Monday, March 13, 2006

Your New Albuquerque Journal: Humor Meets Experimental Fiction

I don't whether this is illegal or not, but as a public service I'm going to post an entire article/column directly from today's Albuquerque Journal. As you know, the Journal is a paid site, and in copying an entire article and pasting it here, Burque Babble is arguably cheating as it circumvents the right for the Journal to generate revenue from its online presence.

Despite its recognition of possible unethical/illegal action in copying/pasting the Journal article, Burque Babble sees the article as of such vital importance that it cannot desist from doing so. This importance is threefold:

1. The article addresses the subject of possible tax liability initiated by the "Big Bill Winter Heating Rebate Check" , which is of importance to almost all New Mexico taxpayers.

2. Limiting access solely to Journal hard copy and/or online subscribers, daily purchasers, and those who find copies of the Journal crammed under "Redbook" and "Highlights for Children" magazines at the Dentist Office is unfair to those without Journal access, in particular those who do not have the financial means to afford the publication.

3. This Journal article/column is gut-bustingly funny. At least I think it is. I think it's a humor article/column...but read it first and we'll discuss...

So, here it is, today's Journal article/column written by UNM Accounting Professor James R. Hamill and entitled "A Final Word on N.M. Energy Rebates":

YOUR TAXES: Writing a newspaper column can be like sitting in a studio as a guest on a radio show— you wonder if anyone out there is listening.
After writing two columns on the tax treatment of the New Mexico energy tax rebate, I've learned that at least someone reads my column. So I decided to write one last (really) column clarifying my views.
The tax law, like all laws, is not always clear. Courts exist to decide how the law applies to a given fact pattern, and even courts can disagree on the "right" treatment.
I find tax law interesting precisely because there are so many issues that do not have a definitive answer. Debating the correct treatment is fun provided neither side stoops to using four letter words to make their point. Unfortunately, the IRS is punctuating its side of the debate with a four-letter word— "must."
New Mexico tax instructions say you "must" include the rebate as other income on your federal tax return. The IRS has said you can be penalized for not doing so. Both of these statements should be ruled out of order in this debate.
Contrary to some quotes attributed to me, I never said the rebate is absolutely not income; I said it probably is not. Let me explain.
Satchel Paige was a great pitcher. He made the ball move so much that he was often accused of throwing illegal pitches.
Satchel replied: "I never threw an illegal pitch. The trouble is, once in a while I toss one that ain't never been seen by this generation."
Such things confuse us. The rules don't say if they're legal or not.
If you want to quote me on this issue, quote me as saying that the trouble is, the energy rebate has never before been seen by this generation. As a result, no one, including the IRS, really knows if it's income.
The IRS says we have seen it— it's the same as the Alaska permanent dividend fund. I have previously written why I think this analogy is deeply flawed. I believe there is authority in the principles of tax law that it's a reduction of non-deductible energy taxes and is not taxable.
However, the argument that it's taxable is not ridiculous.
The four-letter word "must" is an incorrect way to precede "include in income" when addressing the energy rebate. I could live with "may have to" as the proper language, but such language could be replaced with "may not have to include in income." Either one works.
Two final, and important, points need to be made.
First, the IRS does not write tax law and can't say "must" unless the law quite clearly supports its view. The IRS view on the energy rebate is by analogy to the Alaska dividends, not by reference to the Internal Revenue Code.
Second, the IRS is allowed to penalize an understatement of tax due to "negligence or intentional disregard of rules or regulations."
The penalty is 20 percent of the tax understatement caused by this negligence or intentional disregard.
The worst team in baseball in 2005 was the Kansas City Royals— 56 wins and 106 losses. There was a lot of shame in root, root, rooting for the home team in Kansas City, but they still won 34.5 percent of their games.
The tax law says there is no negligence or intentional disregard if the taxpayer's position has a realistic possibility of being sustained on its merits, even if contrary to an official IRS position (which is neither a "rule" nor a "regulation."
A "realistic possibility" means a one-third chance that your interpretation is correct. So you can expect to lose two-thirds of the time without penalty risk. This is worse than the Royals, and you still avoid a penalty.
Competent tax advisers have different views on the tax treatment of the energy rebate. However, I believe that excluding the rebate from income has a better chance of winning than the Kansas City Royals did last year, and that's all you need to avoid a penalty.
You decide what to do; but penalty talk is silly.


Now I'll drop the legalistic jargon bit and we can reflect on whether this column is the Journal's entree into the world of Onion-style Post-Modern slacker ironic stream-of-consciousness humor writing. Or something. Something utterly unlike anything the Journal has ever written. Something like William S. Burroughs, but involving tax accountancy instead of heroin & wife shootings.

Because, let's face it, as a NM taxpayer here is the article/column we're looking for on the tax liability of the "Big Bill Winter Heating Rebate Check":

"A Final Word on N.M. Energy Rebates"
by Dr. James R. Hamill

Yeah, you gotta pay tax on that money.

James R. Hamill, CPA, Ph.D., is KPMG Professor of Accounting in the Anderson Schools of Management, University of New Mexico. He can be reached at


"A Final Word on N.M. Energy Rebates"
by Dr. James R. Hamill

Hell no, don't pay tax on that money.

James R. Hamill, CPA, Ph.D., is KPMG Professor of Accounting in the Anderson Schools of Management, University of New Mexico. He can be reached at

Preferably, of course, the second one. Instead, we get Satchel Paige & Kansas City Royals references, a bit about some Alaska dividends we've never heard of, and then some paragraphs that sound as if they came directly from the U.S. Tax Code, if that code was cut into little pieces, William S. Burroughs style, and recomposed into something like the following:

"The four-letter word "must" is an incorrect way to precede "include in income" when addressing the energy rebate. I could live with "may have to" as the proper language, but such language could be replaced with "may not have to include in income." Either one works."

What the hell does that mean? I mean, really, what the HELL does that mean? I admit it. I'm not a tax accountant, an accountant of any kind, or anything more than a guy who throws data into Turbo Tax online every Spring, but I spent ten solid minutes on the paragraph above, and not only does it not help me do my taxes, it confuses me more than the most bewilderingly obtuse paragraph in any William S. Burroughs cut-n-fold novel. "The Soft Machine" is like reading "Ziggy" compared with "A Final Word on N.M. Energy Rebates".

And that gets me back to the Post-Modern humor idea. My guess is that the Journal has admired the work of The Onion forever, and has tried to work some Onion-esque schtick into their paper for some time, but has never found the proper subject for that brand of humor. The "Big Bill Winter Heating Rebate Check" offered the perfect combination of innocuousness (I mean how much tax can there be on $84?...hang on a second, let me plug it into Turbo Tax Online) and the inherent universal humor of doing one's taxes and being confused about the perplexity.

So, a "Professor" is invented, and using what must have been powerful hallucinogens, Journal writers bang out a faux column that would make the most jaded Onion groupie smirk in snarky, post-ironic smirkiness. For those hip to The Onion lingo, that makes "Professor James R. Hamill" the Journal's own "Herbert Kornfeld". And that's about the highest praise I've ever laid upon the Journal. Ever.

I say long live "Professor James R. Hamill" and his ruminations on the wacky world of tax accountancy. I can hardly wait until the next installment.

Unless, of course, I'm wrong on this Post-Modern humor thing and the article was an actual attempt to help New Mexicans make sense of the "Big Bill Winter Heating Rebate Check" thing. In which case, I'm pretty much at a loss for words and at a loss for what to do with this $84 Big Bill gave me last Fall.

P.S.: Yes, this column resulted in part from the welling up of the deep subconscious resulting from the use of a William S. Burroughs' reading in last night's The Sopranos. Boy, did that bring up some obtuse memories.


Sophie said...

Yeah, that's a real UNM professor. Even with an MBA, I'm as clueless on this one as you are.

Beat Beat said...

William Burroughs on Da Sopranos. Who'd a thunk it...

Lee Alcon said...

If You buy a new vehicle and get a rebate why doen't the IRS make you pau tax on the rebate. A rebate is a rebate.