San Francisco hospitals fail to provide health care in return for tax breaks

Two of San Francisco's nonprofit hospitals received about $74 million in tax breaks, intended as compensation to provide health care for the poor and uninsured, but only provided $5.4 million in charity care, according to a San Francisco Chronicle story about a city health department report.

California Pacific was responsible for the biggest disparity, the report said. It received almost $70 million in tax breaks but spent only $5.2 million on care for the poor and uninsured. Of the total tax breaks, California Pacific got $67 million in state and federal income tax exemptions and $2.8 million in local property tax exemptions.

Chinese Hospital got more than $4 million in tax breaks and spent $265,000 on charity care, according to the report.

Tax fraud part of alleged black-market trade in Asian artifacts

Federal agents raided four art museums in southern California last week as part of an investigation into the sale of looted antiquities from Asia and arrangements that allowed donors of the artifacts to the museums to take inflated tax deductions for their donations.

Federal agents executed search warrants at the properties of dealers, collectors and the museums, including the Los Angeles County Museum of Art (LACMA). No one was arrested, and no charges have been filed in the case.

National Taxpayer Advocate asks Congress to prohibit tax strategy patents

The National Taxpayer Advocate recommended in her annual report to Congress three weeks ago that Congress bar tax strategy patents and limit their enforceability.

The recommendation didn't receive much media attention at the time the report was written but was the focus of a story in today's National Law Journal. (Subscription required.)

"If Congress does not bar them, it should require the U.S. Patent & Trademark Office (PTO) to send any tax strategy patent applications to the IRS so that it can quickly address any abuse they may present and help the PTO identify obvious tax strategies that should not be eligible for patents," National Taxpayer Advocate Nina E. Olson wrote in the executive summary of the report.

Wesley Snipes goes on trial in federal court for failure to pay taxes

The trial of actor Wesley Snipes on tax charges is scheduled to start today in Ocala, Fla.

Snipes is charged with failing to file tax returns for six years, conspiring to defraud the government and filing a false claim for a $7 million tax refund.

"Tax specialists and lawyers say that the Snipes case hinges on whether he can persuade jurors that he sincerely believed that he did not have to pay taxes, while prosecutors will argue that he was just trying to avoid them," reports the New York Times.

Men arrested in multi-state tax evasion scheme

Four men were indicted and arrested for allegedly selling more than 1,000 people a tax "program" that illegally helps people avoid taxes and cost the government $7.5 million in lost taxes.

The programs were sold from 2001 through 2005 by the Freedom & Privacy Committee in Oregon, Louisiana, Virginia and Idaho, according to the indictment. A grand jury in Portland, Ore., issued one count against the men for conspiracy to defraud.

State judge overrules Wal-Mart's use of REIT for tax deduction

A state judge ruled against Wal-Mart in a dispute over whether the company could deduct from its taxes rent it paid to a real estate investment trust in which Wal-Mart had a 99 percent ownership stake.

In a decision filed Jan. 4, Emergency Special Judge of Superior Court Clarence E. Horton Jr. wrote that Wal-Mart's structure had no "real economic substance" other than cutting taxes, The Wall Street Journal reported. Wal-Mart had sought a refund of $33.5 million in taxes, interest and penalties that it paid after state tax authorities determined it had underpaid its taxes.

Church-owned businesses get tax bills

A growing number of local tax officials are scrutinizing church-owned businesses and property to determine whether they are charitable missions or for-profit enterprises, The Wall Street Journal reported today.

This has led to lengthy disputes and court fights between some tax assessors and churches. For instance, the Journal said, Christ Chapel Community Church in Macon, Ga., ended up paying $16,000 for 2005 and 2006 taxes after disputing for 18 months a tax bill for an athletic club it had purchased for $6 million that offered tennis, basketball, and roller hockey for a fee. On the weekend, church members set up seats for 1,000 worshipers.

The changing nature of churches "forces both courts and agencies and tax commissioners to decide what's a religious or charitable use," John Witte Jr., director of the Center for the Study of Law and Religion at Emory University, told the Journal.