David L. Miner

[Cpt Banjo]

And couldn't the same be said about other forms of imputed income, such as original issue discount, which require the recognition of income that hasn't yet been realized?

It seems to me that Congress is on shaky ground any time it requires the recognition of income without any event or transaction on which to hang the "excise" label.

But can't Congress mandate that people be on the accrual method of accounting in connection with OID? And isn't the purchase of an obligation with OID followed by the elapse of time enough of a transaction or an event to be reached by an excise?

Incidentally, in another very different forum, I suggested that a lot of the concerns about the Citizens United decision allowing corporate expenditures for political purposes could be addressed by an amendment to the tax laws in order to require the officers or directors of corporations that use corporate assets to pay for the political expenditures to report the expenditures as additional income to the officers or directors approving the expenditures, using section 7872 as a precedent for Congress recharacterizing transactions in which corporate officers or shareholders use corporate property for personal purposes.

But why would such expenditures necessarily be for personal purposes, as opposed to corporate purposes?

[Noah]

But why would such expenditures necessarily be for personal purposes, as opposed to corporate purposes?

According to Murphy, it is whatever Congress says it is, if the executives don't like it , then get out of management or don't donate. If they protest too much, then, Congress could raise the minimum tax rate to 100 percent of gross income just to teach them a lesson.

How you like them apples

[Arthur Rubin]

But why would such expenditures necessarily be for personal purposes, as opposed to corporate purposes?

According to Murphy, it is whatever Congress says it is, if the executives don't like it , then get out of management or don't donate. If they protest too much, then, Congress could raise the minimum tax rate to 100 percent of gross income just to teach them a lesson.

How you like them apples

I don't think that is at all appropriate. If the board approved the expenditure by secret ballot (allowed in some states), then taxing the board would clearly be unfair. And there have been some court rulings that a confiscatory tax on an activity is legally equivalent to banning the activity, which the Court has ruled that Congress cannot do.

[Noah]

But why would such expenditures necessarily be for personal purposes, as opposed to corporate purposes?

According to Murphy, it is whatever Congress says it is, if the executives don't like it , then get out of management or don't donate. If they protest too much, then, Congress could raise the minimum tax rate to 100 percent of gross income just to teach them a lesson.

How you like them apples

I don't think that is at all appropriate. If the board approved the expenditure by secret ballot (allowed in some states), then taxing the board would clearly be unfair. And there have been some court rulings that a confiscatory tax on an activity is legally equivalent to banning the activity, which the Court has ruled that Congress cannot do.

What is appropriate and fair is in the eye of the beholder. When your view is different than that set out by enabling statutes that are within consitutional boundaries, then,...... tough cookies.

More green apples

[Cpt Banjo]

When your view is different than that set out by enabling statutes that are within consitutional boundaries, then,...... tough cookies.

The whole issue is whether such a tax would be within constitutional boundaries. A 100% tax would likely be deemed a penalty, and the old Bailey v. Drexel Furniture case could probably be used to invalidate it.

Taxing corporate agents (whatever the rate) for authorizing a perfectly legal corporate expense seems to me to be a penalty, pure and simple. A more interesting question would be whether Congress could impose an excise tax on the corporation itself for making the political expenditure.

[LPC]

Taxing corporate agents (whatever the rate) for authorizing a perfectly legal corporate expense seems to me to be a penalty, pure and simple.

Whether something is "perfectly legal" is not really relevant.

It is perfectly legal for corporations to provide corporate officers with salaries, stock options, luxury automobiles for their personal use, luxury jets for their personal use, expensive condominiums for their personal use, and a lots of other perks. The fact that those benefits are legal does not stop Congress from taxing them.

Similarly, it might be perfectly legal for corporations to pay for the expenses of supporting the political objectives of its corporate officers, but that wouldn't stop Congress from taxing those benefits either.

[LPC]

Taxing corporate agents (whatever the rate) for authorizing a perfectly legal corporate expense seems to me to be a penalty, pure and simple. A more interesting question would be whether Congress could impose an excise tax on the corporation itself for making the political expenditure.

Congress is already imposing a tax on corporations for political expenditures because it is already clear that the "perfectly legal" corporate expense of a political expenditure is NOT deductible. See IRC section 162(e). So corporate profits that are spent on electioneering are effectively subject to income tax at the corporate level. The shareholders bear the burden of the tax, but very indirectly.

Corporate officers can pay for electioneering at the expense of the shareholders. Why can't Congress shift the burden to the corporate officers?

[Cpt Banjo]

Similarly, it might be perfectly legal for corporations to pay for the expenses of supporting the political objectives of its corporate officers, but that wouldn't stop Congress from taxing those benefits either.

But you're assuming that the expenditure was for the personal benefit of the officers and directors. What if it was for the benefit of the corporation? Especially with a publicly-traded company, the directors are going to have to make sure that any political expenditure is justifiable as being in the interest of the corporation; otherwise, they are breaching their fiduciary duty to the shareholders. For example, if an oil company were to spend money to defeat a proposal to eliminate the income tax deduction for intangible drilling costs, would that expenditure really have been made for the personal benefit of the directors, none of whom are personally in the business of drilling?

Admittedly, it becomes problematic with a closely-held corpration, where the company's expenditure might very well be for the personal benefit of the owner and therefore a constructive dividend.

Congress is already imposing a tax on corporations for political expenditures because it is already clear that the "perfectly legal" corporate expense of a political expenditure is NOT deductible. See IRC section 162(e).

No, I'm talking about an excise tax on the expenditure itself, say 25%. If Congress really wants to dissuade corporations from making political expenditures, could it impose such a tax in addition to the denial of the deduction? I'm not that familiar with the First Amendment precedents in this area, and there very well could be constitutional objections, but at least such an approach avoids the difficulty of trying to distinguish between corporate and shareholder/director purposes under an approach where the shareholder/directors are taxed.

[Noah]

Similarly, it might be perfectly legal for corporations to pay for the expenses of supporting the political objectives of its corporate officers, but that wouldn't stop Congress from taxing those benefits either.

But you're assuming that the expenditure was for the personal benefit of the officers and directors. What if it was for the benefit of the corporation? Especially with a publicly-traded company, the directors are going to have to make sure that any political expenditure is justifiable as being in the interest of the corporation; otherwise, they are breaching their fiduciary duty to the shareholders. For example, if an oil company were to spend money to defeat a proposal to eliminate the income tax deduction for intangible drilling costs, would that expenditure really have been made for the personal benefit of the directors, none of whom are personally in the business of drilling?

Admittedly, it becomes problematic with a closely-held corpration, where the company's expenditure might very well be for the personal benefit of the owner and therefore a constructive dividend.

Congress is already imposing a tax on corporations for political expenditures because it is already clear that the "perfectly legal" corporate expense of a political expenditure is NOT deductible. See IRC section 162(e).

No, I'm talking about an excise tax on the expenditure itself, say 25%. If Congress really wants to dissuade corporations from making political expenditures, could it impose such a tax in addition to the denial of the deduction? I'm not that familiar with the First Amendment precedents in this area, and there very well could be constitutional objections, but at least such an approach avoids the difficulty of trying to distinguish between corporate and shareholder/director purposes under an approach where the shareholder/directors are taxed.

What part of "it makes no difference" is hard to understand? It has nothing to do with what is fair or logical, as long as it can pass constitutional muster. Congress already sets limits on political contributions, tax on amounts over any limit would just be the cost supporting a cause, for whatever reason, with dollars instead of speech.

Working on a bushel ...

[Cpt Banjo]

It has nothing to do with what is fair or logical, as long as it can pass constitutional muster.

That's the $64,000 question, isn't it? I'm not talking about political contributions as much as I am political speech. Do you see no constitutional problem in Congress' imposing a tax on the exercise of First Amendment rights? Consider the following:

1. Could Congress impose a tax upon every advertisement (by print or any other medium) that promotes or opposes a candidate or a proposed lesislative enactment? Would it matter whether the person placing the ad were an individual or a corporation?

2. Could Congress impose a tax (most likely labeled as a license fee) for merely standing on a soap box and expressing one's views, a la Speakers' Corner in London?

3. Could Congress impose a tax on attending a religious service?

4. Could Congress impose a tax on submitting a petition to the government for redress of grievances? Could it impose a tax on writing one's legislator?

You get the idea. Congress' power to tax noncommercial activities protected by the First Amendment isn't unlimited. Where does a tax on corporate speech dealing with political issues fall?

Personally, I have a problem with the notion of corporations having the same First Amendment rights as individuals. Since they are creations of government, government should be able to impose certain reasonable restrictions upon their activities. Such restrictions are simply the price the shareholders pay for insulation from personal liability for corporate activities. BUT: if they don't have the same free speech rights as individuals, it's hard to see how they can have the same free press rights either. It would then follow that the government could totally regulate the content of anything published by a corporate-owned medium, and I have a problem with that as well.

[Paul]

Since they are creations of government, government should be able to impose certain reasonable restrictions upon their activities.

That's a cliche that really needs to be re-examined. A corporation is a set of relationships among a group of people. "It" is treated as a person by act of government, but that's only because creating this legal fiction is an easy way of dealing with the whole thing. You could organize it by contracts between the members, but that would be a lot clumsier than the shorthand that has been developed in the law over the centuries. But if you look beyond the legal fiction to the reality, what you have is a group of people trying to coordinate their activities in advancing some purpose, and when you limit that group's rights, you are in fact limiting the rights of the members of the group. Treating the corporation as a person with rights is merely the simplest way of protecting the rights of the individual members of the group.

[Cpt Banjo]

what you have is a group of people trying to coordinate their activities in advancing some purpose, and when you limit that group's rights, you are in fact limiting the rights of the members of the group. Treating the corporation as a person with rights is merely the simplest way of protecting the rights of the individual members of the group.

You're overlooking the fact that far from limiting the rights of the group's members, the state is granting them a very special right: freedom from liability for the actions of the group and its members. Absent incorporation (including the formation of other liability-insulating entities such as limited partnerships and limited liability companies), each member of the group would be personally liable for anything done by any other member in furtherance of the group's business. This includes liability for both contracts made for the benefit of the group and torts committed in the course of the group's business. Think about it: if BP were an unincorporated association, each of its owners would be personally liable for all of the damages cause by the oil leak. Of course, BP would never have gone into business as an unincorporated entity, but that's another matter.

As Ambrose Bierce so marvelously put it in The Devil's Dictionary, a corporation is "an ingenious device for obtaining individual profit without individual responsibility."

So why can't the state impose conditions upon the grant of this special right?

[grixit]

T-u-u-u-w-e-e-t!

I'm going have to call a foul in this game. You two are arguing a real issue with real arguments, in front of the tps-- you're going to make their heads explode!

[Famspear]

T-u-u-u-w-e-e-t!

I'm going have to call a foul in this game. You two are arguing a real issue with real arguments, in front of the tps-- you're going to make their heads explode!

Yeah, no kidding. Let's show a little consideration for the Wackadoosters. This thread is starting to look like a real law school class.

[Harvester]

HA! I can tell you the IRS takes this 'imputed income' stuff seriously. Had a friend who, as part of a job/relocation package, received an interest-free loan to be used on a home purchase. Got the loan, bought the house, everything's fine. Then a few years into it, the employer starts adding an 'imputed loan' amount line item into his paycheck and then subtracting the same amount. Purpose of which, no doubt, was to TAX the so-called benefit of a below market rate loan. Is there anything these bankster's won't stoop to for a little extra cash?

Of course, statutorily speaking, this guy wasn't working for an 'employer' and ultimately wasn't subject to this rule, or tax-withholding either.

BTW, David Miner is largely in agreement with Hendrickson; that most Americans aren't subject to the federal income tax. Miner just focuses on a different remedy, correcting your Individual Master File (IMF) to reflect your true status - nontaxpayer. Stand tall warriors - we'll win this yet!

[LPC]

T-u-u-u-w-e-e-t!

I'm going have to call a foul in this game. You two are arguing a real issue with real arguments, in front of the tps-- you're going to make their heads explode!

Yeah, no kidding. Let's show a little consideration for the Wackadoosters. This thread is starting to look like a real law school class.

My bad. I think I started it.

Although I also think that it is instructive to whackos to show what a real tax policy debate looks like. People express their views, and they have reasons for their views and are able to point to actual statutes and actual court decisions that reflect some agreement or disagreement with their views.

And people understand that, if their views do not get the support of a majority, it's not treason or the end of Freedom or the death of democracy, but just a policy decision that didn't work out the want that they wanted.

[Colonel_Buck]

(b) Cross references
For items specifically included in gross income, see part II (sec. 71 and following). For items specifically excluded from gross income, see part III (sec. 101 and following).

Where is part 3, section 101? tia

[Colonel_Buck]

never mind. found it.

[Demosthenes]

Someone named "David L. Miner" apparently wrote this, which I found at Bob Hurt's web site:

From: David Miner

Sent: Sun, May 2, 2010 6:12:19 AM

Subject: Hendrickson and "Cracking the Code" Warriors get Cracked.

First, Pete's case had nothing to do with CtC techniques. I have chatted with him a number of times over the past 6 months, and the initial charges all the way through the final staments [sic] all dealt with the honesty of Pete's statements and claims about the so-called income tax - did he or did he not believe what he was telling so many people over so many years? The case was about his truthfulness, and not about his techniques.

This means the IRS can't use Pete's conviction to go after CtC filers, because CtC filing has not yet been alleged much less adjudicated as being wrong and illegal.

http://groups.google.com/group/lawmen/b ... 6218b08b35

Wrong, wrong, wrong. First, it is actually correct to say that "the IRS cannot use Pete's conviction to go after CtC filers." But that's because, under the U.S. legal system, prosecutors cannot "use" defendant A's conviction to "go after" defendant B anyway. That has nothing to do with whether the merits of Pete Hendrickson's scam were adjudicated in his criminal trial or not.

Second, the merits of Hendrickson's CtC scam HAVE been adjudicated -- in a civil tax proceeding involving Hendrickson himself, and in other civil tax proceedings involving some of his followers. And the scam has indeed been ruled to be invalid - in short, wrong and illegal.

David Miner continues:

Second, Pete's CtC techniques did not make a direct claim to being a non-taxpayer. His methods merely filed taxpayer forms to correct certain presumptions about the money the filers made. If Pete's methodology involved making a direct claim about being a non-taxpayer, then there would be no need to file forms every year. A non-taxpayer does not need to have taxes withheld or file federal forms at all. I am listed in the IRS records as a non-taxpayer not required to file a return, and I have filed no returns and paid no income taxes in 20 years. Pete's process doesn't even go there. I know because he and I have talked about that extensively several times over more than 6 years.

Sorry, but that's just more mindless drivel, Mr. Miner.

Miner closes with a link to his own web site:

http://www.IRx-Solutions.com

Among the blatantly false statements made by Miner at his web site:

.......there is one issue that has consistently won against the IRS in court.

There is no section of the Internal Revenue Code or its enabling regulations that requires me, an individual American NOT involved in a revenue-taxable activity, to file a Form 1040 or pay income taxes.

All efforts to get you free from the IRS absolutely must focus on that one issue and absolutely must downplay or totally ignore the rest of the arguments.

http://www.irx-solutions.com/program.htm

Earth calling: That, of course, is a blatant lie, Mr. Miner. That argument has never, ever won against the Internal Revenue Service in a court of law.

Mr. Miner lists himself as being located in Altamonte Springs, Florida. He charges $1,800 in advance for his "services".

The DOJ issued a press release on Miner today...

FOR IMMEDIATE RELEASE TAX
WEDNESDAY, DECEMBER 15, 2010 (202) 514-2007
WWW.JUSTICE.GOV TDD (202) 514-1888
JUSTICE DEPARTMENT SUES TO BAR FLORIDA MAN
FROM PROMOTING ALLEGED TAX FRAUD SCHEMES
WASHINGTON – The United States has sued an Orlando, Fla., man seeking to bar him from promoting two alleged tax-fraud schemes, the Justice Department announced today.
According to the government complaint in the civil injunction case in U.S. District Court for the Middle District of Florida, David Miner promotes a “decoder” scheme through a website. The government alleges that Miner falsely claims to be able to “decode” and “fix” Internal Revenue Service (IRS) records of his customers’ tax accounts so as to block the IRS from collecting the customers’ taxes. The complaint states that Miner charges each customer $1,800 for this purported service and claims to have helped more than 2,000 customers stop paying taxes.
The lawsuit also alleges that Miner promotes a “pure trust” abusive tax scheme at another website. According to the complaint, Miner charges customers $2,000 to establish “pure trusts” to evade paying federal income taxes, conceal their assets, and interfere with IRS collection efforts. The government alleges that Miner falsely advises his customers that assets purportedly contributed to the trusts may not be seized by personal creditors, including the IRS.
In the past decade, the Justice Department’s Tax Division has obtained injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website.

[Demosthenes]

The gov's complaint:

http://www.cheatingfrenzy.com/miner1.pdf