Talking Tax

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New Jersey's New Tax Lead Shares Vision for Year Ahead Nov 29, 2023

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Marita Sciarrotta, the new acting director of New Jersey's Division of Taxation, will have a busy year ahead as she settles into the role.

Sciarrotta, who spent 40 years in the tax division before taking over as acting director in September, said in an interview that she wants to modernize the state's property tax relief programs—an endeavor that likely will require legislation to make needed changes. She also plans to increase hiring as state revenue agencies across the nation grapple with a growing number of vacancies that can impede their abilities to provide financial oversight.

On this episode of Talking Tax, reporter Danielle Muoio Dunn spoke with Sciarrotta about her plans as the division takes on lawmakers’ overhaul of New Jersey’s corporate tax system and the creation of StayNJ, a property tax relief program for seniors. Sciarrotta also discussed her long tenure in the division and the sexism she's faced over the years.

"There are some people that kind of tend to be siloed off and one of the things I found to be most advantageous in my career is that I get like a morbid curiosity and I will ask about anything to anyone and stick my nose in a lot of different places," Sciarrotta said.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

RERUN: Warner Bros, FTI Tax Leaders on Navigating Uncertainty Nov 24, 2023

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(Note: This episode originally aired June 1, 2023)

What does it mean to be a good tax leader, as an in-house tax professional or as a tax adviser who wants to make the tax functions of your clients better? How do you build a great team?

Bloomberg Tax Insights editor Rebecca Baker sat down with Jared Dunkin, the vice president of tax and senior tax counsel at FTI Consulting, and Dunkin’s mentor and former boss, Todd Davis, the executive vice president and senior tax counsel for Warner Bros. Discovery, to find some answers to these questions.

Dunkin and Davis discuss how to handle the ambiguity of tax when corporate executives—their bosses—demand certainty, how to wage the war for talent, and how to set priorities for their tax teams, particularly when it comes to cross-border tax work.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Inside Malta Pension Promoters' Effort to Outsmart IRS Nov 15, 2023

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For more than a year, a group of wealth management advisers met regularly to devise strategies to defend their wealthy clients' keeping their riches in individual retirement arrangements based in Malta.

The pension plans—which emerged out of a loophole in a 2011 tax treaty between the US and the Mediterranean island nation widely seen as a tax haven—involved a cottage industry of advisers, accountants, and attorneys to facilitate transactions that allowed cash, business interests, and several types of income to go untaxed.

The plans were added to IRS's "Dirty Dozen" list of dubious tax schemes in July 2021. But participants in the participants' monthly Zoom meetings felt "the IRS was too simple, too lazy, or too stupid to figure out what we were doing," according to one wealth adviser who attended them. That changed in June, when the IRS served hundreds of criminal summonses on taxpayers and Malta pension plan promoters. While no charges have been filed yet, IRS Commissioner Danny Werfel has been vocal about cracking down on abusive tax schemes, especially now that his agency is infused with billions in new funding from last year's tax-and-climate law.

In this week's episode of Talking Tax, host David Schultz talks to Bloomberg Tax reporter Michael J. Bologna about his story digging into the wealth advisers' meetings, how these Malta plans were marketed to high-net-worth individuals, and what's next for the IRS investigation.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

NY Governor Must Soon Act on Bill to Expose LLC Owners Nov 08, 2023

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The clock is ticking on Gov. Kathy Hochul (D) to take action on legislation that would make New York the first state to publicly list the owners behind limited liability companies.

The bill, A3484A, would require LLCs to disclose their beneficial owners and other identifying information, such as their business street address. Those who fail to comply for more than two years would be shown as “delinquent” on state records and subject to a $250 penalty. Entities with “significant privacy interests” could apply for a waiver to not appear in the state registry.

On this episode of Talking Tax, Bloomberg Tax spoke with state Sen. Brad Hoylman-Sigal, the Manhattan Democrat who sponsored the bill, and Chelsea Lemon, director of government affairs for the Business Council of New York, which opposes the legislation.

"The LLC Transparency Act doesn't minimize or alter the legal structure or protections of LLCs, but it provides necessary transparency for the public's benefit, as well as our law enforcement," Hoylman-Sigal said.

Other proponents, including state Attorney General Letitia James and Comptroller Thomas DiNapoli, have said the opaque structure of LLCs allow corrupt actors to hide their financial dealings and contribute to issues like tax evasion and money laundering. Opponents, such as real estate groups, have raised privacy concerns with it and said it will hurt the state's economic competitiveness.

A spokesperson for Hochul said she's "reviewing the legislation." She has until Dec. 31 to act on the bill.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

The Moore Supreme Court Case and Its Potential Impact Nov 01, 2023

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It isn't every day that a dispute over a $14,729 tax bill gets every corner of the tax world paying attention—but the potential ramifications of the dispute now before the Supreme Court go far beyond that.

The court will hear oral arguments next month in Moore v. United States, in which Charles and Kathleen Moore, a retired couple from Washington state, are arguing that the “mandatory repatriation tax” should be declared unconstitutional. That tax, enacted as part of the 2017 tax-overhaul law, imposed a one-time levy on accumulated foreign corporate profits when the US changed its tax system so as to tax foreign profits going forward. It also led to the Moores’ $14,729 tax bill, which they had to pay on earnings of an Indian machine-tool company in which they’d invested, even though the earnings weren’t distributed to them.

If the high court rules in the Moores’ favor, it could lead to hundreds of billions of dollars in refunds to giant multinational companies that paid the mandatory repatriation tax. Some observers think it could also play havoc with other taxes on foreign income, partnership taxes, and other forms of tax that are similarly based on undistributed income.

The Moores and their supporters distinguish the mandatory repatriation tax from other provisions, and contend it can be struck down without disrupting the rest of the tax code. The US Chamber of Commerce said in a brief supporting the Moores that such concerns were "badly overblown."

Bloomberg Tax senior reporter Michael Rapoport spoke about the Moore case with Reuven Avi-Yonah, a law professor at the University of Michigan, who specializes in corporate and international taxation. Avi-Yonah filed a friend-of-the-court brief with two other law professors last month urging the Supreme Court to reject the Moores’ challenge.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Accountants Take Center Stage in Trump, FTX Trials Oct 25, 2023

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A pair of high-profile fraud trials are competing for headlines out of New York courtrooms, with accountants serving as marquee witnesses.

Accounting has been a common theme across both the criminal trial of Sam Bankman-Fried, who faces federal fraud charges for allegedly siphoning customer funds from the now-bankrupt FTX cryptocurrency exchange, and the civil trial of former President Donald Trump, who is accused by the New York attorney general of inflating the value of real estate on years of his financial statements.

As financial frauds have become more complex, accountants increasingly play a role in court—as witnesses, experts, or even the accused.

On this episode of Talking Tax, Amanda Iacone, Bloomberg Tax senior reporter, spoke with Bruce Dubinsky, a forensic accountant whose work has spanned frauds involving Enron, Parmalat, and Bernie Madoff. They talked about how the role of accountants in the courtroom has evolved and how their testimony has unfolded in these two trials.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Crypto Backers Wary of Possible Tax Loophole Closure Oct 18, 2023

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Legislation and proposed regulations on cryptocurrency have the potential to answer some open questions about the taxation of digital assets, though not all of the possible changes may be welcomed by industry.

A bill from Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) touches on a variety of crypto tax issues. It would provide a narrow definition of broker for tax reporting, require the marking of crypto assets to market for year-end accounting purposes, and closea tax loophole that may upset some in the industry. The Senate Finance Committee also asked for more information on those crypto taxation issues earlier this fall.

On this episode of Talking Tax, Lisa Zarlenga, the head of Steptoe & Johnson LLPs tax policy practice and a former tax legislative counsel at the Treasury Department, spoke to Bloomberg Tax about that legislation and new proposed regulations on tax reporting rules for crypto brokers.

Closing a tax loophole that allows investors to claim losses by quickly selling and repurchasing their digital assets, for example, may be difficult to implement as some investors would trigger the rule unintentionally, she said.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

New IRS Unit Targeting Partnerships Will Test Tax Laws Oct 11, 2023

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The IRS's new unit to tackle pass-through entity tax-law enforcement could take years to stand up fully and for businesses to feel its impact in the form of tougher audits.

The push comes after years of concern among IRS officials that the agency lacked the expertise and resources to enforce laws around pass-through entities such as large partnerships, sparking fears some companies were manipulating the rules to pay less than they owed. But setting up and staffing up the new unit won't be easy.

On this episode of Talking Tax, Mary McNulty, a partner at Holland and Knight LLP, spoke to Bloomberg Tax about the purpose of the new unit and what it has to do to be successful.

"The wild card here is funding," she said. "So if Congress continues to cut the $80 billion of additional funding to the IRS and reduces the resources again to low levels then the IRS will lack the resources to carry out this strategic initiative, so time will tell.”

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Is Anyone Paying State Taxes on Bitcoin and NFTs? Oct 04, 2023

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State taxpayers have been sitting on a mountain of cryptocurrency assets for nearly a decade. According to one estimate, by the tax software and compliance firm Revenue Solutions Inc., 4.7 million California residents have stockpiled crypto assets valued at $56.2 billion, while 2.3 million New Yorkers are hoarding $27.7 billion in crypto.

Are any of them paying capital gains taxes on the accumulated wealth tied up in Bitcoin, Ethereum, Tether and other digital tokens? And what about those investments in digital art, like Bored Ape Yacht Club non-fungible tokens?

Tax compliance analysts believe barely a trickle of tax revenue linked to digital assets is flowing in the direction of state revenue departments. The reasons are varied. Revenue agencies and auditors just don’t understand the crypto landscape. States and taxpayers alike lack full guidance from the federal government. Tracking digital asset transactions is difficult, and connecting them to specific taxpayers is even harder.

Fran D’Antonio, solutions sales director at Revenue Solutions, and Miles Fuller, a 15-year veteran of the IRS Office of Chief Counsel who's now director of government solutions at digital tax compliance firm TaxBit, spoke with Bloomberg Tax senior reporter Michael J. Bologna about what they've seen in watching the crypto market closely for several years.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

IRS Shifts Auditing for 'Life-Changing' Tax Credits Sep 27, 2023

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Overhauling how the IRS audits low-income taxpayers is a critical step toward more fair audits, many in the industry acknowledged following the agency's announcement earlier this month.

The IRS promised that it would "substantially" reduce audits on refundable tax credits that benefit low-income taxpayers, such as the earned income tax credit. That change follows a study released in January that found Black taxpayers claiming the EITC were audited at higher rates than non-Black taxpayers claiming the credit.

Former National Taxpayer Advocate Nina Olson, now executive director of the Center for Taxpayer Rights, spoke with Bloomberg Tax's Erin Slowey about the impact the audit shift will have on low-income taxpayers and the landscape for claiming the EITC leading up to this announcement.

"It is the difference between being able to have medical care or being able to pay rent or even if you're homeless, putting a deposit down and first month's rent on an apartment," Olson said. "It's life-changing funds."

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

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