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April 15th Deadlines

Tuesday, April 14th, 2020

Yes, the tax deadline for the IRS (and federal estimated payments for the first two quarters) is July 15th. However, not all states conformed to this–especially for estimated payments. The following states all have first quarter estimated payments for individuals that are due tomorrow, April 15th:

  • Arkansas
  • District of Columbia
  • Hawaii (due April 20th)
  • Illinois
  • Iowa (due April 30th)
  • Kentucky
  • Michigan
  • Minnesota
  • New Hampshire
  • New Jersey
  • North Carolina
  • Oregon

So if you need to make estimated payments for 2020 for one of these states, do so. If you are mailing your payment, use certified mail (but not return receipt requested–there’s a possiblity no one is there to pick up the mail).

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Posted in Arkansas, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Michigan, Minnesota, New Hampshire, New Jersey, North Carolina, Oregon | Comments Closed

The 2020 State Business Tax Climate Index: The Usual Laggards, but Some New Faces on Top

Thursday, October 24th, 2019

The Tax Foundation released its annual State Business Tax Climate Index. There weren’t many surprises with the best states:

1. Wyoming
2. South Dakota
3. Alaska
4. Florida
5. Montana
6. New Hampshire
7. Nevada
8. Oregon
9. Utah
10. Indiana

This is the first time I remember Oregon in the top-ten of this list. These states share one of two attributes: the lack of certain taxes (such as individual income taxes) or low tax rates across all taxes (such as in Utah and Indiana). Meanwhile, it’s “Bring me the usual suspects” for the bottom ten:

41. Louisiana
42. Iowa
43. Maryland
44. Vermont
45. Minnesota
46. Arkansas
47. Connecticut
48. California
49. New York
50. New Jersey

As the Tax Foundation says, “The states in the bottom 10 tend to have a number of afflictions in common: complex, nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered by some of the highest property tax burdens in the country, has the second highest-rate corporate income tax in the country and a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.”

I noted Oregon being in the top ten, but the state is likely going to fall out soon. Oregon adopted a gross receipts business tax, and that’s almost certain to send the state out of the top ten next year. Oregon will be one of only two states with both a corporate income tax and a gross receipts tax.

My home state, Nevada, ranks near the top in individual income tax (fifth), which isn’t a surprise since we don’t have that tax. (A few ‘individuals’ will owe the Nevada gross receipts tax on their businesses, which is why the Silver State doesn’t share the top ranking here.) We also rank towards the top (tenth) in property tax. We’re right in the middle for corporate income tax (25th) which shows the impact of the gross receipts tax. We’re towards the bottom (44th) in sales tax (Nevada sales taxes are relatively high; the rate is 8.25% in Clark County) and in unemployment insurance tax (47th). But overall Nevada is a good state for taxation; this is one reason I moved here in 2011.

Contrast that with California. Corporate taxation is actually in the middle (28th) and property tax is in the top half (16th); the property tax ranking is due to Proposition 13 which Democrats in the Golden State are proposing to partially due away with. Unemployment Insurance Tax ranks 22nd, about average. It’s individual income tax which is the major contributor to California’s low ranking. The state ranks 49th. California also fares poorly in sales tax, ranking 45th.

Note that taxation is just one piece of why businesses relocate. It’s an important component, but it’s not everything. Another major factor is regulatory burden, and that’s another place where California ranks at or near the bottom. This is something I’ll be reporting on in the future.

As to individuals who state that businesses don’t move because of taxes, that’s hogwash. Businesses do move because of this, and will continue to do so. It is just one reason, but it’s a very important reason. California lawmakers who look at the map provided by the Tax Foundation (showing California in dark grey (dark grey indicates a bad score) while numerous neighboring states are in blue (indicated a good score) should be worried. But given how I think the Democratic majority in Sacramento thinks, it’s unlikely they’ll do so.

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Posted in California, Nevada, Oregon | Comments Closed

Six Month Vacation Leads to Four and Eight Years at ClubFed

Sunday, December 13th, 2015

Everyone likes vacations. Last year, I went to New Zealand and Australia. Unfortunately, this year’s vacation wasn’t anything like that trip. An Oregon couple has learned that some vacations are better off not taken.

As I previously wrote, Ronald and Dorothea Joling decided after their conviction on tax charges to take a vacation to Arizona rather than show up for sentencing. The US Marshals Service apprehended the couple in Clarksdale, Arizona. On Thursday, Ronald Joling was sentenced to 97 months at ClubFed (eight years and one month) and Dorothea Joling received four years (48 months) at ClubFed. And there’s more! The Jolings are still waiting to be tried after being charged with filing retaliatory bogus liens against various federal judges, prosecutors, and the federal court clerk’s office.

Acting US Attorney for Oregon Billy Williams stated,

This is an egregious case. Not only did the Jolings refuse to pay their fair share of taxes like the rest of us, they retaliated against federal employees who were just doing their jobs. After a jury convicted them at trial, they cowardly refused to show up for sentencing and fled the state. They were fugitives for six months, requiring additional resources to locate and arrest them in Arizona. They are now in custody and will serve their appropriately lengthy sentences.

You will have to wait another eighteen days to see if the Jolings’s actions are good enough to win the 2015 Tax Offender of the Year award.

Posted in Oregon, Tax Evasion | 1 Comment »

State Taxes Matter, Lesson #21

Sunday, July 5th, 2015

When does $108 million equal $80 million? When you’re leaving California and heading to Texas.

DeAndre Jordan has been playing center for the Los Angeles Clippers of the National Basketball Association. Mr. Jordan just signed a free agent deal with the Dallas Mavericks for $80 million, $28 million less than what he was offered to stay with the Clippers. It might be that Mr. Jordan believes that the Mavericks have a better chance at winning the 2015-2016 NBA Championship. Perhaps he likes Texas better than California (his hometown is Houston). It also might be that Mr. Jordan likes keeping more of what he makes.

Marc Spears of Yahoo Sports noted to NBA TV, “First of all the taxes are so bad in my home state of California it ends up being about even.” California’s top tax rate is 13.3%, so if all of Mr. Jordan’s contract were subject to the top California tax rate he’d end up at $93.6 million–still a bit more than the $80 million he’ll get with the Mavericks. Because of Jock Taxes some of what Mr. Jordan will earn will still be subject to various state and local taxes (including California’s); the Spurs will play road games in Los Angeles, Oakland, and Sacramento.

Another NBA free agent, LaMarcus Aldridge, signed for $80 million with the San Antonio Spurs; he played for the Portland Trailblazers last year. Mr. Aldridge is leaving Oregon (which has a 9.9% maximum rate) for Texas’ 0% rate. Yes, the Spurs might be a better team than the Blazers and Mr. Aldridge may like the Spurs’ organization more, but I’m also certain he likes that his tax rate just went down.

Posted in California, Oregon, Texas | 1 Comment »

Yet Another Reminder that a License Doesn’t Always Mean Ethical Behavior

Sunday, October 6th, 2013

While we wait for the Loving appeal decision to come out, yet another reminder that not all licensed tax professionals are ethical. Here, we just have allegations of fraud, so it is definitely possible that the alleged villain of the story is innocent. Nevertheless, the story is too rich to not bring up.

Anyway, from Portland, Oregon, comes the indictment of Steven Cyr. Mr. Cyr is a tax attorney. He’s been charged with two felony counts of overstating the expenses on his own tax returns (for 2006 and 2007). According to a story in Willamette Week, Mr. Cyr reported expenses of $524,678 in 2006 and $408,767 in 2007; the indictment alleges that the total expense figures are inflated. Mr. Cyr is also being investigated by the Oregon Bar.

In any case, this indictment also shows that the IRS does have means of going after tax professionals who do commit crimes. If I were to commit tax crimes, the IRS can sue me and bar me from ever preparing tax returns. They can being proceedings to revoke my license–my license comes from the federal government. If I do something truly rotten, I can be indicted for those crimes.

The idea that just because people have licenses that they will all suddenly go the straight and narrow is laughable. There were tax crimes years ago; there will be tax crimes in the years that follow…licensing or not.

Posted in Oregon, Tax Fraud | 1 Comment »

Texas #1, California #50 in Business Location Survey

Thursday, May 3rd, 2012

Another week, another survey of which state is best for business. For the eighth straight year, Chief Executive magazine ranked Texas as the best state in the union as to where to conduct business. Unsurprisingly, California is at the bottom. My state, Nevada, is at #12; Aaron’s home of Maryland is #40. Here are the top ten and bottom ten states:

1. Texas
2. Florida
3. North Carolina
4. Tennessee
5. Indiana
6. Virginia
7. South Carolina
8. Georgia
9. Utah
10. Arizona

41. Hawaii
42. Oregon
43. Pennsylvania
44. Connecticut
45. New Jersey
46. Michigan
47. Massachusetts
48. Illinois
49. New York
50. California

The two states that made the biggest moves were Oregon and Louisiana. Oregon fell nine spots in the ranking, likely due to their income tax increase that passed last year. On the other end of the spectrum is Louisiana, which was ranked 47th in 2006 but is now ranked 13th (up 27 spots from 2011).

Meanwhile, Chief Executive describes California as having slipped deeper into the ninth circle of business hell. Perhaps this section of the report will enlighten Sacramento:

The following is a representative sample of comments from participating CEOs:

  • California is the worst! They are doing everything possible to drive a business out of their state. If it were not for the climate, they would have lost half their population.
  • California regulations, taxes and costs will leave only tech, life sciences and entertainment as viable. If you aren’t an elitist, no room here for the middle or working classes.
  • California treats business owners like criminals. California has different overtime policies for its own employees vs. private sector.
  • California’s labor regulation is a job killer. We will be moving our business out of the state, which will lose hundreds of jobs simply due to the poor regulatory environment.
  • California should secede from the union—it is like doing business in a foreign country, it has its own exchange rate, and its regulation is crazy.

Meanwhile, the budget deficit in California grows (the Legislative Analyst says it’s at $3 billion and will grow from that number). Perhaps the idea of cutting regulations and spending just what the state takes in might garner some support in Sacramento. Well, one can always dream….

Posted in California, Louisiana, Oregon, Texas | Comments Closed

Nevada Thanks Oregon

Saturday, January 30th, 2010

The Nevada Development Authority was thrilled this week when Oregon voters passed a pair of “Tax the Rich” initiatives. The two tax increases will raise the personal income tax rate to 11% on individuals making $125,000 or more ($250,000 if married filing jointly). The other tax increase is on businesses: the $10 minimum corporate income tax has been replaced with a $150 minimum tax, or 0.1% of gross revenues in excess of $500,000. The measure was sponsored by public employee unions.

How many businesses will want to expand in Oregon when they can move to Washington (with no individual income tax, though there is a business tax) or Nevada (with no personal or corporate income tax)? How many business owners will see these tax increases and lay off individuals? As the Tax Foundation said, you can’t tax the guy behind the tree. This tax increase will make Oregon less competitive and will cause the state to lose jobs in the middle of a recession.

The Chairman of Nike calls these tax increases a death spiral. He’s dead-on accurate.

Posted in Oregon | Comments Closed

Is Oregon at the Tax Crossroads?

Sunday, January 17th, 2010

The Wall Street Journal editorializes on Friday that Oregon is at the tax crossroads. The Oregon Legislature, dominated by Democrats, voted to increase the state’s top personal income tax bracket to 11% from 9%; they also voted to increase the state’s business income tax to 7.9% from 6.6%. Signatures were gathered and a mail election is underway on whether or not these tax increases actually go into effect.

The Journal notes,

In the last budget, the Democratic controlled state legislature doled out a $259 million pay raise to the government work force, even as the state was facing a near $1 billion deficit. In the last three years, the state has added 25,000 new public employees while losing 40,000 private sector jobs. The union TV ads say the tax hikes are needed to preserve schools, roads and public services.

The 11% income tax rate will make Oregon’s income tax about twice as high as the national average. Businesses in Portland can move across the Columbia River to Vancouver, Washington and pay zero income tax. Oregonians used to argue they didn’t have to pay a state sales tax. But the current tax proposal imposes a first-ever “gross receipts tax” on certain retail and wholesalers. This is a disguised sales tax.

The days of unlimited tax and spend are ending. The election in Massachusetts is demonstrating the anger of Americans towards the Democrats’ tax and spend proposals. We’ll have to wait a couple of weeks to see if Oregonians send a message to their legislature about increasing taxes in a recession.

Posted in Oregon | Comments Closed

Didn’t You Know that Wages Aren’t Taxable?

Monday, November 23rd, 2009

Well, I didn’t know that, but one group on individuals made that argument. Joseph Saladino, Marcel Bendshadler, and Michael Mungovan tried that dubious stance. They offered what the Portland Oregonian called a “tax evasion service” as they prepared over 1000 returns where they noted that compensation for personal labor isn’t taxable. One defendant, Richard Ortt, was acquitted; earlier, Richard Fuselier pleaded guilty.

Assistant US Attorney Allan Garten told the Oregonian, “So let’s assume for a moment that you would get a W2 that said $40,000. (The guilty men) would list as income $40,000, and then they would deduct the value of your labor of $40,000 … so that you paid no taxes…That’s illegal.”

Given that the tax fraud involved $9 million, the guilty individuals are looking at lengthy terms at ClubFed. If a tax preparer tries to tell you wages aren’t taxable, run, don’t walk, out of the office.

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Posted in Oregon, Tax Fraud | Comments Closed

“The Producers” Doesn’t Work in Real Life

Monday, October 26th, 2009

One of my favorite movies of all time is Mel Brooks’ The Producers with Zero Mostel as Max Bialystock and Gene Wilder as accountant Leo Bloom. They decide to produce the worst possible Broadway play–Springtime for Hitler–and sell several hundred percent of their show. The movie is wonderful and if you haven’t seen it it’s well worth the time.

Three federal lawsuits have been filed against ClassicStar LLC alleging the company oversold the breeding rights in various thoroughbred mares. In one lawsuit, filed in 2004, ClassicStar is alleged to have sold more than $160 million of mare lease rights when it only owned $40 million. As Leo Bloom would say, “You can only sell 100% of anything.”

Those lawsuits note that a federal investigation was ongoing. That reached fruition today when David Plummer, Spencer Plummer, and Terry Green all pleaded guilty to one county of conspiracy to defraud the United States. Acting U.S. Attorney Kent Robinson noted, “This nationwide fraudulent scheme is by far the largest criminal tax case in the history of Oregon.” Here’s some of how it worked.

Investing in race horses is done by wealthy individuals. It’s very expensive to do this, and you usually end up pooling your investment with others, especially if you are going to invest in the best horses. You’re betting on genetics, and sometimes it works and sometimes it doesn’t.

ClassicStar allowed investors to lease the reproductive capacity of specific thoroughbred horses. If the mare had a foal during the time that the investor held the lease, the investor would own the foal. And you get a tax deduction based on the losses incurred. Most investors financed their investments with loans from the purportedly independent National Equine Lending Company. But NELC wasn’t independent–it was owned by ClassicStar–and the money never really changed hands. Let’s add in that many investors apparently never had to make a loan payment and the fraud starts to stand out.

But that’s not all. ClassicStar also substituted less expensive quarter horse mares for thoroughbred horse mares as ClassicStar didn’t have enough of the thoroughbreds. So many individuals obtained tax deductions they weren’t entitled to, leading to refunds that they shouldn’t have received. The total size of the phony tax deductions is $500 million which led to a loss to the US Treasury of $200 million. Needless to say, the three who pleaded guilty are looking at very lengthy stays at ClubFed. Individuals who invested in ClassicStar are likely going to receive “Dear Valued Taxpayer” letters from the IRS in the very near future. And there are still the lawsuits to be resolved.

If you ever get the idea of selling more than 100% of anything, don’t. Only bad things can happen if you do.

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Posted in Oregon, Tax Fraud | Comments Closed

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