Tax Concepts

September 29, 2008

Textbook: CONCEPTS IN FEDERAL TAXATION: 2008 EDITION, Murphy, Higgins (Required)

Internet access or a copy of the Internal Revenue Code and Regulations most recent edition.

Summary: An introduction to the federal income tax structure as it applies to the individual taxpayer. Themajor focus of this course will be upon the conceptual and legal underpinnings of the Internal Revenue Code (IRC).

Course Objectives and Student Responsibilities

To learn and refine methods of reasoning and analysis, and apply these to problems arising in an individual’s situation, using the following steps:

a) Applying the rules of law (IRC) to specific facts, either real-life or hypothetical;

b) Discerning the range of possible outcomes or results;

c) Recommending appropriate courses of actions for individual taxpayers in similar situations; and

d) Identifying general rules or policies that might be established from the IRC and the facts.

Study methods of statutory analysis and interpretation (of the IRC) and apply them to individual problems.

Understand the basic principles of the IRC that relate to taxable and nontaxable transactions, and learn how to apply these principles to problems that arise in the context of the individual taxpayer’s personal and business transactions.

Learn the nature of the IRC, how tax laws are made, and the complex interactions between tax law and social, political, and economic forces.

To explain tax jargon in simple, plain, and yet accurate English so that such terms will be of use to you as a future accountant or business manager.

To develop an increased awareness of legal, governmental, and ethical restraints facing tax planners and business managers.

To raise and discuss issues in regard to actions which may be legal but not ethical or moral.

To increase skills in making decisions which have tax and legal ramifications.

To increase your awareness of when a CPA or legal counsel is necessary or appropriate and how to seek such counsel.

Course Competencies: Upon satisfactory completion of the course the student should be able to:

General: Demonstrate a broad understanding of the Internal Revenue Code–its evolvement and procedures.

Recognize broad principles of tax law relating to how an individual can plan to legally minimize the taxes that they must currently account for and pay.

To achieve the above objectives and competencies, students are expected to attend all classes; complete all written and reading assignments as advance class preparation; take an active part in class discussions; organize and participate in a study group (optional); and write out the answers for all assigned problems.

Grades: Class Curve (The typical curve has been “A” 86% “B” 72% “C” 60% “D” 50%). There will be three (3) essay style problem-solving examinations [one midterm and one final, this is truly where your letter grade is determined] given throughout the semester. These exams will be cumulative. This comprehensive nature is to assist the student in discerning the interrelationships among the various tax and legal concepts in the course. Your grade for this course will be determined by the weighted average of these examinations, the following constitute 25% of your grade on a pass/fail basis; the term paper or service-learning project, class participation and group case write-ups, and the individual tax return problem. Since the required assignments are varied and extensive, they are sufficient to determine your mastery of the course materials (basically if you do this part you will get the grade you earn on the tests. If you do not do this part then take the grade you would have gotten based on your test results and then reduce it by two full letter grades. This is the reason that I have stated that the highest grade you can get without the paper or service-learning project is a ?C?). (If there is any student in this class who has need for special accommodations for test-taking or note-taking, please feel free to discuss this with me.)

25% Class participation individual tax return problem (5%) and a 20-page term paper with a minimum of 15 references (20%). There must be a minimum of 6 web references and 6 old-fashioned book references (The paper is the class requirement. Standard format will be one inch margins all around and 12pt type Times New Roman with proper citation, one staple at the top left corner) on an issue dealing with the tax system and its effects on citizens that are low income, working poor and indigent (example, write a review of the TAX RELIEF AND HEALTH CARE ACT OF 2006 and its effects or lack thereof on the poor in America as compared to the benefits or lack thereof provided to rich Americans). Students always are telling me how expensive books and tuition are and that they are ?poor working students? or ?broke.? Thus the paper will focus on the ?equity? in the tax system. This will help you to objectively determine if you are ?broke.? Outlines and references will be due on January 31, 2008. As an alternative to this paper students may engage in a service-learning project (optional in place of the term paper) that deals with taxes (VITA). In this project students will gain skills in interviewing, data collection and expertise in using the tax knowledge gained in class. One of the two options must be completed in order to receive a passing grade for this class. Failure to complete the paper or the service-learning project will result in a two-grade reduction from what you earn on the graded portion of this class (i.e. the highest possible grade without the paper or service-learning project is a ?C?). Participation will be on an “expert” system. The mechanics of this system will be explained in the second week of class. The above part is Pass/Fail.
25% Final Examination Chapters 9-12 (see College Final Exam Schedule for specific date and time)
50% Midterm Exams Chapters 1-4 and Chapters 5-8

THE POLICY AND REGULATIONS OF THE UNIVERSITY ON ACADEMIC DISHONESTY WILL BE STRICTLY ENFORCED IN THIS COURSE.

Service-learning general information:

SERVICE LEARNING is a method by which students learn through active participation in thoughtfully organized service conducted in and meeting the needs of the community. Service learning is integrated into and enhances the curriculum. It includes structured time for reflection and helps to foster civic and corporate responsibility. As pedagogy, service learning emerges from experiential learning theory and encourages active student involvement in the learning process.

CRITERIA FOR A SERVICE-LEARNING COURSE:

  1. NEEDED SERVICE: Students provide a needed service.
  2. SERVICE-SUBJECT MATTER RELATION: Through the process students gain first-hand exposure to critical tax concepts.
  3. CLASS CONTEMPLATES LEARNING THROUGH SERVICE: Throughout the course, class sessions are set-aside as “Workshops” for reflecting on the service experience.
  4. CREDIT/ASSESSMENT OF LEARNING FROM SERVICE: Students are evaluated on the quality and accurateness of the services they provide.
  5. SERVICE RECIPIENTS EVALUATE SERVICE: The completed output will be evaluated by the clients, supervising CPAs and attorneys and by your instructor.
  6. SERVICE DEVELOPS CIVIC EDUCATION: To provide the service, students must learn about the tax system and its specific effects on those of low income in our society and how the agencies they are assisting serve the community.
  7. KNOWLEDGE ENHANCES SERVICE: Students acquire both functional knowledge of the tax system and civic knowledge of disadvantaged populations within the community. The course is intended to raise the consciousness of students in applying their business and accounting knowledge to social problems.
  8. LEARNING FROM OTHER CLASS MEMBERS: The highly interactive setting provides substantive and frequent opportunities for learning from collaborative experience.

Service-learning project information.

I. Overview of the Service-Learning Project

The IRS’s Volunteer Income Tax Assistance program (VITA) has been in existence for many years as a means of assisting lower income taxpayers with answers to their tax questions and assistance in preparing their income tax returns. I have been recognized by the IRS for having provided over twenty years of service through the VITA program. Come on now, you would not think that your instructors would ask you to do stuff they themselves are not doing, would you? The VITA program will provide the basic tax training for the participants in this service-learning project.

The program is expected to provide the following benefits to participating students:

  • Provides a review of the basic tax rules learned in AC306, as well as supplementing that learning with various technical aspects of tax preparation and compliance.
  • Provides instruction and practice in the preparation of Hawaii income tax returns
  • Increases your communication skills through experience of interviewing clients and keeping a journal of your experiences. You will have to do 4 additional reflection papers and share some of your thoughts and insights in class.
  • Provides exposure to a broad cross-section of the population. Students will gain knowledge about the general population’s understanding of the tax laws and the problems they face in complying with its provisions.

The program is also a service to the community. This may be our client’s first one-on-one encounter with Chaminade students and with all the things that are being said about the need for private universities – try to represent your campus well and give the community one more reason why Chaminade is good for the state!

II. CLASS REQUIREMENTS

  • Students must receive a passing grade on a federal tax returns test to be completed (individually!) by the beginning of class on Tuesday, January 29th (subject to change) see below for further details. There is no test for doing Hawaii tax returns.Note: You have four chances to pass the federal (IRS) test, you may take the “Retest? up to three times. A fail on the fourth grading will cause you to be disqualified from the VITA program and the service-learning option for this class. As such the term paper will be your only remaining option.
  • Students must perform publicity activities.
  • Help with bringing in clients by preparing the returns for at least 6 people you have personally contacted about VITA. Two of these 6 people (or their information) must be brought in during the first two weeks of the program.
  • Work at least 16 hours (or four shifts) in the VITA centers during the tax season.
  • Maintain an activity time log that confirms your activities and 6 taxpayers.
  • Keep a folder with your time log, a record of your coordinating or publicity activities and a daily journal of your experiences at the VITA sites.

Based on the journal, you will submit a typewritten reflection papers on your experiences (2-5 typewritten pages) pursuant to the schedule that will be established by your instructor. This log and reflection paper are meant to be not just a summary of the number of people you assisted (we have to keep separate records on that) but comments and thoughts on new things learned, problems encountered, things you would do differently in retrospect, mistakes you realized you may have made, insights about people’s knowledge of, respect for the tax laws & the IRS. You will receive further guidance on the form and substance of the papers as they are assigned. ?You will also be required to spend approximately 4 hours learning and using tax preparation software. This will be covered outside of class in the tax law training sessions on January 26, 2008 at Chaminade.

As mentioned in the email that I sent out in December (I will be using the Chaminade email address assigned to every student for all class correspondence so please check it before every class session) ?The service learning option will require each student to participate in my tax clinics for the homeless project or with the Hawaii Asset Building Coalition?s sites. My clinics involve doing tax returns for welfare to work clients at homeless transition shelters, domestic abuse shelters and low-income housing projects and other volunteer sites around the island of Oahu. Before being allowed to provide assistance all students must pass at least the basic test given by the Internal Revenue Service (IRS). You may prepare and test online at http://www.irs.gov/app/vita/index.jsp (or go to www.irs.gov and search for “link and learn” if the link that I gave you does not open up to the link and learn site), but you still must attend the 1/26 (at Chaminade) session as there is no online substitute for that part of the training. On 1/26 we will be learning about Hawaii State taxes and the IRS approved software that we will be using for e-filing of federal tax returns. You must pass the tests for the BASIC module before being certified to go out and prepare returns for clients. You will need to submit to the IRS/site coordinator and for my files a printed copy of the passing test scores for at least the BASIC module. You may do the other modules if you wish, but they are not required for this project.

You can get more information about this project at the following website as well: http://www.cic.edu/projects_services/epe/chaminade.asp. If this does not work go to the Chaminade homepage at www.chaminade.edu then go to academics and faculty profiles, click on my profile (Tanna, Wayne) and then click on the Click here for CIC’s report on the Chaminade project.

III. DETERMINATION OF GRADE for the SERVICE-LEARNING OPTION (Pass/Fail)

  • IRS test
  • Publicity & 6 clients
  • Tax preparation, including your attitude & quality of your work
  • Log & Reflection papers
  • Supervisor’s evaluation

IV. HOURS WORKED (Hey a standard workweek used to be 40 hours so we will make this a 40 hour project.

You will be given credit for hours spent learning the tax laws, worked at the sites, doing publicity, coordinating activities, learning & doing computer tax preparation, a maximum of 20 hours will be given for the training sessions that are listed below (this includes time to take the VITA certification test). Because of these varied possibilities it is your responsibility to keep track of your hours worked and have them verified after each activity by an authorized person (each site will have a site-coordinator and one or more professions [CPAs and/or Tax attorneys). You are responsible for fulfilling all your commitments. Last, but not least, you are going to have FUN. I guarantee it!

Two VITA tax Law Training Courses will all be held this semester. I will be doing one at Chaminade University, Kieffer Hall Room 9. I will be teaching the federal parts and representatives from the Hawaii Department of Taxation and the IRS will be teaching the state and tax software parts. The schedule will be as follows (lunch provided by Aloha United Way):

Saturday 1/12/2007 8:30am ? 4:30pm Federal Part I

Saturday 1/19/2007 8:30am ? 4:30pm Federal Part II

Saturday 1/26/2007 8:30am ? 4:30pm State taxes and TaxWise software

My Theme – AORTA (could not work out the acronym for HEART) this works for all careers that deal with serving clients or patients (as well as others in the community).

Acquire information
Organize the information and determine what is needed and what is not
Record the essential information in a formal fashion
Transmit the information to the required parties
Assess the process to continually improve the process

SERVICE LEARNING
ASSIGNMENT ONE

Your first service learning assignment will require you to investigate possible placements, choose one that you will be willing to stay with for the duration of the semester or the project’s required time commitment (whichever is longer) and to make your first visit or orientation meeting.

  1. You may get assistance from others on campus to locate an agency to serve with. However, please remember that I must approve both the agency and the kind of work that is to be done at that agency.
  2. Investigate each of the possible projects that interest you with respect to:
    • Practical issues–can you get there and back at the times the agency requires your time and service (do you have transportation, does the time fit into your schedule)?
    • issues–will you be working with a population or in a situation that is comfortable for you? Can you work there effectively or will this whole situation get you stressed out?
    • Course related issues–is the agency and the service to be performed the type of activity that relates to this course or generally to law or accounting; will the project meet with my approval?

    You may be able to talk with other students that have volunteered with the agency you are thinking about working with. You may want to interview the volunteer coordinator at the site you are thinking about working at. You may also try to talk with other instructors or administrators at our school that are involved with service learning in order to find out more about possible opportunities that may work for you

  3. Set up your first visit and plan a regular schedule when you are ready to proceed with you service learning project.

Your first written report (1-2 typed pages) is DUE: January 31, 2008 (with the passing certification test results) and should include:

  • A discussion of the place you have selected and your rationale for choosing the one you did. How does this fit in with the subject you are studying?
  • A discussion of the things you did to check out the agency that you are thinking about working with.

Dear Student,

Teaching classes in business administration and law is my vocation. Both business administration and my students are important to me. I work hard at teaching and expect my students to work hard at learning. I am a parent, a professor, an attorney, an accountant, a tax and business consultant, an author, a non profit manager and a cancer survivor (I will be moving slower and may not be as understanding this semester).

My office phone number is 739-4606 (Chaminade). Please use this number or Email me at wtanna@chaminade.edu if you wish to reach me or if you have problems with the homework. I read email daily, I do not respond to them daily but I do return phone calls unless I am away. No cell phone use in class.

It is your responsibility to learn the material. It is my responsibility to make the learning process as productive as possible. If you miss a class, check the course outline to determine what you must do, read the material in the text, do the homework, and call if you need help.

Tests are like job interviews scheduled weeks in advance: treat them as such. Do not miss a test. If you do miss a test, be sure that I know about it as soon as you do or I will have to assume that you are no longer interested in passing this class.

Being a student is not an easy job. It is work. Plan time to attend class, as well as time to work on the material outside of class. If I can be of help, call me or see me in my office or just after class. Additionally, please keep in mind that knowledge of the law is cumulative. Do not fall behind in your reading. Work all assignments. And while you are in class please set all of your cell phones and pagers to a non-audible mode. I will penalize students who disrupt class (especially during exams, you can get an F for that test) with their pagers and cell phones.

I have one additional thought for you as we start this semester: If you have something to do, in the words of Nike “JUST DO IT”, if not, relax and have some fun. HAVE A GOOD SEMESTER.

Very truly yours,

Wayne M. Tanna

Wayne, your instructor

P.S. I have a teaching assistant that usually accompanies me to class. His name is R.P. Orange, the Reasonably Prudent (a term of great legal significance) Orangutan. You may have previously seem or heard of him. In reality, he is a stuffed animal. However, it is what he stands for that is important. There are three things that he is in class to promote: First, there is more to life than what is in any single class or classroom (priorities); Second, grades are not everything (it is what you learn or the knowledge that is gained that really matters); and Third, if you need a hug or something to make you take yourself (instructor included) less seriously, R.P. Orange is there for you.

Now, write a letter to me, Wayne, your instructor, telling me who you are. Tell me of your strengths, weaknesses, fears, and goals. Discuss your world and how your roles in this world might affect your performance in this class. Speak of your business background. Discuss how this class might play a role in your future.

Tell me what I might do to help you achieve your goals for this class. Include in your letter a statement that you have read and understood the grading for this class and the academic dishonesty policy of the university. This letter must be typed. Due Tuesday, January 29, 2008 (this will count for your first two weeks of attendance).

School: Chaminade University
Professor: Wayne M. Tanna JD, LL.M.
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