Talking Tax

The state tax gap—the difference between the true tax liabilities owed to a state and the amount voluntarily submitted to revenue agencies—is possibly the most stubborn and perplexing problem facing tax administrators. For decades, revenue commissioners have tried to close the gap through audits and enforcement sweeps, but the process is slow, costly, and uncertain.Janette Lohman, a former director of the Missouri Department of Revenue, believes there is a way to collect more delinquent taxes faster, cheaper, and with less hostility: a strategy she describes as “prospective voluntary disclosure.” The states generally allow delinquent businesses to voluntarily come forward and pay their back taxes plus interest for a specified look-back period, but Lohman has proposed a process that allows delinquent taxpayers to submit their taxes on a going-forward basis without paying any back taxes or penalties.On this episode of Talking Tax, Bloomberg Tax senior reporter Michael J. Bologna caught up with Lohman to discuss her efforts in Missouri to boost compliance using prospective voluntary disclosure. Lohman, a tax partner in the St. Louis office of Thompson Coburn LLP, recently presented her strategy during the annual meeting of the Federation of Tax Administrators.Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Training for CPAs must evolve to focus on the skills and experiences necessary to meet future market demands, the leader of the largest US accounting industry group said.Barry Melancon, president and CEO of the American Institute of CPAs, also defended a required fifth year of college for CPA candidates, saying current rules have achieved their purpose of elevating the role of accountants and turning out better-educated professionals.Melancon, who is preparing to retire in December, spoke to Bloomberg Tax reporter Amanda Iacone about ongoing efforts to restore what is now a shrinking pipeline of future accountants. Proposed reforms could soften the bite of the mandatory 150 college credit hours for CPAs to earn their license by offering alternatives such as employer-provided training or work-study programs.He also discussed the role artificial intelligence could play in closing the talent gap and the impact of private equity investors as CPA firms look to keep pace with technology advancements.—Produced by Matthew S. Schwartz.Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

The new chief of the IRS criminal division wants America to know he’s hiring special agents, and they’re fulfilling their mission to investigate tax and financial crimes.Guy Ficco started his new gig in April following an almost three-decade career at the agency. He comes into the position at the same time the IRS is flush with tens of billions in funding from the Democrats’ 2022 tax-and-climate law.In fiscal year 2023, CI initiated more than 2,676 criminal investigations and identified over $37.1 billion from tax and financial crimes. The division has an 88.4% conviction rate on cases accepted for prosecution.Bloomberg Tax reporter Erin Slowey spoke with Ficco about how CI is handling its pandemic-era tax credit cases, what retention at the division looks like, and how the volume of investigation referrals has changed in the past couple of years.Produced by Matthew S. Schwartz.

The US Supreme Court brought a muted end last week to its biggest tax case in years, but the arguments that propelled the case are far from over, especially about what the court’s ruling could mean for future attempts to enact a wealth tax.The court voted 7-2 to uphold the mandatory repatriation tax, a one-time tax on past foreign corporate profits. Washington state residents Charles and Kathleen Moore had challenged the constitutionality of the tax, arguing that it had forced them to pay $14,729 in taxes on the profits of an Indian company in which they’d invested even though the company’s profits were never distributed to them.But the case’s significance went far beyond the Moores. Many had feared that striking down the tax not only would lead to billions of dollars in refunds to giant multinational companies that were the tax’s primary targets, but also would call into question a host of other taxes based on similar legal principles.The Supreme Court said the tax was constitutional, and stressed that its ruling was narrow, with any outside issues left for another time. But that left unanswered questions about what the ruling could mean for any future wealth tax. Many such proposals would tax wealthy people’s “unrealized” gains on investments—profits that haven’t actually been distributed or monetized—which was the same issue over which the Moores questioned the repatriation tax.And while the court’s ruling was narrow and set aside the realization issue, at least four of the nine justices supported the idea that income should have to be realized before it could be taxed, a signal that any future wealth tax could have a hard time passing legal muster before the court.This edition of Talking Tax has two interviews with two very different perspectives on the Moore ruling. Bloomberg Tax senior reporter Michael Rapoport spoke first with Chye-Ching Huang, executive director of the Tax Law Center at New York University’s law school, who wanted to see the tax upheld, and then with Andrew Grossman and Jeff Paravano, attorneys for BakerHostetler who represented the Moores and wanted to see the tax struck down.Producer: Matthew S. Schwartz.Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Wealthy taxpayers are preparing for a potential decrease in the estate tax exemption. Deloitte's Laura Hinson explains popular trust strategies. The recent Supreme Court decision will impact estate planning. Various trust options are explored for effective estate planning. Guidelines for managing trusts and adapting to changing tax laws are discussed.

Countries are under pressure to finalize and sign the text of the OECD's multilateral tax treaty, one part of the international tax deal known as Pillar One, by the end of June. Several OECD officials, including Manal Corwin, director of the organization's Center for Tax Policy and Administration, have reported significant progress on finalizing the document. But negotiations have hit a snag.The problem area is treatment of another part of Pillar One, known as Amount B, that's meant to simplify the way businesses value intercompany marketing and distribution transactions. The US and India, in particular, have butted heads over whether the measure should be mandatory. In this week's episode of Talking Tax, Bloomberg Tax reporter Lauren Vella sits down with Dr. Santiago Gomez Cifuentes, head of congressional affairs at the Colombian Embassy in Washington, to talk about progress made on the Organization for Economic Cooperation and Development-led deal and what's holding back the completion of Pillar One.Gomez Cifuentes is in close contact with the Colombian delegation to the OECD, and serves as a go-between representing Colombian interests in conversations with US lawmakers. He spoke with Bloomberg Tax on his own behalf and doesn't represent the official position of the Colombian government.They also talk about Colombia's interest in the US Inflation Reduction Act and tax incentives that could boost mineral exports from Latin American countries.Produced by Matthew S. Schwartz.

Six months into implementation of the new global corporate minimum tax, countries are racing to craft incentives to attract and maintain outside investment. Companies, too, are pouring resources into complying with the tax.The tax took effect in January in dozens of countries across the globe, with a goal of "raising the floor" tax rate to 15% in every country that a multinational company operates in, to reduce profit shifting to low-tax countries.In this podcast episode, Bloomberg Tax reporter Lauren Vella talks through all the ways companies and countries are responding to the new global tax regime, and what new guidance companies can expect in the future.Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

AI companies are training models on copyrighted works sparking lawsuits and concerns. Authors like George R.R. Martin are suing AI firms for imitating their styles. Ethical challenges of using pirated ebooks in AI training. Exploring mechanics of language models and authors' lawsuits against AI companies for copyright infringement.

The new 15% global minimum tax that took effect this year is turning out to be compliance beast.The tax, which is part of an international tax deal agreed to by more than 140 countries in 2021, contains a slew of new technical terms, complex rules, and hundreds of pages of administrative guidance.Now, some of the largest accounting firms in the world have been tasked with interpreting these rules, educating their clients, and building complex data systems to help multinational companies calculate their global minimum tax bills.In this week's episode of "Talking Tax," reporter Lauren Vella sits down with Danyle Ordway, principal of tax technology and data analytics at Ernst & Young LLP, to talk about how the firm is helping clients adapt to the new levy.Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

A looming decision from the US Supreme Court on federal agency rulemaking power is fueling chatter on just how much it could upend the regulatory process at these agencies.Justices in January heard two cases, Relentless v. Dept. of Commerce and Loper Bright Enterprises v. Raimondo, which challenge the decades-old landmark administrative principle known as the Chevron doctrine saying that federal courts should defer to agency interpretation when a law is vague.Bloomberg Tax reporter Erin Slowey spoke with Kristin Hickman, a University of Minnesota law professor who specializes in tax and administrative issues, on the background of Chevron in the tax context and how the Treasury Department and the IRS are expected to be largely insulated from the ruling, no matter the outcome.Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.