Posted by Issam Abualnadi.

Tax is a sum of money levied on incomes, property, sales, etc., by a government for its support or for specific services. (The American Heritage Dictionary). According to the IRS website, the origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913; however, history, it actually goes back even further. During the Civil, War Congress passed the Revenue Act of 1861, which included a tax on personal incomes to help pay war expenses. The tax was repealed ten years later. In 1894, however, Congress enacted a flat rate Federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court. The Court held it was a direct tax not apportioned according to the population of each state.

The 16th amendment, ratified in 1913, removed this objection by allowing the Federal government to tax the income of individuals without regard to the population of each State. (IRS Website). The sole purpose of income tax is based economics and social goals.( Income Tax Fundamentals 1-2). While the government tries to maximize its revenue, at the same time, Congress tries to make the tax law suitable and fair for each individual. Therefore, the tax law not only divides the taxpayers into categories upon their income, but also it allows them to minimize their taxes due by structuring their tax return in different methods. Unfortunately, not every citizen is law-abiding in this respect, and accordingly, some taxpayers break the tax law. In the foregoing, I will discuss the differences between tax avoidance, tax fraud, and tax evasion.    Avoidance of tax is not a criminal offense. According to the IRS, taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. One who avoids tax does not conceal or misrepresent, but shapes and preplans events to reduce or eliminate tax liability within the parameters of the law. Take for example, Warren Buffett. Buffett wrote in The New York Times in 2011 “ Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent” ( The New York Times). But how Buffett can do that?

Buffett and many other super rich people use different tax rules to avoid paying taxes, like the “cash-rich split-off.” This code mechanism is used when Company (A) puts cash or other “investment assets” plus a business into a subsidiary that it then swaps tax-free to Company (B) in return for B’s holding of A’s stock. In 2010 Graham Holdings and Berkshire (Warren Buffett’s corporation), saved a total of about $675 million in federal and state income taxes by going the “cash-rich split-off” route. Graham Holdings is trading cash, Berkshire stock that it owns, and a TV station for most of Berkshire’s 23 percent stake in Graham Holdings. Tax avoidance matches the well-known saying, “Work smarter not harder.” Also, it is worth mentioning that massive tax avoidance draws attention to the notion of the efficiency of the tax codes, and the need to produce new rules or restrictions prevent such legal tax evasion. (The New York Times).

Tax fraud is another way some taxpayers use to minimize their tax liability. According to the IRS website, tax fraud “is deception by misrepresentation of material facts, or silence when good faith requires expression, which results in material damage to one who relies on it and has the right to rely on it. Simply stated, it is obtaining something of value from someone else through deceit.” (IRS Section 25.1.1.2). According to IRS’s definition of tax fraud, not all the mistakes in preparing a tax return are considered a fraud, and in order to consider a case as a fraud, two elements should be presented:

1. An additional tax due and owing as the result of a deliberate intent to evade tax; or

2. The willful and material submission of false statements or false documents in connection with an application and/or return. (IRS Section 25.1.1.1). Generally the expression “Tax Fraud” used for civil and criminal cases.

The third area is tax evasion. Tax evasion, “Involves some affirmative act to evade or defeat a tax, or payment of tax. Examples of affirmative acts are deceit, subterfuge, camouflage, concealment, attempts to color or obscure events, or make things seem other than they are” (IRS Section 25.1.1.2.4). “It is typically used in the criminal context, and it is a subset of the tax fraud.”

Tax fraud and tax evasion are very close in their meaning; both are illegal way to reduce the tax liability. The IRS indicates tax fraud by two major indicators. The first indicator is when the taxpayer knowingly understates their tax liability often leaving evidence in the form of identifying earmarks. The second indicator is that serve as a sign or symptom, or signify that actions may have been done for the purpose of deceit, concealment or to make things seem other than what they are. Usually the IRS cannot prove that to court, because taxpayer can easily claim a good faith misunderstanding of the law or good faith belief that one is not violating the law negating willfulness. Therefore, the IRS chooses to prosecute the taxpayer civilly for underpaying taxes. In such cases, the IRS can impose a tax fraud penalty, which is 75% of the tax owed plus the interest on this penalty. On the other hand, tax evasion is a subset of tax fraud. In tax evasion cases, the very difficult burden for the IRS is to prove the willfulness, which means a voluntary, intentional violation of a known legal duty. (IRS, Section 25.1.1.1) To prove fraud, they must show the court that the taxpayer did the act deliberately for the purpose of deceit. Examples include omissions of specific items where similar items are included; concealment of bank accounts or other assets. (ISR Section 25.1.1.3). So if the IRS can prove that, then it is a tax evasion case. In tax evasion cases, the penalty range is up to five years in jail plus a big fine and plus the costs of prosecution for each separate tax crime.

In conclusion, the tax law was created to enable the government to support the economical and social activities in the American society. The lawmaker enacted some tax codes to help eligible taxpayers reduce their tax liability under exact conditions, but some still try to deceive the government by using illegal means.

Issam is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.

Works Cited

“Sixteenth Amendment.” West’s Encyclopedia of American Law, edition 2. 2008. The Gale Group 17 Nov. 2014. http://legal-dictionary.thefreedictionary.com/Sixteenth+Amendment

tax.” The American Heritage® Dictionary of the English Language, Fourth Edition. 2003. Houghton Mifflin Company 23 Nov. 2014 http://www.thefreedictionary.com/tax

“Brief History of IRS.” Brief History of IRS. Web. 10 Oct. 2014. .

Whittenburg, Gerald E., and Ray Whittington. “The Individual Income Tax Return.” Income Tax Fundamentals. 2014 ed. St. Paul: Cengage Learning, 2014. 1-2. Print.

“Internal Revenue Manual – 25.1.1 Overview/Definitions.” Internal Revenue Manual – 25.1.1 Overview/Definitions. Web. 23 Nov. 2014. .

BUFFETT, WARREN. “Stop Coddling the Super-Rich.” The New York Times 14 Aug. 2011. Web.

Posted by Melissa Nomani.

Farmers across the United States are filing suits against Syngenta. As stated in the article, “The lawsuits allege the biotechnology company’s genetically modified Agrisure Viptera and Duracade seeds contaminated US corn shipments, making them unacceptable for export to China.” China does not allow the importation of GMO products that it has not tested. In February of 2014, China learned that the corn shipments from the U.S. contained Viptera. Agrisure Viptera is a seed that is genetically modified (known as MIR162) to prevent damage to crops by earworms and cutworms. As a result, China has rejected corn imports from the U.S.

Over 1,800 suits have been filed. Lawsuits filed against Syngenta state that the company put seeds on the market even though there was no approval from foreign markets. This has led to some farms having great financial losses. Even farmers who do not use GMO seeds could be affected due to accidental contamination from other fields. Syngenta has tried to refute the lawsuits by stating that they are not responsible for protecting farmers from GMO seeds. This arguments were rejected in September by Judge Lungstrum, who refused to dismiss the suits.

It has been estimated by The National Grain and Feed Association that as of April 2014 almost $3.0 billion worth of losses were caused by Syngenta’s Agrisure Viptera MIT162 corn seed.

The first of the lawsuits are expected to go to trial in June 2017.

Melissa is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

The President signed into law a bill passed by Congress banning U.S. imports of “fish caught by slaves in Southeast Asia, gold mined by children in Africa, and garments sewn by abused women in Bangladesh.” The law closes a loophole in an 85-year-old tariff law which allowed these products to be sold.

Due to high demand of certain products, the previous law allowed these goods to be sold in the U.S. regardless if they were produced by slave labor. Sen. Sherrod Brown has pressed U.S. Customs to make sure the law is enforced.  He said, “It’s embarrassing that for 85 years, the United States let products made with forced labor into this country, and closing this loophole gives the U.S. an important tool to fight global slavery.”

Posted by Stephen D’Angelo.

Friday morning, two days after the judge presiding the Uber class action lawsuit decided that drivers attempting to arbitrate can be included in the law suit, Uber sent drivers a new agreement. The document undermined the judge’s ruling by revising the arbitration clause.

Liss-Riordan and her team are filing an emergency motion that will be heard in front of Judge Edward Chen next Thursday; it asks the court to block Uber from enforcing this new driver agreement. “Uber has tried to fix the problem that Judge Chen ruled made the agreement unenforceable,” Liss Riordan told TechCrunch in an email.. The Private Attorney General Act gives “a private citizen the right to pursue fines that would normally only be available to the State of California. It also allows that private citizen to “seek civil penalties not only for violations that he personally suffered” but also for violations of “other current or former employees.”

According to Chen’s Wednesday ruling, the Uber driver agreement of 2014 and 2015 illegally waived drivers’ rights under PAGA, which informed Judge Chen’s decision that the arbitration clause could not be honored because it contained an illegal provision. This was the reason for the provision of the agreement, to quickly remove the illegality and include new provisions to the agreement.

The Private Attorney General Act protects uber drivers from what uber has tried to prevent, a large action against the company. Uber has agreed to resolve any claim against the company but only on an individual basis. Uber’s driver agreement provision also attempts to prevent workers from participating in any class collective or representative action against the company. Uber also rewrote the agreement to remove a requirement that arbitration between a driver and the company remain confidential. The language makes it clear that the agreement goes into effect only when a driver accepts it  not when a revision is published, therefore, protecting drivers who previously signed the agreement.

Stephen is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.

Research proposal posted by Jessica Page.

Topic

The principle of double effect creates a set of guidelines to “determine when it is ethically permissible for a human being to engage in conduct in pursuit of a good end with full knowledge that the conduct will also bring about bad results” (The Principle of Double Effect). Generally, the principle states that when someone is deciding a certain conduct that has both good and bad effects, the course of conduct they choose is “ethically permissible only if it is not wrong in itself and if it does not require that one directly intend the bad result” (The Principle of Double Effect). The moral criteria for the principle of double effect generally states the action in itself must be good or indifferent, the good effect cannot be obtained through the bad effect, there must be a proportion between the good and bad effects brought about, the intention of the subject must be directed towards the good effect and merely tolerate the bad effect and there does not exist another possibility or avenue (What is the Principle of Double Effect?).

Pros and Cons

The issue with the principle of double effect is that each situation where the principle applies is different. If an act is bad, it cannot become good or indifferent by a good motive or good circumstances. If it is evil in nature, this will not change. That being said, the principle “the end justifies the means” must always be rejected. The idea that needs to be applied to each issue is the fact that a human must never do evil, but they are not bound to prevent the existence of evil. One example we can apply this to is the BP oil spill that was discussed in class. By not mandating a cut-off switch because of how expensive it was, even though the safety benefits were astronomical, when an explosion happened on one of the rigs, eleven workers were killed and seventeen were injured. Not to mention the five million barrels of oil that gushed into the ocean. Had the US mandated these switches like they wanted, even though BP lobbied against them, it could have avoided the deaths, injuries and pollution caused by the exploding rig. In this case, the deaths and havoc caused by the explosion did not justify the fact that BP was trying to save money for their own personal benefit. Another example where the principle of double effect is relevant today is the controversy of euthanasia. It is used to justify the case “where a doctor gives drugs to a patient to relieve distressing symptoms even though he knows doing this may shorten the patient’s life” (BBC). The doctor’s intention is not to kill the patient, but the result of death is a side-effect of reducing patient’s pain. One problem that people argue against this doctrine is the fact that they believe we are responsible for all anticipated consequences of our actions. Another is the fact that intention is irrelevant. A third issue, specifically in the euthanasia issue, is the fact that death is not always seen as a bad thing making the double effect irrelevant. Lastly, the double effect can produce an unexpected moral result.

Ethics and Principles

When looking at the incorporation of Catholic, one of the main issues that concerns this principle and the Catholic religion is that case where a pregnancy may need to end in order to preserve the life of the mother. The example most often given is a woman with uterine cancer. By removing the uterus, it will bring death to the fetus but the death is not “directly” intended and in turn, the mother will live. It is an issue that still is debated today (Soloman). Another similar case having to do closely with Catholic ideals is when a woman has an ectopic pregnancy and must receive surgery to remove the embryo. At a Catholic hospital, it can be questioned whether that specific procedure is considered a direct abortion, going against the Catholic ideals and morals, no matter what the means of the surgery are. “The principle of double effect enables bioethicists and Catholic moralists to navigate various actions that may or may not be morally justifiable in some circumstances” (Kockler). The idea of proportionate reasoning has also been condemned by Pope John Paul II. He categorized proportionalism as a species of consequentialism. This is condemned by the Church because no Catholic moralist would agree that a desirable end justifies any means (Kockler). These are serious issues, especially when considering the principle of double effect from a Catholic standpoint.

Works Cited:

Kockler, Nicolas. The Principle of Double Effect and Proportionate Reason. http://journalofethics.ama-assn.org/2007/05/pfor2-0705.html

“The Doctrine of Double Effect”. BBC. http://www.bbc.co.uk/ethics/euthanasia/overview/doubleeffect.shtml

“The Principle of Double Effect”. http://sites.saintmarys.edu/~incandel/doubleeffect.html

“The Principle of Double Effect”. http://www83.homepage.villanova.edu/richard.jacobs/MPA%208300/theories/double%20effect.html

“What is the Principle of Double Effect?” http://ncbcenter.org/document.doc?id=132

Posted by Rizzlyn Melo.

The practice of corruption in any company hurts every single person involved. This is certainly the case with Petrobras, a Brazilian state-run oil company. The corruption that has been associated within the large company has caused it exponential damages and has tarnished the reputations of both business executives and political figures. In the BBC article, it was reported that the company suffered an “overall loss of $7.2 billion” and an impairment charge of $14.8 billion that reflects the decreased value of its assets. These figures represent the first losses the company has suffered in decades.

The unfortunate circumstances Petrobras is currently facing are the results of various criminal activities. One of the most scandalous discoveries made against Petrobras is its members’ involvement in bribery. Bribery can be defined as the unlawful offer or acceptance of anything of value in exchange for influence on a government or public official. Various government officials have been linked to these bribery allegations. Even Brazil’s president, Dilma Rousseff, has endured scrutiny for her alleged involvement. Rousseff was a board member of Petrobras during the time of the illegal activity. Thousands of Brazilian people have protested against their elected president. Later, however, an attorney general of any charges exonerated Rousseff. Another form of corruption Petrobras has been accused of is money laundering, which is the concealment of the origins of money obtained illegally. In this case, money laundering was employed to hide bribes as well as several illegal donations made to political parties.

At least forty politicians are currently under investigation. That number does not even include the numerous business executives that have lost their positions. The criminal activities of this one company have ruined countless lives and has shaken an entire nation. The corruption in Petrobras demonstrates how important business law is in keeping companies such as this in check. Petrobras has lost more trust than profit, and that is something it cannot easily make up.

Rizzlyn is a business administration major with a concentration in marketing at Montclair State University, Class of 2017.

Posted by Giancarlo Barrera.

Goldman Sachs was infamously named “The Wolf of Wall Street.”   Goldman created, convinced, and sold mortgage investments that had been designed to fail in the first place.corruption at its finest.  It was corruption at its finest.  Goldman even went as far as betting against the same derivatives it was promoting and selling to their own clientele.  Goldman accepted that it misled investors the wrong way, but did not admit to any scheming or wrongdoing.

In July 2010, Goldman paid an enormous SEC fine of 550 milion dollars.  It was one fine after another.  Then in April 2012, Goldman paid a fine of 22 million dollars for allowing insider trading of non-public information to Goldman’s clients and traders since 2007.  On the link, the story goes into further detail of how much fraud and dishonesty was played under the table and behind the backs of its own clients, who the company was supposed to help invest their money in the first place.

Business is business.

Giancarlo is an economics and finance major at Montclair State University, Class of 2016.

Posted by Jose L. Diaz.

Imagine having a potential life-ending disease or illness that you depend on medication for to survive. Money is tight, and most of your savings goes towards purchasing the medication in order to survive. Suddenly, just overnight, the price of this drug not only increases, but it increases by 5000%. While it sounds absolutely absurd, this actually happened when Turing Pharmaceuticals, a startup company being run by a former hedge fund manager, increased the price of their drug called Daraprim, from $13.50 a tablet to $750 a tablet overnight. That is not $750 a prescription–it is $750 per tablet. This brought the annual cost of treatment for some patients to over a hundred thousand dollars.

Martin Shkreli, CEO of Turing Pharmaceuticals, claims that the drug is so rarely used that the price increase would not have a significant effect on the health system. He claims that the money earned from the price increase would go towards developing better treatments for toxoplasmosis, the disease that is treated by Daraprim. However, the price increase will make it almost impossible for private insurers like Medicare and patients in hospitals to attain. The fact that the drug is so expensive and hard to attain now, it makes it harder for other companies to make samples of the drug and replicate it. Overall, the drug is the leading treatment for the life-threatening parasitic infection toxoplasmosis. The increase in price seems to be an only profit-driven choice.

Jose is finance and accounting major at the Stillman School of Business, Seton Hall University.

Posted by Katie Kim.

On Thursday, Martin Shkreli, a 32 year-old pharmaceutical executive, was arrested by the federal authorities on securities and wire-fraud charges stemming from an alleged Ponzi scheme he ran as a hedge-fund manager. What the young executive was doing was taking out loans from investors to start a new pharmaceutical company and using that money to pay off his debt from his hedge-fund. Martin Shkreli committed “fraud in nearly every aspect of hedge-fund investments and in connection with his stewardship of a public company,” said the director of enforcement at the Securities and Exchange Commission, Andrew J. Ceresney.

Shkreli was already notorious for price-gouging during his time at Turning Pharmaceuticals. His idea was to acquire decades old drugs and raise the price of it to $750 from $13.50 per pill. The current charges are not related to Shkreli’s work as chief executive of Turing Pharmaceuticals.

The federal authorities say that Shkreli was running three schemes that had connections to one another, he defrauded investors and used stock and cash from an unrelated pharmaceutical company to cover up the money he lost. The Brooklyn US attorney filed a seven-count criminal indictment and the Securities and Exchange Commission filed a related civil complaint on alleged securities fraud against Shkreli. Federal officials painted Mr. Shkreli’s business dealings as “a securities fraud trifecta of lies, deceit and greed.”

Shkreli was released on a $5 million bail, secured by a bank account and his father and brother. The authorities also arrested Evan L. Greebel who served as an outside counsel to Retrophin, the company Shkreli previously worked for. Shkreli treated Retrophin like his “personal piggy bank” where he used $11 million to pay back shareholders of MSMB funds.

Katie is an accounting/finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Mike Bocchino.

Tom Brady has been accused of knowing about his team deflating footballs in the 2015 AFC championship game against the Indianapolis Colts. The footballs’ air pressure had been significantly reduced to a point where other players could tell the difference. The NFL commissioner, Roger Goodell, investigated and suspended Brady for knowing about the tampering of the footballs. Brady fought the suspension in federal district court and his lawyers persuaded the judge. He ruled that Brady did not need to serve his suspension because it was an unfair punishment for just being accused of knowing about the deflation.

The commissioner then took the case to the court of appeals where they did not look at the facts of whether or not Brady deflated the ball, but rather whether or not Goodell was able to cast such a punishment on a player. They looked solely at whether Goodell, as arbitrator, acted in the spirit of the collective bargaining agreement. Judges Barrington Daniels Parker Jr. and Denny Chin wrote in their opinion, “We hold that the commissioner properly exercised this broad discretion under the collective bargaining agreement and that his procedural rulings were properly grounded in that agreement and did not deprive Brady of fundamental fairness. Accordingly, we reverse the judgment of the district court and remand with instructions to confirm the award.”

Basically they agree that the commissioner acted on the powers which he, the league, and the players union had all agreed upon in 2011. So those of you out there saying that Goodell has too much power, the players agreed to what he can and cannot do. Plus, the tampering of footballs is cheating and this is not the first time that Brady had been caught cheating, never mind countless times that he did not get caught. It was only a matter of time.

But overall, the court of appeals did a great job looking at whether or not Roger Goodell stepped over the line or acted within his range of duties and whether or not it was the best interest of the league, which it was.

Mike is business administration major with a concentration in finance at the Feliciano School of Business, Montclair State University, Class of 2018.

Posted by Dan Udvari.

On December 3, 2015 Donald L. Blankenship – the CEO of Massey Energy, Co. – was convicted of a single misdemeanor for conducting a conspiracy to violate safety rules in his coal mines just before the Upper Big Branch Mine disaster that occurred on April 5, 2010.

Massey Energy was the fourth largest publicly traded coal extractor by revenue ($2.69 billion) in the United States. It was founded in 1920 by the Massey family and operated in Richmond, Virginia. The company consisted of approximately 5800 employees right before Alpha Natural Resources acquired the company for 7.1 billion dollars. Interestingly, 99% of the shareholders voted in favor of the acquisition, which shows how poorly the company was governed by management. Don Blankenship took control over the company in 1992 and created a culture that favored profits over safety. In total, the coal extractor giant had around 369 citations and orders, which totaled a staggering 10.8 million dollars.

On April 5, 2015 a massive explosion in the Upper Big Branch Mine in Montcoal, West Virginia occurred that killed 29 people. This tragedy was the worst since the 1970 Hyden disaster. Massey Energy operated the Upper Big Branch Mine and later turned out that they operated the mine in a manner that was against several rules set up by the MSHA. The investigation later determined that the ventilation system in the mine did not work properly and failed to get rid of the toxic gases that caused the explosion. Massey intentionally neglected all the safety rules and citations issued by the MSHA for the purpose of increasing profits. However, this case goes deeper than one thinks. According to reports, Massey Energy is very influential on political figures and officials in West Virginia. Using this power, they were able to bribe and manipulate MSHA regulators so they look the other way when inspecting the mines.

In November 2014, Don Blankenship, was indicted by a federal jury on four criminal counts including conspiracy to violate safety laws, securities fraud, defrauding the federal government, and making false statements to the SEC. Even though he was charged with these, he was only found guilty of one on December 3, 2015. Had he been convicted of all four, he could have been sent to prison for approximately thirty years. Now, he is only serving one year in jail.

I do not believe that Blankenship should only serve one year in jail. It seems unfair to those who had lost their lives because of profits. It baffles me that people as greedy as him get away with conspiracy and murder charges. It seems that money can literally buy your freedom in the United States. All you need is a good lawyer or lawyers.

Dan is a graduate accounting student with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University, Class of 2016.

Posted by Da’Naysia Aarons.

In an article called, “Lawsuits and Consumer Reporters Fight Home Warranty Companies,” Heidi Turner discusses how home warranty companies are being sued by consumers. An investigative reporter was asked to look into a company called Sensible Home Warranty who was allegedly selling consumers a warranty policy. However, when one consumer asked for a new microwave, Sensible Home warranty refused to pay out her claim. While investigating the company, a reporter name Michelle Mortensen found that Sensible Home Warranty has more than 1,950 complaints. In the article it states, “An investigation into the company was undertaken by the Nevada Division of Insurance but in the meantime, the company reportedly went out of business.”

Due to the fact that the company was mistreating their consumers and taking advantage of their money, the company was fined $5,000 dollars for not complying with the state’s Service Warranty Act. In the article it further states, “The business failed to pay legitimate claims made on home warranty contracts sold in the State of Utah, or to pay them in a timely manner, and the business failed to respond to inquiries of the commissioner.”

Since many other home warranty companies have been taking advantage of other consumers, lawsuits have been filed against them.

Da’Naysia is an international business major at Montclair State University, Class of 2017.