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PostHeaderIcon Tax News – July 22, 2013

This is going to be something new I’ll be doing on a mostly daily basis.  It’ll be a run down of the tax related news stories that I find and read through out the day.  As I get into this, you should also see my “links” list grow and while some of these stories will be posted individually on my Facebook page (most likely in the morning), you’ll find all of those and more in this daily update which should show up in the evening.  Anyway, on to my inaugural edition.

Right now, tax reform is in the spotlight and while I think it’s not going to happen anytime soon (we can’t Congress to agree on the small things much less something expansive as this), it’s in the news.

First off, we have a story at CNN Money talking about how “temporary” tax breaks that have at times lasted 30 years play havoc on budget estimates and downplay the true cost of these tax breaks.  The research and development credit and the renewable energy production tax credit are both examples of these temporary but permanent tax breaks.

Another CNN Money article talks about how companies have used advance pricing agreements to shave their taxes with regard to multinational   I remember when I was in school, transfer pricing was a big deal and a tool that the IRS could used to bring a hammer down on some of the bigger companies with overseas operations.  Transfer pricing is basically the prices you charge to your international subsidiaries or branches must be the same price as an arms length transaction.  To protect themselves, companies entered into advance pricing agreements to cover themselves in advance with the IRS with regard to transfer pricing issues.

On the tax reform front, we have an editorial at Politico.com talking about how, for tax reform to work, we need to start completely over.  Again, this probably isn’t going to happen because it’ll be a lobbying feeding frenzy but it’s fun talking about.  And speaking of lobbyists, we have a WSJ piece on those big companies that have a vested interest in how tax reform will take shape.

Phil Mickelson recently won the British Open and with it, the state of California looks to cash in more than the pro golfer.  If you believe the math here, it looks like Phil is going to have to pay 61% of it which will be split between the federal government and the state of California.