policy, which in 2018 ranked states according to the fairness of their tax systems, put Oklahoma in the bottom 10 along with seven of the nine no-individual income tax states.

Conversely, the Tax Foundation, whose Business Tax Climate Index explicitly favors states without corporate income tax, individual income tax and/or state sales tax, ranks four of the no-individual income tax states in its top 10. Oklahoma is No. 23 overall, although it ranks first for workers’ compensation insurance and fourth for corporate taxes.

Auxier said tax policy should be determined by real circumstances, not abstract ideology.

“Talk to communities,” he said. “Ask, ‘What do you need to succeed? What’s the tax that gets in your way?’ Cutting income taxes may be popular, but that doesn’t mean it’s the best way to incentivize growth.”

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Originally Appeared Here

Washington — A former IRS contractor who was charged with illegally disclosing the tax return information of former President Donald Trump and thousands of wealthy Americans pleaded guilty on Thursday to one count of disclosing tax return information. 

Charles Littlejohn was charged on criminal information last month after investigators said he obtained the tax records and gave them to news organizations.

Although court documents at the time did not reveal the name of the government official whose financial papers were disclosed, a person familiar with the matter previously confirmed to CBS News that it was former President Donald Trump. And when asked in court to name the person whose information was disclosed, Littlejohn said aloud, “Donald J. Trump.”

Prosecutors said the news organizations — which Littlejohn also identified in court as The New York Times and Pro Publica —  published “numerous articles” based on the information obtained from Littlejohn, according to the court documents.

Click here to view related media.

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During Thursday’s hearing, Littlejohn revealed he provided the New York Times with Trump’s tax information between August and October of 2019 and provided ProPublica with the other financial records in September of that same year. 

The New York Times and Pro Publica were not accused of any wrongdoing in court documents. 

Littlejohn — a 38-year-old graduate of the University of North Carolina, Chapel Hill — now faces a maximum of five years in prison for the single count to which he admitted guilt. 

In accepting the plea, Judge Ana Reyes — appointed to the federal bench by President Biden — admonished the defendant.

“I cannot overstate how troubled I am by what occurred,” the judge said Thursday. “Make no mistake — this was not acceptable.” 

Reyes told Littlejohn the law shielding tax records from public view that he admitted he violated dated back to the Nixon administration’s improper use of the tax records of then-President Richard Nixon’s political opponents.  

“When we have people who for whatever reason take the law into their own hands, society doesn’t function properly,” the judge also warned. 

Trump’s attorney and legal spokesperson, Alina Habba, spoke in court on the president’s behalf and called Littlejohn’s admitted conduct an “atrocity.” 

The “egregious breach” of Trump’s tax records, Habba alleged, was likely not carried out by Littlejohn alone and could have cost him votes in the 2020 election. She said that while Trump opposed any plea deal with the defendant, if it’s accepted, Littlejohn should serve the maximum sentence. 

The New York Times declined to comment on Littlejohn’s charges last month and Pro Publica said in a statement to CBS News, “We have no comment on today’s announcement from the DOJ. As we’ve said previously, ProPublica doesn’t know the identity of the source who provided this trove of information on the taxes paid by the wealthiest Americans.”

When the Times published its extensive reporting on Trump’s tax returns in September 2020, then-editor Dean Baquet wrote, “Some will raise questions about publishing the president’s personal tax information. But the Supreme Court has repeatedly ruled that the First Amendment allows the press to publish newsworthy information that was legally obtained by reporters even when those in power fight to keep it hidden. That powerful principle of the First Amendment applies here.”

Littlejohn is set to be sentenced in January. 

“There will be consequences for this egregious act,” the judge warned. 

More from CBS News

Originally Appeared Here

The IRS has pledged to intensify scrutiny on many wealthy taxpayers and their complex dealings, foreign and digital assets and other suspected areas of low compliance.

But is there anything wealthy clients can do in response?

“There is increasing awareness among high-net-worth families of the potential for increased IRS audits,” said Rob Kovacev, Washington, D.C.-based tax controversy partner at Miller & Chevalier and a former senior litigation counsel at the Tax Division of the U.S. Department of Justice. “Tax professionals should be warning their high-net-worth clients, including those who haven’t been audited in years, if ever.”

Kyle Hafstad, estate planning advisor at Exencial Wealth Advisors in in Plano, Texas, said it’s important to let clients know that following the rules is the best way to deal with the increased scrutiny.

“We remind them that staying compliant is and always has been a priority, regardless of the number of IRS agents, and that the lack of agents has made actually dealing with the IRS over the last few years even more challenging,” he said.

Clients who earn income through complex business structures, such as partnerships and corporations, are the most likely to draw attention from the IRS, said Sophia Duffy, associate professor of business planning at The American College of Financial Services in King of Prussia, Pa.

“Often, these businesses own other, smaller subsidiaries, making the flow of income even more complex,” she said. “Auditing these taxpayers is extremely time-consuming and requires a high level of expertise.”

Advisors said there are other planning tools that could trigger an audit.

“First, outright taxable income avoidance: trusts that have been labeled irrevocable spendthrift trusts and marketed as a way of outright income tax elimination, not deferral,” Hafstad said, adding that the IRS has already invested in gathering information “and challenging 831(b) small captives,” he said. “This will most likely continue as they seek to ensure legitimate insurance is being provided and risk sharing is actually occurring. They may also look to challenge larger family partnerships and entities.”

Duffy said the IRS seems to be zeroed in on business entities, at least for the time being.

“[Clients] may have heard that taxpayers earning over $400,000 per year will be specifically targeted, but it appears the IRS is only focusing on complex business entities for now, including publicly traded partnerships, hedge funds, REITs, large law firms and so on,” Duffy said. “They’re starting with the highest partnership asset values—over $10 billion for audits and $10 million for non-compliance.”

Bruce Primeau, president of Summit Wealth Advocates in Prior Lake, Minn., said the people “most ripe for additional scrutiny” are business owners who run personal, non-deductible expenses through their corporate entities. “I’m convinced this activity continues to take place. My advice is the same – operate within the confines of the law, as it just isn’t worth getting caught,” he said.

Kovacev said the IRS is now treating wealthy families “like a sophisticated business enterprise and scrutinizing their taxes across all tax areas.

“Expect a family to be audited individually at the same time as the businesses it owns [and] its international business interests are audited in coordination with foreign tax authorities, the private foundations it funds are audited and so forth,” he added.

Artificial intelligence will allow the IRS to be more aggressive in its scrutiny, advisors noted. “AI technology is already being used to analyze data and flag partnerships for audit and compliance risks,” Duffy said. “The use of this technology will super-charged the IRS by performing analyses of vast amounts of data, much more rapidly and accurately than can be done by individual IRS staff.

“This means that clients who formerly flew under the radar may now be flagged,” she said.

Originally Appeared Here

TOLEDO, Ohio — Over three weeks ago, UAW Local 12 members followed the call of United Auto Workers President Shaun Fain by standing up and striking the Stellantis Toledo North Assembly Plant. Toledo’s Jeep facility was one of three plants across the United States that took to the picket line (the others were in Michigan and Missouri) that Friday, Sept. 15. 

Now, three weeks into the strike, and for the first time since, WTOL 11 sat down with Toledo Mayor Wade Kapszukiewicz to discuss the strike’s impact.

Kapszukiewicz, a Toledo native now in his sixth year in office, said this strike is not only historical on the national front, but it’s also historic for Toledo as the birthplace of Jeep. 

“We’ve been making it for 83 years,” Kapszukiewicz said. “They’ve never been on strike before, this is the first time in 83 years that anything like this has happened.” 

Credit: WTOL

Toledo Mayor Wade Kapszukiewicz says everything about the UAW strike with Detroit’s Big Three is unpleasant and unprecedented.

During our interview Thursday evening at the WTOL 11 studio in downtown Toledo, Kapszukiewicz said these are not typical times, and he hoped Toledoans could let the negotiations play out. But with no signs of a deal, we pressed him to talk dollars and cents and asked what this strike was costing the city. 

“Every month that the workers at Jeep are out on strike costs the city not quite a million dollars – but almost a million dollars in lost general fund revenues from loss of income tax,” Kapszukiewicz said.

Just to be sure, we checked in with Toledo City Councilman George Sarantou, who is chair of the finance committee. We asked him if he could support those figures. While he said he couldn’t answer as far as monthly payroll at Jeep is concerned, he did tell us, “if every UAW employee was on strike (including GM and Stellantis) the city would lose about $1.5M a month.”  As of Oct. 6, that is not the case.

Credit: WTOL

Councilman Sarantou chairs the Toledo City Finance, Debt and Budget Oversight Committee

So does that mean city employees don’t get paid at some point? Or, does this mean that city services would come to a screeching halt? The Mayor said, “No.” 

“If this Jeep strike, or if this UAW strike that affects Jeep turns into a rainy day, no one’s happy about that, but at least we planned for it,” Kapszukiewicz said. ”And so we will be ready from the standpoint of the city of Toledo to meet our obligations. It will not affect the operations of the city of Toledo – not one bit.”

Kapszukiewicz explained Toledo’s so-called “rainy-day” fund sits at about $64 million right now. He stated that money, if needed, would sustain city services should the strike continue and the city run low on money. He also claimed the city’s rainy-day fund is currently six times the size it was when he took office. 

Toledo Finance Committee Chair George Sarantou did corroborate that rainy day fund number for us saying, “…it’ll have about $64 million by the end of this year.”

Since the beginning of the strike three weeks ago, the WTOL 11 team has  been reporting on the impact it’s having on the Toledo economy. In fact, this week there were UAW members on the picket line who told our Kristy Gerlett they were already picking up, looking for, or interviewing for secondary jobs.

RELATED: No fourth round of UAW strikes, Fain says, following developments with GM

“Those 6,000 employees make a total of $36 million per month,” Kapszukiewicz said. “So you can think of that, whether you refer to that as purchasing power or buying power, that is an aggregate $36 million loss to the local economy…fewer blue jeans being purchased…fewer trips to restaurants and such.”

The Mayor said he’s a true believer in the process, regardless of the negotiations going back and forth between UAW leadership and the Big Three and he says he thinks the end result could ultimately benefit Toledo.    

RELATED: UAW strike in Lansing prompts second work stoppage at Toledo Propulsion Systems

“While it is true that there is a financial loss to the city right now from lost income tax revenues, when this is resolved – and it will eventually be resolved – these employees will be getting taxed at a higher wage, and we will be bringing in, at that point, be bringing in more in income tax collection than we were before,” Kapszukiewicz said.

MORE COVERAGE FROM WTOL 11

Originally Appeared Here

Big thief On Friday, the Department of Justice charged 38-year-old government contractor Charles Littlejohn with having stolen private tax information from the IRS, which he then leaked to journalists. 

The outlets he leaked to were ostensibly ProPublica and The New York Times, though the DOJ did not specify. In June 2021, ProPublica‘s Jesse Eisinger, Jeff Ernsthausen, and Paul Kiel published a “vast cache” of private IRS information, revealing the tax burdens—or strategies used to minimize such burdens—of some of the wealthiest Americans, including Donald Trump, Elon Musk, Jeff Bezos, Carl Icahn, Warren Buffett, and Michael Bloomberg. 

Littlejohn worked as an IRS contractor from 2017 to 2021. The indictment claims he stole tax information from as far back as 15 years ago. IRS information is not supposed to be made public without the individual’s consent, and this breach made clear that the agency’s protection of people’s personal information was not up to snuff. (I’ve reported on the agency’s bad behavior a bunch over the years, if you need more reasons to hate them.) The breach also “renewed calls by Democrats to enact a so-called wealth tax that would prevent billionaires from using creative financial strategies to lessen their tax burdens,” adds The New York Times. 

“The government has a fundamental obligation to protect the confidentiality of Americans’ sensitive information, whether it be tax records or healthcare records,” said Ken Griffin, a hedge fund manager whose records were part of the leak and is now suing the IRS. Littlejohn faces up to five years in prison.

Gaetz vs. McCarthy Yesterday, Rep. Matt Gaetz (R–Fl.) brought forth a resolution declaring the speakership vacant, a clear sign of antagonism toward House Speaker Kevin McCarthy (R–Calif.). The resolution will, over the course of the next few days, force a vote, meaning members of the House must decide on whether McCarthy will remain in leadership. Only two other speakers have been removed over the House’s 234-year history. 

“It is becoming increasingly clear who the speaker of the House already works for, and it’s not the Republican conference,” said Gaetz, accusing McCarthy of making a “secret deal” with President Joe Biden to pass the stopgap measure which allowed the federal government to remain funded until mid-November in lieu of a shutdown.

Rep. Matt Gaetz (R-Fla.) followed through with his pledge to trigger a vote to oust Speaker Kevin McCarthy (R-Calif.) on Monday evening, kicking off a complicated process that will determine McCarthy’s fate.

Here’s a guide to five ways in which it could play out.… pic.twitter.com/k2dxVG2jWC

— The Washington Post (@washingtonpost) October 3, 2023

Fantasy world Last week, Judge Arthur Engoron handed New York Attorney General Letitia James a huge victory in the state’s civil case against Donald Trump, ruling that the real estate magnate and former president committed fraud by overvaluing his business assets. “In defendants’ world: rent regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air…and square footage subjective,” Engoron wrote. “That is a fantasy world, not the real world.” 

Though Engoron conceded that square footage can sometimes be overvalued by mistake, generally falling in the realm of 10-20 percent, Trump’s properties were in some cases inflated by 200 percent, which strains credulity.

But that ruling dealt with only one of the seven total claims that James had brought against Trump. Yesterday, the first day of the trial—which will deal with the remaining six—started. Previously, Engoron had “revoked Mr. Trump’s licenses to operate his New York properties,” but now the attorney general is seeking more from Engoron, “asking that he impose the $250 million penalty and that the former president be permanently barred from running a business in New York,” reports The New York Times. The trial will determine Trump’s penalty, both in terms of fines and in terms of the degree to which he will be allowed to continue to do business in New York real estate.

“The substance of Mr. Trump’s defense is that his annual financial statements were merely estimates, and that valuing real estate is more art than science,” reports The New York Times. “The banks to which Mr. Trump submitted his statements, his lawyers argued, were hardly victims: They made money from their dealings with Mr. Trump and did not rely on his estimates.”

Scenes from New York: 

In May 2021, Chef Daniel Humm of Eleven Madison Park announced he would no longer permit animal-derived ingredients to be used in his kitchen. “We offer three menus, all of which are 100% plant-based. Our main dining room tasting menu is nine to ten courses for $365 per guest” while “the 6-course menu is $285 per guest,” offers their website.

As a staunchly pro-meat individual, and an appreciator of New York’s fine dining scene, this thread making the rounds on Twitter/X brought me great joy:

I’m at 11 Madison Park and our first course is this tomato, this is about to be the most expensive joke ever pic.twitter.com/R1DdQzuJvj

— Supreet (@supreetkay) September 29, 2023

The best part is not the hefty price tag for tomatoes, tofu, and sunflower; the best part is the hidden meat room, where up until relatively recently, diners who had booked private experiences still had beef, lobster, foie gras, and sturgeon available to them. Or possibly the fact that the massive price tag did not go down at all over the course of the restaurant’s pivot to vegan (in fact, it went up, after reports criticizing worker pay surfaced).

To me, this is all very New York: outwardly posturing as morally superior but still raking it in from big chunks of cow in an even more exclusive setting. Brilliant.

QUICK HITS

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It’s Happening. https://t.co/EV9JJONhQT

— Sarah Constantin (@s_r_constantin) September 28, 2023

One year for each finger on both hands.

Today ends a full decade in prison.

I sometimes fear I’ll spend the rest of my life behind concrete walls and locked doors. But I have no one else to blame. It’s my poor choices that led me here.

All I can do now is pray for mercy.

— Ross Ulbricht (@RealRossU) October 1, 2023

• Rep. Jamaal Bowman (D–N.Y.) had his staff circulate talking points to fellow Democrats defending his pulling of the fire alarm while voting on this weekend’s stopgap bill, which was passed to avoid a government shutdown. The prepared talking points are next-level incredible. A sampling: “I believe Congressman Bowman when he says this was an accident. Republicans need to instead focus their energy on the Nazi members of their party before anything else.”
• The Machinery of Freedom turns 50.
• Checking in on Hollywood, y’all OK?

“What should the minimum number of servers in a restaurant be?”

“That’s an absurd question—I have no idea. Haven’t you read Hayek? Let the market figure it out.”

“OK. What should the minimum number of writers for a 14 episode TV show be?”

“Six.” pic.twitter.com/zFC3DFYWCa

— Chris Freiman (@cafreiman) October 2, 2023

• ICYMI: Coverage of Donald Trump’s very strange California GOP Convention speech by Reason‘s Christian Britschgi, who reported live from the event.
• “The choice was not between Elon Musk founding PayPal and Tesla in South Africa or in the United States,” writes Cato’s Alex Nowrasteh on brain drain. “The choice was between Paypal and Tesla being founded in the United States or never being founded at all in South Africa.”
• Is Russia testing a nuclear-powered missile?

Originally Appeared Here

After nearly two years of fits and starts, a long-awaited tax relief and reform package made it to the governor’s desk this week after lawmakers in the state House and Senate overwhelmingly approved the compromise agreement.

The roughly $1 billion tax bill is among the most significant pieces of legislation to reach Gov. Maura Healey since she took office in January. The Arlington Democrat has been prodding lawmakers to finish their tax talks since she was a candidate last year.

In a statement, Healey called the Legislature’s product “comprehensive” and said she would look it over. She has until Sunday, Oct. 8 to act on the bill, which she could choose to amend and send back to lawmakers.

“As I’ve said on the campaign trail and from day one of this administration — tax cuts are essential for making Massachusetts more affordable, competitive and equitable. I thank Senate President Spilka, Speaker Mariano, Chairs Rodrigues and Michlewitz and the Legislature for taking this important step,” the governor wrote. “This is a comprehensive package that delivers relief to families and businesses, including through our proposed Child and Family Tax Credit, and I look forward to reviewing the details and delivering for Massachusetts.”

• Read More: Mass. Senate approves $1B tax relief bill, moving it closer to Gov. Healey

The child tax credit was one of Healey’s signature pledges on the campaign trail last fall. The governor sought a $600-per-dependent credit, though House and Senate leaders landed on an eventual credit of $440 in their compromise agreement.

Sen. Walter Timilty, D-Norfolk/Plymouth/Bristol, said he agreed with the governor’s initial $600 credit proposal and expressed hope the Legislature could work on that “in the future.”

“I’m very happy with what we did today. I would have liked to have gone with more, but today is a great day for all of us, I believe,” Timilty told State House News Service.

Sen. Susan Moran, D-Plymouth/Barnstable, who co-chairs the Joint Committee on Revenue, also signaled a pathway for expanded tax relief when asked about the governor’s $600 child and family tax credit.

“I appreciate the governor always shooting for the heights and really giving some kind of wind beneath the wings of the Legislature to really do something important,” Moran told the News Service. “And I look forward to continuing to work with the administration on that as we see where this step takes us — and maybe after that, reach even higher heights.”

• Read More: What’s in Massachusetts’ proposed $1 billion tax relief bill?

The Senate accepted the conference report 38-1, with Sen. Jamie Eldridge, D-Middlesex/Worcester casting the lone vote of dissent. President Karen Spilka, D-Middlesex/Norfolk, voted “yes,” which can sometimes be an emphatic sign of support from the chamber’s leader, who generally does not vote in roll calls.

Democrats then rebuffed a Republican attempt to suspend a rule and introduce amendments to the House-Senate compromise, before taking a final enactment vote and sending the bill to Healey’s desk at 1:30 p.m.

Other components of the package include raising the estate tax threshold from $1 million to $2 million while eliminating the so-called cliff effect by imposing a credit of $99,600; increasing the earned income tax credit from 30 percent to 40 percent of the federal credit; doubling the senior circuit breaker tax credit from $1,200 to $2,400; and increasing the rental deduction cap from $3,000 to $4,000. The package also slashes the short-term capital gains tax rate from 12 percent to 8.5 percent and overhauls how Massachusetts calculates taxes owed by multistate companies.

“With inflation the way it is, every dollar goes a long way, and this will help people meet their daily needs,” Timilty said after adjournment. “It’s very important for all of us.”

The House approved the package 155-1 on Wednesday and kept its informal session open Thursday so that it could take its final enactment vote, ensuring that the bill could reach the governor’s desk by the afternoon.

The compromise between the House and Senate was crafted since June by a six-member squad of reps and senators led by the chambers’ budget chairs.

• Read More: Mass. tax refund to do little to help lower income residents: ‘It’s expensive to be poor’

Former Gov. Charlie Baker kicked off the tax relief discussion in January 2022 when he filed his own proposal.

To Sen. Patrick O’Connor, R-Plymouth/Norfolk, the ranking GOP member of the Ways and Means Committee, the 2022-2023 tax relief talks represented something “very uniquely Massachusetts.”

“And that’s the fact that in January of 2022 we had a Republican governor file a bill with his administration, and they looked at, how can we make Massachusetts competitive and how can we make Massachusetts a more affordable place to live?” O’Connor said.

“And then that governor decided not to run for reelection, and 14 months later, a Democratic governor, with her administration, took a hard look at how to make Massachusetts competitive and how to make Massachusetts a more affordable place to live. And they filed almost an identical bill,” O’Connor continued.

On the chamber floor, Tarr, R-Essex/Middlesex; O’Connor, and Sen. Rebecca Rausch, D-Norfolk/Worcester/Middlesex all expressed notes of discontent with some elements of the compromise. But when the roll was called, Eldridge, who did not speak during the session, was the lone dissenter.

Tarr, the chamber’s Republican leader, labeled three sections as “poison pills” — a new requirement that taxpayers who file jointly at the federal level also file their state income taxes jointly; an alteration to the state’s tax cap law, known as Chapter 62F, that would spread excess tax revenues back to taxpayers in equal shares rather than proportional to the taxes they paid; and a change to the cap on money going into the state’s rainy day fund.

Rausch said she “wish[ed] we could have done more” with the proposal, such as by including teenagers in the child and dependent tax credit, but called it a “good compromise.”

The only Democrat during the brief debate to cast a negative light on some aspects of the bill, Rausch looked ahead to next budget season and wondered aloud what services may be cut as a result of a smaller tax haul.

“[W]ith this bill, we’re cutting $1 billion from our coffers, wiping out the new revenues of Fair Share almost to the penny,” the Needham lawmaker said. “If we don’t increase our revenues, whether through ultra-high-earning corporate taxation or otherwise, then the only other option for us is to put services on the chopping block. So come budget time next year, what are we gonna cut?”

Referring to “revenue that we’re losing today,” Rausch called for a future “debate in this chamber, on this floor, about revenue.”

As Tarr and Rodrigues collegially sparred during multiple budget and tax debates this year, the bipartisan duo enlisted the use of a prop — a large paper “I.O.U.” they exchanged, representing the promise of future tax relief measures.

Rodrigues presented the note back to the Republican leader with a handshake Thursday, and Tarr “marked the I.O.U. paid.”

Originally Appeared Here

The Inflation Reduction Act of 2022 fundamentally changed the way most renewable energy tax credits are calculated by obligating companies to meet prevailing wage and apprentice requirements to be entitled to the full tax credit amount.

The mechanics of the prevailing wage requirements allow a multiplier for eligible businesses at five times the base rate for production and investment tax credits for qualifying projects. On Aug. 29, the IRS proposed regulations that provide additional rules to address a number of issues, including easing penalties for developers and investors who fail to meet the labor rules for the clean energy tax credits on their projects.

While seemingly simple to implement, the prevailing wage requirements are more difficult to get certainty on at a practical level.

Penalty and Cure Provisions

To satisfy the prevailing wage requirement, companies must ensure that any laborer, mechanic, contractor, or subcontractor employed in the construction of a qualified facility are paid wages at no less than the prevailing rates as most recently determined by the Department of Labor.

But wage rates aren’t always apparent for each category of laborers and mechanics. For example, the DOL hasn’t yet prescribed categories for workers installing solar panels and wind turbines. As a result, businesses must choose a broad category that may not be appropriate for the particular type of laborer or mechanic. This lack of clarity leaves companies guessing if they’ve complied with the correct prevailing wage rate.

If companies fail to pay a prevailing wage, they can still remain eligible for the increased credit amount by making applicable correction and penalty payments. A correction payment must be made to the laborer or mechanic equal to the difference between the prevailing wage amount required to be paid and the actual amount paid, plus interest at the federal short-term rate increased by 6%.

A penalty penalty also must be made to the Department of the Treasury equal to $5,000 multiplied by the total number of laborers or mechanics who were paid wages below the prevailing wage rate. These amounts are increased for intentional disregard.

The preamble to the proposed regulations clarifies that the obligation to make such payments arises when a business fails to pay prevailing wages but becomes binding only when the increased credit is claimed on a tax return. However, they can make correction payments to laborers and mechanics in advance of filing to minimize the amount of interest due.

There are additional nuanced rules for hiring apprentices and paying penalties for failure to comply with the apprenticeship requirements.

Penalty Waivers

The proposed regulations include a safe harbor for union labor that’s likely to continue to be controversial.

The preamble states that “pre-hire labor agreements may be used to incentivize stronger labor standards and worker protections, which may also help ensure compliance with the prevailing wage requirement. For these reasons, the penalty provisions would also not apply to pre-hire collective bargaining agreements with one or more labor organizations meeting certain requirements when correction payments are made before a return is filed.”

This exception favors labor unions that are active in the energy industry and will likely attract the attention of businesses that are concerned about complying with the prevailing wage requirement but some see this as an unfair advantage.

The proposed regulations also grant the IRS discretion to waive penalties when businesses make correction payments by the earlier of 30 days after becoming aware of the error, or the date on which the tax return claiming the increased credit is filed.

Companies hoping to claim the increased credit amount should remain diligent in monitoring payroll practices for all employees—including engineering, procurement, and construction contractors and subcontractors—to ensure any mistakes are identified and corrected within these deadlines.

Transferability of Tax Credits

In the past, businesses haven’t been able to transfer renewable energy tax credits absent tax equity partnerships or through leasing transactions. The new law now allows those eligible to elect to transfer certain tax credits to unrelated persons for cash.

While a transferee would claim a transferred eligible credit (or portion thereof) on their tax return, the proposed regulations provide that the obligation to make correction and penalty payments would remain with the transferor. This provision generally keeps the transferor liable for correction and penalty payments post-sale but would suggest that, if the penalty and correction payments aren’t made, then the amount of the credit would be reduced to the lower base credit, which would generally be 20% of the full credit.

Businesses entering into tax credit transfer transactions will need to consider protections against this risk through indemnities, tax insurance, and diligence. Careful drafting of the purchase agreement could address or mediate this issue.

Treasury and the IRS have requested comments on the proposed regulations by Oct. 30, ahead of a Nov. 21 public hearing. The comments can include alternate ways that businesses might use project labor agreements to meet the prevailing wage requirement and the transferability of credits.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Martha “Marty” Pugh is a corporate tax partner in K&L Gates’ power practice group, focusing on renewable energy incentives related to wind, solar, and energy storage projects.

France Beard Johnson is an associate at K&L Gates whose practice focuses on US federal and international tax matters.

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Originally Appeared Here

NEW YORK, Sept. 24, 2023 (GLOBE NEWSWIRE) —

WHY: Rosen Law Firm, a global investor rights law firm, announces that it is investigating potential securities claims on behalf of shareholders of American Coastal Insurance Corporation (NASDAQ: ACIC) resulting from allegations that American Coastal may have issued materially misleading business information to the investing public.

SO WHAT: If you purchased American Coastal securities you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement. The Rosen Law Firm is preparing a class action seeking recovery of investor losses.

WHAT TO DO NEXT: To join the prospective class action, go to https://rosenlegal.com/submit-form/?case_id=19156 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or cases@rosenlegal.com for information on the class action.

WHAT IS THIS ABOUT: On August 21, 2023, American Coastal issued a press release stating that it “has identified certain errors related to the reporting of discontinued operations for the previously issued unaudited condensed consolidated financial statements for the three months ended March 31, 2023, which errors had the effect of understating the net income for the three months ended March 31, 2023 by approximately $6.4 million. These errors were discovered in the course of preparing [American Coastal’s] interim financial statements for the fiscal quarter ended June 30, 2023, and included errors in [American Coastal’s] accounting for income tax expense primarily relating to the deconsolidation of [American Coastal’s] former subsidiary, United Property & Casualty Insurance Company.” Accordingly, American Coastal determined that the statements at issue should no longer be relied upon.

On this news, American Coastal’s stock price fell $0.38 per share, or 5%, to close at $7.22 per share on August 22, 2023.

WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.

Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.

Attorney Advertising. Prior results do not guarantee a similar outcome.

——————————-

Contact Information:

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The Rosen Law Firm, P.A.
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New York, NY 10016
Tel: (212) 686-1060
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Originally Appeared Here

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Federal agents raided the headquarters of Duval Teachers United in Jacksonville, Florida, on Sept. 6, carrying away computers and boxes of financial documents.

“An investigative team from FBI Jacksonville executed a court-authorized search warrant today in furtherance of a federal investigation,” an agency spokesperson told the Florida Times-Union. “Because the investigation is ongoing, details about the search are not being released at this time.”

Local news reported that the investigation involves the potential misappropriation of funds. The presence of IRS agents at the raid supports this.

Union officers would not comment but released a statement that read, “We continue to be focused on upholding our mission of supporting our members and the students we serve. We are fully cooperating with authorities and anticipate a full and thorough assessment of the facts. To respect the integrity of the process, we will not discuss any further details.”

News crews spotted prominent Florida criminal defense attorney Hank Coxe at the scene, but he would not reveal the nature of the investigation or whom he was representing.

With everyone involved mum, media outlets have followed suit. There hasn’t been a single update since the raid occurred.

Now, a raid is not itself evidence that a crime has been committed. It only shows that the FBI and IRS received enough information to convince a judge that further investigation was warranted. The presence of federal agents means the situation was beyond the scope of local law enforcement.

But the union’s finances aren’t a complete cipher. All unions and other tax-exempt organizations are required to file an annual disclosure report with the IRS. The most recent one from Duval Teachers United covers the 2021-22 school year. It contains nothing that indicates criminal activity, though there is at least one curiosity.

I don’t have a definitive number for how many members the union has, though American Federation of Teachers documents suggest it is in the vicinity of 7,500. The Duval union reported collecting more than $5 million in revenue in 2021-22, though that number is a little deceiving, since almost $2.8 million of it was forwarded to state and national union affiliates.

That left about $2.2 million for the local to run its operations. Its staff is small. The contract with the Duval County Public Schools allows no more than seven people to be released to work for the union. It appears that is the number staffing the headquarters building.

The union has two elected officers. The president, Terrie Brady, has held that position since 1999, and her executive vice president, Ruby George, since at least 2004-05.

That year, the union paid them $114,000 and $101,000, respectively.

Since then, their pay has fluctuated wildly. Brady’s salary ranged from $160,000 in 2006-07 to more than $326,000 in 2019-20. She received $251,868 in 2021-22.

George’s salary had a similar trajectory, though not always parallel to Brady’s. She received $134,000 in 2018-19 but almost $327,000 the following year.

It’s unusual for union officers’ pay to rise and fall that dramatically, unless they are constantly deferring compensation for tax purposes and then collecting it in later years. That may be the case here. But the amounts involved are also unusual.

For example, Brady’s taxable compensation for 2021-22 greatly exceeded the amounts paid to the presidents of United Teachers Los Angeles ($140,000), the Chicago Teachers Union ($155,000) and even that of the largest teachers union in Florida, the United Teachers of Dade ($217,000).

Duval Teachers United is similar in size to two other Florida teachers union locals, the Orange County Classroom Teachers Association and the Palm Beach County Classroom Teachers Association. Their presidents made $127,000 and $152,000, respectively, last year.

The largest local affiliates of the Florida Education Association have a long, sad history of problems with the law and their own parent unions. The state and national unions have not commented on the Duval raid, but neither have they initiated a trusteeship over the local, as far as I can tell.

“There’s more to come, I’m sure.”

Mike Antonucci’s Union Report appears most Wednesdays; see the full archive.

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Originally Appeared Here