TikTok has amplified trends such as dance challenges and celebrity reactions. But tax fraud? It’s true—users posted videos on how to (illegally) claim tax refunds from the Australian government, and the idea took off.
Recognized as the largest tax fraud in Australian history, the scheme was alarmingly simple. Individuals registered for an Australian Business Number, akin to a US EIN or a VAT number, and used it to claim goods and services tax refunds through a government portal. Astonishingly, the Australian Tax Office disbursed A$4.6 billion ($2.97 billion) in fraudulent refunds to 56,000 claimants, each receiving around A$50,000.
The method of dissemination is almost irrelevant when the fraud is as straightforward as filling out a form and clicking “submit.” Although TikTok served as the platform, any social media post would have sufficed.
Part of the blame lies with influencers who spread the misinformation and assured followers that the worst-case scenario would be repaying the government, effectively framing the fraud as a short-term loan opportunity.
But most of the blame falls on the ATO for its lack of oversight. The scheme was so simple that many claimants were unaware their actions amounted to fraud. Such situations also make taxpayers vulnerable to identity thieves who can use their information for a quick payday, leaving the taxpayer to explain themselves when they seek their own income tax refund.
Here at Bloomberg Tax, we may not be the best dancers, but we do spotlight real experts and tax “influencers” who provide reliable guidance.
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
Illustration of the Gibert official match ball sponsored by TikTok during the 2023 summer international rugby match between France and Australia on Aug. 27, 2023, in Saint-Denis near Paris.
Photographer: Jean Catuffe/Getty Images
State Insights
Although sales tax holidays are politically popular and easy to implement from a state’s perspective, they create numerous compliance obstacles for retailers, Avalara’s Scott Peterson says.
Federal Insights
EY’s Marna Ricker writes that companies must develop tax operating models that can meet the demands of Pillar Two, ESG, and other reporting requirements—and decide which capabilities to build in-house or outsource.
Although an IRS ruling to deny a taxpayer relief to make a late 70% safe harbor election was illogical and unusual, it highlights the importance of making deadlines, says Eide Bailly’s Carolyn Linkov.
Pausing enforcement of a mandate that high-income earners must make catch-up retirement contributions only on a post-tax basis gives Congress and Treasury time to better explain and simplify the process, says attorney Carol Buckmann.
An accounting regulator’s study that found a decline in audit quality of public companies doesn’t reveal the full picture of overall audit health, says Dennis McGowan of the Center for Audit Quality.
Stout’s Gina Witherington reviews a newly implemented accounting standard on operating leases and shares how companies can correctly apply the standard in four areas.
Global Insights
The IRS should consider options other than criminal investigation for examining Malta’s pension plans, say Kostelanetz’s Caroline Ciraolo, Don Fort, and Ian Weinstock.
Ignacio Gepp of Puente Sur considers the effects of the OECD’s Pillar Two initiative from a Latin American viewpoint, and looks at some ways that regional economies may approach the issues.
James Ross of Taylor Wessing explains the progress in the UK of the OECD’s Pillar Two initiative, and considers what the effect of the new reforms will be.
Aditya Singh Chandel and Sarvagya Bilgaiyan of AZB & Partners explain the Indian perspective on Pillar Two and overlapping interests that arise from the country’s status as both a market jurisdiction and an emerging economy.
Save the Date
Professionals—even risk-averse ones—can use chatbots such as ChatGPT to make their jobs easier. To see how you can start using generative AI today, join the Bloomberg Tax and Bloomberg Law Insights & Commentary teams on Sept. 28 from noon to 1 p.m. ET for the latest installment of our free virtual Lunch & Learn series.
SMB Law Group’s Eric Pacifici and Kevin Henderson will explain how AI can boost efficiency while steering clear of privacy, confidentiality, security, and intellectual property minefields.
Career Moves
Mitch Tiras has joined King & Spalding’s corporate, finance, and investments practice group as a partner in Houston.
Michael Lebovitz has joined Eversheds Sutherland as a partner with the tax practice group in San Francisco.
Stuart Cox, Andrew DeMaio, and Stephen Oppenheim have joined Wilentz, Goldman & Spitzer as of counsel in the firm’s trusts and estates group in Red Bank, N.J.
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.
- US battery projects have proliferated since the Inflation Reduction Act was enacted one year ago, outpacing other clean energy technologies encouraged by the climate-and-tax law and spotlighting a heavy lift of shifting supply chains from China.
- Canada’s proposal for imposing a global minimum tax spells uncertainty for companies’ tax bills and could drastically increase their tax compliance workload, tax lawyers and accountants said.
- The IRS and Treasury Department are easing penalties assessed to developers and investors who don’t meet the labor rules for the clean energy tax credits on their projects.
- Seven years and three controversial proposals later, US accounting standard-setters voted to require companies to tell the public more about the taxes they pay.
Women assemble lithium batteries in a factory in Suixi in central China’s Anhui province, on Aug. 13, 2021.
Photographer: Feature China/Future Publishing via Getty Images
Tax Journals
In a Tax Management International Journal analysis, Herbert M. Chain of Kreston Global Audit Group and Guillermo Narvaez of Kreston Global Tax Group write that the regulatory landscape for crypto assets is still developing, with very different positions being taken across jurisdictions.
In another Tax Management International Journal analysis, Patrick Marley, Ilana Ludwin, and Oleg Chayka of Osler, Hoskin & Harcourt write that Canada’s draft legislation relating to the OECD’s Two Pillars would impact a wide range of entities beyond Canada’s borders.
Puerto Rico benefits expert Carlos Gonzalez addresses which of the SECURE 2.0 Act’s main changes to the US retirement plan rules must be made to Puerto Rico-only qualified plans or applied to the Puerto Rico participants in dual-qualified plans, and which are optional.
While the corporate alternative minimum tax base generally tracks pre-tax GAAP, which treats fines as deductible, a 2017 tax act provision and the public policy doctrine may require fines to be added back to GAAP income in determining CAMT, says Alan Lederman of Gunster, Yoakley & Stewart.
*Note: Your Bloomberg Tax login is required to access Tax Journal articles.
Tax Pro Week
Every tax professional wishes they could make one change in the tax world—a revision to the federal tax code, a state tax deduction, clear agency guidance—the list goes on. We’re collecting a series of short essays highlighting practitioners’ thoughts about, and solutions to, some of the most challenging rules for tax practitioners.
For this series, submissions should be no more than 300 words. We’ll publish five responses on The Exchange, one per day, from Oct. 23–27 during what we call Tax Pro Week. The deadline for submissions is Sept. 29, 2023.
Photo Illustration: Jonathan Hurtarte/Bloomberg Tax; Photos: Getty Images
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. This can include the impact of SECURE 2.0, changes to retirement regulations around the world, common mistakes companies make when setting up retirement packages, and how taxpayers can benefit from retirement tax deferrals (besides through IRA, Roth, and 401(k) plans).
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
Andrew Leahey (Columnist): I just wrapped up the Netflix documentary miniseries on missing Malaysia Airlines Flight 370. I wouldn’t recommend it for the purpose of learning about the realities of the air disaster, but it is an excellent study on what conspiracy theories can do to the human mind.
Reading
Martha Mueller Neff (Federal News Team Lead): “Rules of Civility” by Amor Towles. It’s not new, but it’s so good. Set in 1937, it’s kind of a pot boiler/true crime slice of New York City.
Listening
Melanie Cohen (Content Editor): Gary Clark Jr., a blues rock artist I was able to see in concert in a smaller venue this week. He and his band have unlimited groove!
Stay Connected
Get our newsletter delivered to your inbox each week by heading over to The Exchange and clicking the green “Free Newsletter Signup” box at the top. Follow Bloomberg Tax on X, Facebook, Instagram, LinkedIn, and Threads—and check out Bloomberg Law on TikTok. We also have a growing LinkedIn group where our authors, contributors, and readers can share tax-related stories and exchange ideas.
