If a database existed containing the income and tax details of every tax filer in the country, whom would you investigate first? Your boss, colleagues, or those you consider economically similar to yourself?
Would knowing that others could see that you had accessed their tax records affect your choice?
Evidence from Norway indicates it would. Tax records have been publicly accessible there for decades and, until 2014, Norwegians could view this information anonymously. But once the government changed the system to alert taxpayers when and by whom their information was accessed, the practice sharply declined.
This phenomenon offers an interesting prospect for US policy. The natural reluctance to be identified as someone who snoops into tax records could lead people to investigate more distant individuals, such as celebrities or politicians, rather than friends and family. This could increase income transparency and possibly tax compliance while maintaining a balance of privacy.
However, there would need to be measures to prevent misuse and intimidation. It’s easy to envision such a program being exploited to send threatening messages.
In Norway, taxpayers receive pre-filled returns and, unless the individual alters them, no filing is required. As a result, the public tax record system likely impacts tax compliance less than it would in the US, where taxpayers provide income information and calculate what they owe. Here, seeing others pay less taxes could motivate someone to reduce their taxable income—legitimately or otherwise. Conversely, confirming others with comparable income are paying similar taxes could improve compliance.
The concept of making tax information public is an intriguing innovation that merits consideration. At Bloomberg Tax, we value and examine such innovative ideas.
The Exchange—It’s where great ideas intersect.
—Andrew Leahey
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social
State Insights
Allowing tax deductions on free promotional bets only enriches sports betting companies at the expense of states’ revenue collections, says Richard C. Auxier of the Urban-Brookings Tax Policy Center.
Changing requirements for reporting sales and use taxes are among the compliance challenges that businesses and tax practitioners are facing in Colorado, says EY’s Rachel Quintana.
Federal Insights
The IRS’s issuance of proposed regulations to classify monetized installment sales as listed transactions is the latest sign that the agency will adhere to formal rulemaking procedures from now on, says Holland & Knight’s Joshua Odintz.
New tax credits enacted by the Inflation Reduction Act will allow federally recognized American Indian tribes more control over their energy resources, says Quarles & Brady’s Pilar Thomas.
The Gregory v. Commissioner decision could have profound tax consequences in light of the IRS’s frequent attempts in audits to characterize business activities as “not engaged in for profit,” says Marcum’s Michael D’Addio.
Mazars’ Tifphani White-King explains why accounting firms should recruit people with nontraditional educational backgrounds and discusses ways to help such candidates succeed in the industry.
Global Insights
Those who demand the global community make concessions to the US on the global minimum tax deal fail to understand the value of what the Treasury Department has negotiated, says Fordham Law professor Rebecca Kysar.
Peter Barnes of Caplin & Drysdale considers the questions raised by critics of the OECD’s Pillar Two initiative, and argues that Pillar Two could ultimately be beneficial for the US.
As Vietnam develops a thriving software industry, Nguyen Thu Phuong and Vu Hong Ngoc of Grant Thornton explain how enterprises involved in software production intended for export can successfully claim VAT refunds.
From next year, the shipping industry will need to steer a course through the new EU Emissions Trading System requirements and their financial implications. Kasia Klaczynska Lewis of EY explores key considerations for tax and finance teams.
Chris Morgan of KPMG looks at why companies aren’t all seizing the opportunity for tax transparency, and where there might be ways to resolve some difficulties in the process.
Columnist Corner
The 45V tax credit in the Inflation Reduction Act of 2022 requires that hydrogen be produced by clean electricity to qualify, which has caused debate over the restrictiveness of the credit. In this week’s Technically Speaking, Andrew Leahey writes that streamlining and clarifying the clean electricity tax credit system would help foster the renewable hydrogen industry.
Career Moves
Ryan E. Dunn has joined Murtha Cullina as of counsel with the tax practice in New Haven, Conn.
Alvarez & Marsal Tax has appointed Carl Padding as a cost segregation services senior adviser within its research credits and incentives group.
Gev Khan and Eric Evans have joined Crowe LLP, a public accounting, consulting, and technology firm, in New York and Salt Lake City, respectively.
Andrew Grumet and Christina Cahill have joined Holland & Knight as partners with the nonprofit and tax-exempt organizations team in New York.
Megan Leesley has been promoted to equity principal at Dark Horse CPAs.
If you are changing jobs or being promoted, let us know. You can email your submission to TaxMoves@bloombergindustry.com for consideration.
News Roundup
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team.
*Note: Your Bloomberg Tax login is required to access Tax News.
- New York added new guidance for individuals planning to take advantage of the state’s pass-through entity tax, a move that “may impact PTET returns and payments” that are due in September, according to the state Department of Taxation and Finance.
- California Democrats want to make it tougher for anti-tax groups to pass a ballot measure making it more difficult to enact local tax increases.
- The US Tax Court ordered the IRS to identify when various agency personnel became aware of misstatements to the court about the date that a $15.2 million penalty against a conservation easement donor was approved.
- US-based cryptocurrency exchanges, such as Coinbase Global Inc. and Kraken, would have to disclose detailed information on their clients’ transactions to the IRS starting in 2026 under a new Treasury proposal.
Tax Journals
In a Tax Management International Journal analysis, Gessimbergue Monteiro of G.S. Monteiro Law and Felipe Medaglia of Souza Okawa write that using Brazilian investment funds is an important wealth planning tool for Brazilian families who are considering US tax residency.
In another Tax Management International Journal analysis, Michael J. Miller of Roberts & Holland analyzes AM 2023-003 regarding the application of the regularly traded stock exception where USRPHC stock is held by a partnership.
*Note: Your Bloomberg Tax login is required to access Tax Journal articles.
Attention Law Students
Do you have an original take on the law—but you’re not a lawyer yet? Our student writing competition is the perfect opportunity to show off your work.
We invite students to choose an area of law and technology and describe how it might be tested in courts, update past practices, or force a rethinking of the legal landscape.
We’ll publish the winning entry in December, and the student with the winning entry will get a swag bag of Bloomberg Industry Group products.
Our Wish List
We’re in the middle of the Atlantic hurricane season, so for September, we’re calling for submissions on storm preparedness and casualty loss. We’d also welcome articles that discuss retirement planning.
If you have an interesting, never-published article for publication, you can contact our Insights team by email at TaxInsights@bloombergindustry.com.
Our Team
We talk about tax a lot. But there’s much more that you might hear us talking about if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.
Watching
Maria Menezes (Practice Lead): World Athletics Championships from Budapest! Love a bit of jumping, running, and throwing, plus all the drama.
Reading
Andrew Leahey (Columnist): I’m returning to “Wild New World” by Dan Flores, which I put down earlier in the year. It’s a fantastic historical retelling of the interaction between humans and animals in the New World.
Listening
Daniel Xu (Content Editor): The music of Ghost and Amon Amarth. They play very different styles of heavy metal, but both will perform at a concert I’m attending this week.
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