The IRS Scandal, Day 22

Eddie Quigg, CPA, JD

A popular tax blog has been collecting the various articles written about the IRS targeting of conservative groups applying for tax-exempt status under IRC section 501(c)(4)--the social welfare group classification--- since the time the story went public at a question and answer session during an American Bar Association conference.

Of course the story has gotten increasing political, and the end doesn't seem to be in sight. Certain [mostly Republican] members of Congress have been pushing for the appointment of an independent counsel, visions or nightmares of Watergate come to mind, to get to the bottom of the mess. It makes some sense when you consider that the President's promise to "fix the problem" may be affected by the fact that the Treasury Department reports to him and given the political nature of the alleged abuses....well, you get the picture.

For the full treatment, from all points of view, I recommend the blog, which can accessed here:

http://taxprof.typepad.com/taxprof_blog/2013/05/the-irs-7.html

WILL THE HOUSE PASS THE INTERNET SALES TAX LAW?



Eddie Quigg, CPA, JD



After a lot of chest thumping about leveling the playing field for retailers, fairness and the rest of the blah blah that Congress specializes in, the Senate on May 6 overwhelmingly passed the Marketplace Fairness Act of 2013. In other words it's genuinely bipartisan because 21 Republicans voted in favor of it. Forget the details of the measure because the House is almost guaranteed to change them. The real question is whether the House will get on board and pass its own version, setting up a compromise bill that will eventually become law.

The pundits are weighing in: sampling a Google search provides the following results:

• Mother Jones: Says it will be tougher sledding in the House, still has a long way to go according to Rep. Bob Goodlatte, R-Va, chairman of the House Judiciary Committee, which would have jurisdiction over the bill. None of the House heavyweights has rejected it outright. With widespread support from just about everyone except E-Bay, it seems likely the House will get on board.

• LA Times: In a thorough treatment, this article basically says the House will take its time to air all the issues associated with the legislation, including whether the door might open to allow states to tax interstate income etc. which can't currently be taxed. Also, the procedures need to be simplified, and E-Bay insists that the exemption for sales less that 1 million should be raised to 10 million. So, expect a lot of changes.

• Washington Post: Again, joining in the chorus, the article cites the view that it will be a tougher sell in the House due to the specter raised by some Republicans and business groups  of the bill possibly causing a tax increase.It cites the current (judicially mandated) law that prevents states from taxing sales by retailers that do not have the necessary physical presence in the state.

• CNNTech: Another thorough article with roughly the same message, noting that the earliest the bill could go into effect would be October 1, 2013, and that states would have to then change their laws to allow them to collect the tax from internet-only sellers.

The bottom line--I get the sense that this will happen, we'll have to start paying tax on all those Amazon purchases, but when is unclear.