On Monday, Oct. 4, there was a collective gasp as the social media platform, Facebook, and some related apps, including Instagram and WhatsApp, went dark for nearly six hours.
Ok, maybe it wasn’t an actual gasp. But it did shock many of the approximately 3.51 billion people who use one of Facebook’s apps every month.
It was the largest such outage for the internet giant since 2019.
The problem was corrected once the company reset its server computers, but not before complaints were flying from casual users and business owners who rely on the site for sales.
Even rival Twitter got in on the shade, tweeting out, “hello literally everyone,” during the outage.
hello literally everyone— Twitter (@Twitter) October 4, 2021
For many folks, the blip—as short as it was—was a reminder about how dependent we can be on social media for our communication. That’s true in the tax and accounting world—especially during the pandemic—as we increasingly lean on our colleagues around the world to share their expertise.
I love social media because it makes the world a little smaller. But there’s real value in “old school” communication, too, like picking up the phone or sending a quick email. And hopefully, soon, in-person networking will be making a comeback.
Sharing ideas among colleagues—whether on social media or at a conference—is critical to keep your skills sharp and ensure that you’re on top of the latest tax news. Fortunately, this week, as always, our experts have the latest federal, state, and international tax analysis to keep you up to date.
The Exchange… It’s where great ideas intersect.
—Kelly Phillips Erb
Quick Numbers Trivia
Facebook took the IRS to Tax Court over a $1.73 million tax bill for the 2010 tax year focusing on the value of intangible assets, such as trademarks and copyrights, transferred to an Irish subsidiary. How much money did Facebook advise that it might owe if the IRS prevails?
(Answer at the bottom)
This week, our experts touched on a wide range of topics, from life insurance traps to the Pandora Papers. For a look at what’s making news, here’s our roundup:
When it comes to relationships, Facebook isn’t the only place where they can be complicated. In Overcoming Unique Complications of Blended Family Estate Planning, Mela Garber of Anchin, Block & Anchin, LLP, considers the unique complications of blended family estate planning and how to minimize the potential lack of consensus among children from a previous marriage and second or more marriages.
Some of the ultra-rich like to present an Instagram-able look at their lives, while others guard their privacy. In Pandora’s Box in South Dakota—Privacy Is Not the Enemy, tax attorney Andrew Leahey outlines why the state has become so popular and argues for eliminating domestic asset protection trusts (DAPTs), not privacy provisions, to discourage the stashing of assets.
Life on social media may not always be as it appears: That’s true in the real world, too. The SEC continues to crack down on companies that manipulate earnings data to meet forecasts, and are using data analysis to detect suspicious activity, say Morrison & Foerster partner Jina Choi—a former regional director of the SEC—and associate Andre Fontana in The SEC Is Scrutinizing ‘Earnings Management Practices.’ They urge companies to pay close attention to their accounting controls.
And while it can be fun to provide advice on TikTok and other social media platforms, remember that the details matter. There’s no one-size-fits-all planning. In Less Familiar Life Insurance Traps and Uses in a Client’s Estate Plan, Henry Montag, managing director and principal of the TOLI Center East, takes a look at life insurance and estate planning, and explains the importance of identifying the proper strategy to provide guidance to your clients and their children.
It’s easy to draw conclusions from a single tweet or post, but there may be more to it than meets the eye. That’s true in business, too. In Indian Tax Tribunal Ruling on Permanent Establishment, Shailendra Sharma discusses a recent ruling focusing on the motivation to re-domicile an entity to Mauritius and the resulting tax treatment.
IPOs of social media companies from Facebook to Twitter have been big news for investors. In Tax Receivable Agreements Under the Microscope, Robert Willens explains that while tax receivable agreements are reported by the corporation, many an IPO investor may be unaware of the significant tax benefit the agreements provide to founders but not subsequent investors.
Instagram-worthy locations may be a great investment, but do your homework. In Real Estate Investment Trusts: Tax Implications for Investors, Rajeev Agarwal of Qatar Navigation QPSC discusses the tax implications of real estate investment trusts and looks at examples in several jurisdictions.
And social media platforms aren’t the only ones using algorithms to predict behavior. Tax administrations in jurisdictions around the world are increasingly using techniques based on a behavioral insights approach to understand taxpayer behavior and improve compliance, as Alfredo Collosa explains in Using Behavioral Insights in Tax Administration.
Opinion and Commentary
The Pandora Papers dominated many social media conversations this week. In Pandora Papers Show the Rich Will Find a Way, Bloomberg Editorial’s David Fickling writes about the latest set of leaks to the International Consortium of Investigative Journalists.
And Twitter couldn’t stop talking about the budget. President
YouTube can make you feel like you’re in the front row—as with this event hosted by The Center for Strategic and International Studies. A speaker at the event, Charif Souki, who founded the biggest U.S. natural gas-export firm and now chairs another called Tellurian Inc., isn’t known for mincing words, writes Bloomberg News’ Liam Denning. In Why Biden’s Methane Fee Isn’t a Gas Tax, Denning says Souki didn’t disappoint when tackling the issue of methane emissions.
Columnists & Contributors
The Pandora Papers had taxpayers and tax professionals talking. Were the contents of those confidential documents detailing secretive financial transactions really a surprise? And what did they reveal about U.S.-based trusts linked to foreign owners? Pandora Papers’ Big Tax Reveal Is Hardly a Shock offers a look at what the papers say about U.S. tax transparency.
Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s spotlight is on David King, CEO of Optima Tax. King helped found the California-based company in 2011, with a mission to provide ethical service to taxpayers who owe taxes. Optima focuses on tax relief, including assistance with tax audits and tax debt reduction.
Pandora’s box got flung wide open this week, and secrets about how global billionaires and politicians stash their assets came spilling out. On this week’s episode of Talking Tax, Bloomberg Tax reporter Michael Rapoport hears two very different views: Christian Hallum, tax policy lead for the charity and advocacy group Oxfam International, who decries the practices detailed in the documents and says they perpetuate global inequality, and Josh Rubenstein, a trusts and estates attorney and national chair of the private wealth department at Katten Muchin Rosenman LLP, who worries that a crackdown could ultimately invade the privacy of law-abiding people who use trusts to manage their wealth.
It’s been a long 18 months for tax professionals—deemed #marchternity on Twitter. But is there light at the end of the tunnel? According to the 2021 Accountants Confidence Report, tax and accounting professionals are confident their clients’ finances will improve over the next 12-18 months. However, the same report shows industry professionals are also pessimistic about the overall health of small businesses and the U.S. economy within the same time period. On this week’s episode of the Taxgirl podcast, Kelly is joined by Sona Akmakjian, Avalara’s executive leading global account partnerships and programs, to chat about the changing tax landscape and how business owners can remain empowered and informed while embracing new technology.
From hacks to best practices, I love hearing what my fellow tax professionals have to say about how they achieve success. So, we’ve instituted a Friday networking minute to hear what you have to say about life in the profession.
Last week, I asked: What’s your best tip for managing email?
Kellie Parks, a coach for accounting professionals, echoed most of the responders, saying, “Kill the notifications, check only a few times a day,” and linking to an article that she wrote about inbox wrangling.
Nicole Davis, a CPA from Georgia, touted the use of folders to help stay organized. Her favorites? Do, Defer, Delegate and Delete.
And, of course, automation played a huge role in responses, with many tax professionals indicating that they rely on project management software like Accelo and Karbon.
Here’s this week’s question: What social media platform do you rely on most for professional outreach and communication?
You can leave your answer on social media, or email firstname.lastname@example.org with the subject line “Chime In”. Be sure to include your name, company, and title. We’ll assemble some of the best responses and include them in a future edition of the newsletter.
Exclusive Content for Bloomberg Tax Subscribers
Not willing to wait for updates on Twitter to find out what’s happening with the Build Back Better Act (H.R.5376)? Check out our Bloomberg Tax and Accounting watch page, which brings together resources on related tax provisions, including the latest news from our team of reporters on Capitol Hill, links to key documents, and our growing body of analysis.
*Note: Your Bloomberg Tax login will be required to access the Build Back Better Act watch page.
Quick Numbers Answer
In its 2019 Form 10-K, Facebook noted that “we believe that, if the IRS prevails in its updated position, this could result in an additional federal tax liability of an estimated, aggregate amount of up to approximately $9.0 billion in excess of the amounts in our originally filed U.S. return, plus interest and any penalties asserted.” You can find more on the trial here.
I hope you were inspired by all of this talk about social media. You can follow Bloomberg Tax on Twitter, Facebook, Instagram, and LinkedIn—and check out Bloomberg Law on TikTok. We also have a growing LinkedIn group where our authors, contributors, and readers can share tax-related stories and exchange ideas. We hope you’ll join the conversation!
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