Criminal tax cases require the government to bring certain considerations to the prosecution that are different from most other federal criminal enforcement. Federal tax statutes impose a heightened level of mens rea, requiring the government to prove that the defendant acted “willfully.”

Yet in the recent case M.H. Boulware, the Supreme Court emphasized that whether tax evasion can be proven depends — not on alleged bad acts, even coupled with bad intentions — but upon proving that a tax deficiency exists, as Kathryn Keneally and Charles P. Rettig demonstrate in a column in the Journal of Tax Practice and Procedure.

The U.S. financial industry is a pervasive force in daily life, and its employees and hired local counsel often work in many other states. Departing from interpretations of nexus based on physical presence, some states are now enforcing “economic nexus” and “attributional nexus.”

Christina Berger, in an article in the Journal of State Taxation, explains theories of nexus and the principals on which these concepts are based with an emphasis on the banking industry.

In 1998, Congress revised the Subchapter S Corporation rules to permit S Corp shares to be owned by Employee Stock Ownership Plans (ESOPs), allowing S corps to replace the usual profit-sharing retirement plan and substantially increase retirement benefits. Rule complexities and high front-end costs have limited the number of participants, though.

Ira Langer, in an article in the Journal of Retirement Planning, dispels the myth that only large corporations can make use of the ESOP structure and explains the benefits.

Temporary Reg. §1.482-9T, promulgated in 2006, provides guidance in determining taxable income for taxpayers engaged in controlled services transactions. The section permits taxpayers, under specified circumstances, to determine the arm’s-length charge for controlled services transactions by reference to total services costs, with no mark up.

Robert Feinschreiber and Margaret Kent, in an article in Corporate Business Taxation Monthly, describe the application of the services cost method and correlate the services cost method examples in the regulation with the specified covered services in Rev. Proc. 2007-13.

In a recent decision, the U.S. Supreme Court held that investment advisory fees paid by a trustee to an outside investment advisor are only deductible to the extent such fees exceed two percent of the trust’s adjusted gross income. The decision establishes a new national standard and resolves a closely followed split in authorities among the appellate circuits.

In an article in the Journal of Practical Estate Planning, Michael G. Schwartz summarizes the statutory and judicial background leading up to the M.J. Knight decision and discusses issues remaining and industry impacts.