Category: Company and Industry News

This interview is one in a series in which we’ve asked an industry leader questions on the topic of tax reform and the issues faced by Congress in addressing the tax code.
Scott Goodman is the Founding Principal of PKD Foundation and Chicago Economics Club.
What are your thoughts on Congress allocating significant time and resources to tax reform in 2015?
Congress’s attention to tax reform is long overdue.  The tax code is just a series of layers on top of layers of  either revenue generators or incentives which have relevance at the time they are enacted, but are not adequately reviewed over time.    The fact that a majority of Americans are not capable of preparing their own tax returns is testament to the fact that the tax code is too complicated. This seems almost unconstitutional.
Do you think Congress should address corporate-only or comprehensive tax reform, and why?
Congress should undertake comprehensive tax reform.  The U.S. is falling way behind in the condition of our infrastructure, whether it be the existing conditions of our roads, bridges, and electrical grid, or the need to build new wireless networks or fiber lines.  Obviously our national debt needs to be addressed as well.  Comprehensive tax reform can at once simplify our tax code and raise needed revenues for public projects.
The upper end of the tax rate for U.S. corporations is 35% and the individual rate is pushing 40% for federal and state taxes alone. Should that be cut and do you think individuals and/or corporations would be willing to give up popular tax incentives to do so?
I do not think the tax rates for corporations or individuals should be cut. In fact, greater distribution of wealth is exactly what is needed to give our economy a chance of fortifying the middle class.  Current policies have created a clear ”have/have not” society in America, and this is dangerous.  Corporate incentives should be scrutinized.
Many industries receive tax credits that are excessive and probably unnecessary. As for eliminating some of the popular incentives, again, they should be scrutinized.  Because they are intended to affect behavior, we should analyze the tax incentives to be sure that the type of behavior they were intended to affect is still (a) effective (b) relevant, and (c) worth the cost of revenue loss.
What part of your business would be impacted most by a repeal of 1031 exchanges and why?
In the past, we used 1031 exchanges often.  Today, we utilize them less frequently because the ownership structure of our deals has become more complex.  Repeal of 1031 exchanges would, in certain instances, affect our ability to purchase certain properties because oftentimes property owners will only sell if they can trade into new properties and defer taxes.
How can Washington simplify the tax code?
Obviously a flat tax or a tax code devoid of deductions, special treatments and credits would be simpler; I’m just not sure it would be better.  The tax code is too voluminous.  Layers and layers of new taxes and provisions have been added over time, many cowing to special interests, many which have added to the complexity without fixing or amending the problems they were meant to address.
Time to start over. The tax code should be made fair and balanced, readable and understandable, easily compliable and accessible.
Are there certain parts of the tax code today that would dramatically change your business should they be repealed?
I am sure there are, but I am not familiar or knowledgeable  enough to comment.
Are you concerned by the recent spike in inversions undergone by U.S. corporations?
No, not concerned, but this loophole should be closed.

States Follow Federal Laws on Section 1031 Tax Deferral
While Internal Revenue Code (IRC) Section 1031 pertains to the deferral of tax on the federal level, the various states in the country generally follow the Fed’s lead in this regard.  So, if a transaction meets the requirements of IRC Section 1031, the state in which the relinquished property is located will similarly recognize the tax deferral.  However, a few states take this matter of deferral a bit further and will only allow taxpayers who trade into replacement property in the state to avoid ongoing reporting.  For those states, should a taxpayer acquire out-of-state replacement property, there is a requirement to pay to the state the original amount deferred when the out-of-state replacement property is sold.  These state provisions allow the states to reach out into a future transaction and require the tax be paid upon the original transaction.  Due to this ability to reach out and pull back the tax deferral, these state requirements are sometimes known as “clawback” provisions.  States with clawback provisions include:

Oregon
Montana
Massachusetts
California

The State of California and the Proposed Form FTB 3840

States Follow Federal Laws on Section 1031 Tax Deferral
While Internal Revenue Code (IRC) Section 1031 pertains to the deferral of tax on the federal level, the various states in the country generally follow the Fed’s lead in this regard.  So, if a transaction meets the requirements of IRC Section 1031, the state in which the relinquished property is located will similarly recognize the tax deferral.  However, a few states take this matter of deferral a bit further and will only allow taxpayers who trade into replacement property in the state to avoid ongoing reporting.  For those states, should a taxpayer acquire out-of-state replacement property, there is a requirement to pay to the state the original amount deferred when the out-of-state replacement property is sold.  These state provisions allow the states to reach out into a future transaction and require the tax be paid upon the original transaction.  Due to this ability to reach out and pull back the tax deferral, these state requirements are sometimes known as “clawback” provisions.  States with clawback provisions include:

Oregon
Montana
Massachusetts
California

The State of California and the Proposed Form FTB 3840

States Follow Federal Laws on Section 1031 Tax Deferral
While Internal Revenue Code (IRC) Section 1031 pertains to the deferral of tax on the federal level, the various states in the country generally follow the Fed’s lead in this regard.  So, if a transaction meets the requirements of IRC Section 1031, the state in which the relinquished property is located will similarly recognize the tax deferral.  However, a few states take this matter of deferral a bit further and will only allow taxpayers who trade into replacement property in the state to avoid ongoing reporting.  For those states, should a taxpayer acquire out-of-state replacement property, there is a requirement to pay to the state the original amount deferred when the out-of-state replacement property is sold.  These state provisions allow the states to reach out into a future transaction and require the tax be paid upon the original transaction.  Due to this ability to reach out and pull back the tax deferral, these state requirements are sometimes known as “clawback” provisions.  States with clawback provisions include:

Oregon
Montana
Massachusetts
California

The State of California and the Proposed Form FTB 3840

Accruit CEO Brent Abrahm has completed the 2014 Preferred Gran Fondo. The 2-day event is a cycling tour of Illinois, Indiana and Michigan to raise money for the https://www.nfte.com/”>Network for Teaching Entrepreneurship (NFTE). This year’s event raised over $20,000, which directly supports NFTE participants in Chicago-area schools.
NFTE inspires young people from low-income communities to find their paths to success. NFTE works closely with educators in high-need schools to re-engage students in learning, introduce them to business concepts, and open up their possibilities for the future.
Since its inception in 1987, NFTE has worked with more than 500,000 young people from low-income communities in programs across the U.S. and around the world.
Brent is an avid road cyclist and strong believer in the importance of education on business. In addition to his support of NFTE, he serves on the Board of Directors for http://coloradosucceeds.org/”>Colorado Succeeds, a non-profit, non-partisan coalition of business leaders committed to improving the state’s education system.

Brent Abrahm (back row, third from left)

Accruit CEO Brent Abrahm has completed the 2014 Preferred Gran Fondo. The 2-day event is a cycling tour of Illinois, Indiana and Michigan to raise money for the https://www.nfte.com/”>Network for Teaching Entrepreneurship (NFTE). This year’s event raised over $20,000, which directly supports NFTE participants in Chicago-area schools.
NFTE inspires young people from low-income communities to find their paths to success. NFTE works closely with educators in high-need schools to re-engage students in learning, introduce them to business concepts, and open up their possibilities for the future.
Since its inception in 1987, NFTE has worked with more than 500,000 young people from low-income communities in programs across the U.S. and around the world.
Brent is an avid road cyclist and strong believer in the importance of education on business. In addition to his support of NFTE, he serves on the Board of Directors for http://coloradosucceeds.org/”>Colorado Succeeds, a non-profit, non-partisan coalition of business leaders committed to improving the state’s education system.

Brent Abrahm (back row, third from left)

Accruit CEO Brent Abrahm has completed the 2014 Preferred Gran Fondo. The 2-day event is a cycling tour of Illinois, Indiana and Michigan to raise money for the https://www.nfte.com/”>Network for Teaching Entrepreneurship (NFTE). This year’s event raised over $20,000, which directly supports NFTE participants in Chicago-area schools.
NFTE inspires young people from low-income communities to find their paths to success. NFTE works closely with educators in high-need schools to re-engage students in learning, introduce them to business concepts, and open up their possibilities for the future.
Since its inception in 1987, NFTE has worked with more than 500,000 young people from low-income communities in programs across the U.S. and around the world.
Brent is an avid road cyclist and strong believer in the importance of education on business. In addition to his support of NFTE, he serves on the Board of Directors for http://coloradosucceeds.org/”>Colorado Succeeds, a non-profit, non-partisan coalition of business leaders committed to improving the state’s education system.

Brent Abrahm (back row, third from left)

A message from our President & CEO, Brent Abrahm:  As I have communicated over the last nine months, repeal of 1031 like-kind exchanges is a topic of discussion in Washington DC as part of overall tax reform. As co-chair of the Federation of Exchange Accommodator’s (FEA’s) Government Affairs Committee, we are making great progress in one-on-one discussions with our Congressmen and women. Our arguments for retaining 1031s are solid and are being heard. Based upon 90 plus years of strong tax policy supporting the continuation of IRC § 1031, members of Congress are beginning to understand that taxing cash flow is NOT good tax policy.

In the last nine months, Accruit team members have flown out to DC on four separate trips, have held over 50 meetings and have personally donated to our industry’s PAC and to several representatives that sit on the Senate Finance Committee and House Ways & Means Committee.
Now the industry needs your support. In the attached FEA Press Release, you will note that our association has launched www.1031taxreform.com

A message from our President & CEO, Brent Abrahm:  As I have communicated over the last nine months, repeal of 1031 like-kind exchanges is a topic of discussion in Washington DC as part of overall tax reform. As co-chair of the Federation of Exchange Accommodator’s (FEA’s) Government Affairs Committee, we are making great progress in one-on-one discussions with our Congressmen and women. Our arguments for retaining 1031s are solid and are being heard. Based upon 90 plus years of strong tax policy supporting the continuation of IRC § 1031, members of Congress are beginning to understand that taxing cash flow is NOT good tax policy.

In the last nine months, Accruit team members have flown out to DC on four separate trips, have held over 50 meetings and have personally donated to our industry’s PAC and to several representatives that sit on the Senate Finance Committee and House Ways & Means Committee.
Now the industry needs your support. In the attached FEA Press Release, you will note that our association has launched www.1031taxreform.com

A message from our President & CEO, Brent Abrahm:  As I have communicated over the last nine months, repeal of 1031 like-kind exchanges is a topic of discussion in Washington DC as part of overall tax reform. As co-chair of the Federation of Exchange Accommodator’s (FEA’s) Government Affairs Committee, we are making great progress in one-on-one discussions with our Congressmen and women. Our arguments for retaining 1031s are solid and are being heard. Based upon 90 plus years of strong tax policy supporting the continuation of IRC § 1031, members of Congress are beginning to understand that taxing cash flow is NOT good tax policy.

In the last nine months, Accruit team members have flown out to DC on four separate trips, have held over 50 meetings and have personally donated to our industry’s PAC and to several representatives that sit on the Senate Finance Committee and House Ways & Means Committee.
Now the industry needs your support. In the attached FEA Press Release, you will note that our association has launched www.1031taxreform.com