All I was going to write about was taxes. I hadn’t planned on gay rights, religion, crackpot science and sovereign shenanigans, but as I view the last decade, those things kind of stick out. Go figure.
A Decade Comes And Goes
The decade just ended corresponds well with my career as a tax writer. I posted for the first time on December 28, 2009. It was a piece about the taxation of virtual transactions, but not as that term has evolved. Bitcoin had started at the beginning of 2009, but had not yet worked its way into my consciousness. I was writing about the tax implications of massive multiplayer on-line role playing games (MMORPGs) specifically mentioning World of Warcraft and Second Life.
Still I will give my self credit for a bit of prescience. Virtual currency did become a thing just not in the way I thought. And how to tax WOW Gold and the like did get some serious scholarly attention.
My main approach has been to read original source material pretty thoroughly – Tax Court decisions, appellate decisions, certain IRS releases, etc – and write about the ones that I think are interesting, important or really funny. The important ones can be important either because of practical utility or because they raise larger issues.
What I had not anticipated was that these isolated documents would sometimes stitch themselves together into long story arcs, that would require additional research and input. And generate heated debate.
Three in particular made the decade for me. Two of them came to conclusions, one quite satisfactorily and one, at least in my view unsatisfactorily. And one rather amazingly continues on. We’ll start with the good news.
Robin And Terry – Wedding Bells And A Simpler Tax Return
I invented Robin and Terry to get around the awkward pronoun problems in writing about hypothetical couples that might or might not be same-sex. Robin and Terry love each other very much and are very committed to one another, but everything else about them varies with the requirements of my hypothetical.
The complicated tax issue of legally married same-sex couples popped up early in my writing career with my coverage of a then obscure Chief Counsel Advice. CCA 201021050 indicated that California registered domestic partners should split their incomes (i.e. Robin report’s half of Robin’s income and half or Terry’s and visa versa for Terry). Commentators indicated that the same logic should apply to legally married same-sex California couples.
This was another instance of how it is different in community property states, since state law determines ownership of property, which affects the incidence of federal income tax.
What further complicated matters and was the big issue was the Defense of Marriage Act (DOMA) which provided that regardless of state law marriage would be recognized for purposes of federal law only when it was between a man and a woman. That was still the law of the land in 2010.
Of course DOMA was not just a tax issue. Advocates would cite a GAO report that indicated it impacted 1,138 rights. As a practical matter, this was a bit of an exaggeration as I explained here.
Nonetheless, not being allowed to file a joint return was probably the first thing that popped into people’s minds when DOMA came up. Certainly tax people anyway.
There was a certain irony that for many same-sex couples not being considered married for federal tax purposes was actually an advantage. I seem to have been one of the few commentators that pointed that out.
It Gets Exciting
Things got exciting in July 2010 as the federal court for the District of Massachusetts ruled that DOMA was unconstitutional in Gill v OPM. The order in the case included issuing refunds to three couples who would have filed jointly absent DOMA.
That inspired me to make numerous posts advising same-sex couples to file protective refund claims. I was incredibly delighted when one of them was reprinted in Bay Windows (by its account New England’s largest gay newspaper) and celebrated with a post that covered three of the odd tropes that have plagued my writing since.
An obsession with being interviewed by Ellen DeGeneres (never happened), my friendship with science fiction writer John Sundman and bragging about having attended the same high school as Antonin Scalia.
Flying The Rainbow Flag On A More Prestigious Platform
When I made the great leap forward to Forbes, my first post was on same-sex marriage, specifically the tax implications of marriage equality in New York, which pre-DOMA were rather complicated.
There was a happy ending to all this. Another case, Windsor, made it to the Supremes, where the unconstitutionality of DOMA was confirmed. At issue in Windsor was the estate tax unlimited marital exclusion. The Windsor decision came out in June 2013 – about three years after I started covering the issue, but there was more.
Edith Windsor, the affected taxpayer, became a celebrity of sorts due to the significance of the decision. Her passing in 2017 gave me another chance to look back at the story which I had picked up seven years before.
How Much Is That House With The Mega-pastor?
The conclusion of the struggle over the constitutionality of Code Section 107(2), the parsonage exclusion, was less satisfying. 107(2) allows “ministers of the gospel” to exclude amounts designated for housing, that are spent on housing, from their income. There are no dollar limits to the exclusion and the exclusion. Pastors of mega-churches and televangelists claim exclusion for hundreds of thousands of dollars.
I picked up the story in 2010 with a ruling in a case that the Freedom From Religion Foundation had brought in California. That particular case ended up going nowhere, but my comment was a little prescient.
“If I was still tied up in worrying about a small congregation with an underpaid minister, I’d definitely be rooting for this thing to just go away. Also I think the plaintiff has a really disturbing name. Intellectually though the whole thing is really interesting and it should be fun to watch as the case develops.”
My continuing coverage of the Freedom From Religion’s fight against the parsonage exclusion was fascinating to me and to at least one of my readers, who probably became my biggest fan and sometime collaborator, Robert Baty, bane of the basketball ministers.
It did not dawn on me at the time, but it was actually retired IRS appeals officer Robert Baty, who had inspired FFRF to take on the long struggle. Never underestimate a cranky old man with a computer, an internet connection, time on his hands when not watching the grandchildren and a certain level of zealousness.
After losing the California case on standing, FFRF took two more shots in Wisconsin, where its headquarters are. And Judge Barbara Crabb ruled twice that 107(2) was unconstitutional. Seventh Circuit overruled her on standing in November of 2014 and on the merits in March of 2019.
The story comes to its unhappy conclusion in June of 2019, when FFRF threw in the towel and decided not to appeal the second Seventh Circuit decision to the Supreme Court.
A Fascinating Story
Covering this story was fascinating as it highlighted the strange tensions in law when taxation intersects religion. I appreciated being able to interact with the legal scholars who weighed in on the issues particularly Samuel Brunson and Edward Zelinsky who devoted chapters in their respective books to the issue coming to a common view on tax policy, but opposite views on constitutionality.
And I was extremely upset by the reaction of the various religious establishments. They behaved just like any other industry that has carved out special tax status for itself and did not even propose cleaning up the egregious abuses that the generally modest benefit has facilitated.
The high point of my parsonage coverage might have been when I got a Presidential candidate to comment on it.
Parsonage is not Bob Baty’s only passion. He kept trying to get me interested in Young Earth Creationism, a peculiar view that seeks a foothold in several denominations including his own (which does not style itself a denomination, having an extreme congregational polity). YEC is the notion that there is scientific support for a hyper literal reading of the Bible, that would indicate that the universe is about 6,000 years old. I didn’t bite – not in my lane.
Then from my routine review of Tax Court decisions, there came one that I thought was particularly hilarious in October 2012. My post was titled Young Earth Creationists Whipsawed By IRS. The taxpayer was Jo Hovind, the long suffering first wife of Kent Hovind, Doctor Dino. It was the sort of thing that was typical of Hovind. His stubborn tax resistance had created a situation in which he and his wife were being charged with the same income, since neither had filed returns.
Hovind himself, at the time, was serving a long prison sentence. I entered the story in media res which motivated me to look at the back story a bit learning that he had been convicted of, among other things, structuring and not income tax evasion, his multi-million dollar deficiency and fraud penalty to the contrary notwithstanding,
Feds Take Another Crack At Hovind
What I did not see coming was the government’s second prosecution of Hovind, as he was nearing release. He was being prosecuted for actions he had taken to frustrate government seizure of property coming out of his 2006 conviction. He became a celebrity in the right wing alternative media bubble getting as far as Alex Jones, but not quite ever making it to Fox.
I covered what I ended up calling L’Affaire Kent Hovind very intensely including a telephone interview with the still imprisoned Kent Hovind.
I violated one of my fundamental rules of tax blogging and spent, to me, substantial money covering Hovind’s trial in 2015. Filmmaker Jonathan Schwartz pulled a journalistic coup identifying and interviewing Don Camacho who provided the bit of juror nullification that saved Hovind from a second stretch in prison.
I appreciated getting to know and like some of the Hovindicators as I dubbed them particularly Ernie Land, Rudy Davis and Eric Hovind. I declared an end to L’affaire Kent Hovind being Forbes worthy in the summer of 2015 with the sentencing of co-defendant Paul John Hansen, but have continued to cover the ongoing drama on my alternative blog including a recent sit down with Eric and a tour of the new Dinosaur Adventure Land.
Hovind is still fighting his original conviction and I covered his latest efforts on this platform in November 2019. Apparently, he is never going to quit on that.
The latest news which I could not quite make a post out of it is that the entity that runs DAL has received a ruling from the IRS recognizing it as a church. Ernie Land sent me a copy, but I promised not to reproduce it. Guidestar has not gotten the word yet, but they are not up to the minute. Had Hovind went that way twenty or twenty-five years ago, he might have been spared all his troubles, but then he would not have been Kent Hovind.
Of Course There Is More
I picked these three story arcs because they ran so long and raise so many other issues. They are not the only controversial activities I have covered. More importantly, they have not distracted me from the practical focus as I have provided lessons on not blowing off 1099s, thinking carefully about filing joint returns and being bold in claiming “hobby losses” among other things.
Sometimes, pretty rarely, I will review the latest decisions and rulings and come up empty not seeing anything I can make something out of. The despair passes quickly, so I may be at this for another decade or more.