IRS employee cleverly strengthens job security

Last week we wrote about a refund scam run from inside a prison; this week we have a different kind of inside job. An IRS employee was sentenced to nine years in prison for running a multiyear identity theft scam using taxpayer information she accessed from IRS computers.1

She gained unauthorized access to taxpayers' personal information and filed fraudulent returns, directing the refunds to be paid on debit cards mailed to addresses that she controlled. It's estimated that she and her co-conspirators collected around $1 million in fraudulent refunds before they were caught.

The worst part is that she worked for the IRS's Taxpayer Advocate Service, which is supposed to help taxpayers solve tax return identity theft cases, not add to the workload. It looks like she ironically increased the job security of her entire department ... just not for her own job.


Will you prepare C-3PO's 1040?

Bill Gates recently noted that if robots are going to take over human jobs, one side effect (aside from lost jobs) will be the lost income tax revenue. He therefore proposed that robots should be taxed on the value of their work.1 Under his plan, the taxes collected on robots would go into a fund used for training to fill jobs that humans would still have to do, like child care and senior care. In his mind, preparing for the rise of the machines is worth the potential slow-down to innovation.

The backlash came fast, though, with opponents arguing that the overall impact of automation is increased employment and taxing robots will thus slow down job creation.2 One opponent pointed out that it's a slippery slope; would we apply an income tax to technology that makes it easier for humans to do their jobs ... like Microsoft Word?

Gates isn't the only one suggesting this, either. Benoît Hamon, France's Socialist party presidential candidate, proposed something similar (along with legalization of marijuana, a 32-hour work week, and recognition of burn-out as an occupational disease).3

If we opt for a robotax, I can't see C-3PO handling the stress of tax season very well; if anyone's going to show up to his appointment with his organizer already completed, it's definitely R2-D2.


Slow tax refunds blamed for fast food slump

Jack in the Box released their quarterly earnings last month, and even though customers are eating 1,000 Jack in the Box tacos every minute,1 the company's 2017 revenue has failed to meet Wall Street expectations.2

One of the reasons for the slowdown, according to company CEO Lenny Comma:3 delayed tax refunds.

And it's not just Jack in the Box. Red Robin CFO Guy Constant said late tax refunds contributed to a "challenging" February for the company, and Cracker Barrel CEO Sandra Cochran said "the consumer is just anxious" about the timing and size of tax refunds.4

So it sounds like the fast food industry will survive — as will the nation's appetite for the only "taco" we know of that's made with a slice of American cheese.

3 Contrary to what you see on TV, the company's CEO is not actually the clown-headed Jack Box

Let's get QuizziCAL: Prescription medicines

Here's a stumper for you … click below to reveal the answer.

Your client Herb has his own business, Herb's Herbs and Medicaments. Herb's truck is filled with obscure devices, "curative" spices, strange preparations, healthy libations, sphygmomanometers, digi-thermometers, Chinese potions, emollient lotions, obesity products, custom orthotics, antiseptics, and cures for dyspeptics ... just to name a few. Herb sells his products to anyone who will buy them, including specialty stores, licensed acupuncturists and chiropractors, doctors, and health facilities.

It's up to you to figure out what's taxable and what isn't. Identify all the products in Herb's truck that are not subject to sales tax.

  1. Appetite suppressants provided to customers of a weight-reducing facility as part of a supervised weight-reducing program
  2. Qi Gu Di Huang Wan (miraculous during tax season — treats blurry vision, dry and painful eyes, pressure behind the eyes — take just 24 pills per day)
  3. Low-calorie meal replacement products as part of a medically supervised weight loss program
  4. Suspension sling attached to a hospital bed to suspend a patient's leg
  5. Dynowalker to immobilize the lower leg and foot in relation to each other
  6. Cervical and pelvic traction devices
  7. Passive motion machines
  8. Stockings to wear with artificial legs


(c), (f), (g), (h).

Sales of medicines are exempt from tax if:

  • Prescribed by a licensed physician and dispensed by a licensed pharmacist;
  • Furnished or sold to a licensed physician, surgeon, podiatrist, or dentist for patient treatment;
  • Furnished to a patient by a licensed physician; or
  • Sold to the state of California.
    (R&TC §6369)

See ¶43-205 (Prescription medicines) of Spidell's Analysis & Explanation of California Taxes®.

A few fun facts about this week's writers:

Kathryn Zdan, EAKathryn Zdan, EA, is not only director of the editorial department, she also "rocks the house" as a regular in curling bonspiels around the country. She also enjoys foreign and avant-garde film, baking, and the Investigation Discovery channel.
Favorite travel destination: Prague, Czech Republic

Diane FullerDiane Fuller is a woman of many talents which include writing children's poetry, taking unwitting challengers to town in poker, and whipping up Michelin-worthy dishes from scratch. Find her laughing with her two grandkids.
Favorite travel destination: Sun Valley, Idaho

Austin LewisAustin Lewis wrote an article about fast food this week and couldn't resist using this older photo with his bio. He no longer eats French fries in this fashion; instead, you'll find him enjoying a Dodger Dog at Dodger Stadium when baseball season begins next month.
Favorite travel destination: Santa Cruz, California

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