Introduction
As Herman Wouk had one of his characters remark in The Caine Mutiny, "The Navy is a system designed by geniuses to be executed by idiots." Turning a bit of a phrase here, and with apologies to Mr. Wouk, those of us who work in the tax area might say, "The Internal Revenue Code is a system designed by idiots to be run by geniuses."
Hunger for revenue, the desire to use the tax code for policy objectives, and the propensity of rules to become progressively more complex as theybecome riddled with exceptions and then exceptions to exceptions, all continue to bedevil the tax code and the world of the tax practitioner.
This chapter will touch on some of the leading trends and dominant issues that confront tax professionals currently in advising business clients.
In preparing this piece, I had the opportunity to go back and review my chapter, " Mega Trends and Current Issues in the Tax World," which was published by Aspatore in 2008. After that review, I could not help but be struck by the applicability of the famous French proverb, "Plus ça change, plus c'est la même chose" ("The more things change, the more they stay the same").
Virtually every point I made in 2008 continues to be true. We continue to be overwhelmed by the proliferation of complexity in the tax code and regulations.
The compliance system continues to strain under inadequate staffing and undue complexity. Flow-through taxation is the norm for small businesses, either in the forms of limited liability companies (LLCs) electing partnership status or S corporations, and this is steadily and inexorably eroding the corporate tax base. Cancellation of debt income (COD), bankruptcy, and insolvency tax issues have dominated planning considerations during the "Great Recession." And the government has commenced the efforts to enforce and improve compliance on the employment tax front that I predicted.
Again, virtually every issue identified in 2008 continues to be a dominating issue for tax practitioners. And the predictions, alas, proved all too true. So this raises the question, "What has changed?"
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
