This transcript has been edited for length and clarity.

David D. Stewart: Happy holidays from Tax Notes. I'm David Stewart, editor in chief of Tax Notes Today International.

As 2023 comes to an end, we're continuing our annual tradition of ending the year with a few short stories that may be a little odd or otherwise don't work as a full episode. As our gift to you this holiday season, here's our year-end collection 2023.

Joining me now is Tax Notes legal reporter Caitlin Mullaney. Caitlin, welcome back.

Caitlin Mullaney: Happy to be here.

David D. Stewart: So what do you have for me?

Caitlin Mullaney: Well, Dave, have you ever been playing video games and wished that you could simultaneously file your taxes through the game? Because that call has been answered.

David D. Stewart: It is not a need that I knew I had, but I'm curious to find out how someone has answered that.

Caitlin Mullaney: Yes. Well, there is this one art collective and they have created an anime dating video game that taxpayers can prepare their individual returns while playing the game.

David D. Stewart: OK, based on this description, I'm going to withdraw my earlier statement that I'm interested in doing this, but let's hear more about it.

Caitlin Mullaney: Well, there is a game; it came out earlier this year, and its Tax Heaven 3000, and it's free. It's a dating simulator that'll prepare a taxpayer's federal tax return as they play the game. And while you're playing the game, you're going on a date with the host of it named Iris.

David D. Stewart: OK. There's some things that are clever here and some things that I find troubling, but continue.

Caitlin Mullaney: So as I'm sure you recognize, Iris sounds a little bit like IRS. So as you're on the date, she asks you questions that are tax related, and throughout the date, she helps you fill out your returns.

David D. Stewart: I mean, this sounds almost less like a tax preparation simulator and more of a phishing scam simulator.

Caitlin Mullaney: Yeah. So that was not an uncommon response when I talked to a few practitioners about it. So at the start of the game, I will just say that Iris tells the user, "Join me and we'll search for deductions while searching for love."

So one person I talked to, Tim Owens of NAT20 Tax Services, he said, "At best, this is a worst version of the Free File program that were endorsed by the IRS. And at worse , it's a scheme to collect personal information from people."

David D. Stewart: I can definitely, definitely sympathize. Now, did you play around with this simulator?

Caitlin Mullaney: So I did. I downloaded it, of course, on my company computer because they have IT, and I don't have that at home. And it's really interesting. You go through; they ask questions. It very much reminds me of like an old-school, early 2000s, '90s video game where all the words are popping up in a font that you'd never imagine.

And what I did find most interesting was when you log onto the game, the information about the game is basically a manifesto against TurboTax. The art collective behind the creation of the game describes TurboTax in the kindest of words as a "predatory parasitic bottleneck that deliberately complicate the tax filing process in order to make it unable for ordinary people to navigate." So you can tell there's no bias there.

David D. Stewart: Of course. Absolutely.

Caitlin Mullaney: What's interesting about the game is it is created by an art collective, and the art collective has taken part in a bunch of other crazy pop culture contributions to things that are common in our political scheme. They've done artwork with medical bills to highlight the crisis in that area. They've done an ice cream truck that was driving around New York, I believe, with "Eat the Rich" popsicles that were ice cream bars à la the SpongeBob ones that you get, but instead of that, it was faces of billionaires. And they did the controversial Jesus shoes. So it's not uncommon. This was probably the only one that they've done that would actually play into something that we'd report on though.

David D. Stewart: Right.

Caitlin Mullaney: I said it's very much an anti-capitalism motive behind it.

David D. Stewart: Well, I don't think that I'll be using it to do my taxes next year, and I definitely won't be downloading it on my work computer.

Caitlin Mullaney: That is good. I downloaded it and have not heard anything, like complaining, yet. But who knows? I will say it is only good for federal. So even then, you still have to file your state tax on your own.

David D. Stewart: Oh, well then, what's the point? Really? Honestly.

Caitlin Mullaney: Maybe coming 2024, Tax Heaven 4000.

David D. Stewart: Well, Caitlin, this has been great. Thank you so much for being here.

Caitlin Mullaney: Well, thank you for having me.

David D. Stewart: Joining me now is Tax Notes reporter Emily Hollingsworth. Emily, welcome to the podcast.

Emily Hollingsworth: Thanks for having me.

David D. Stewart: So what do you have for me?

Emily Hollingsworth: So I have a story for you about how this new tax has affected the NBA roster.

David D. Stewart: All right. So what's happening?

Emily Hollingsworth: So NBA player Grant Williams had over the summer signed a contract with the Dallas Mavericks totaling $54 million. In an interview that he gave July 6 with the publication The Athletic, he told The Athletic that he was also considering a contract with the team he was currently playing with at the time, the Boston Celtics, and that contract was for $48 million with some incentives thrown in. But Williams told the publication that he ultimately went with the Mavericks because he explicitly mentioned the Massachusetts 4 percent surtax on individual income that exceeds a million dollars — the so-called millionaire's tax.

David D. Stewart: So what sort of reactions have we heard from this move?

Emily Hollingsworth: The reactions have been varied. So you have some tax organizations, like the Massachusetts Fiscal Alliance, that for them, it's sort of confirmed the fears that they had had surrounding this surtax, that it could potentially drive away higher earners from living in Massachusetts.

And what's interesting about this is that the Massachusetts Society of CPAs issued a report earlier this year. They surveyed about 270 CPAs, and they found that of the respondents, about 82 percent had said that their high-income clients had expressed plans to leave Massachusetts in the next 12 months. And 61 percent of respondents said that their clients specified that tax policy was a primary reason.

So it's been something that the state has had a look at as it's taken on this new surtax. The surtax took effect in January, but then you also have organizations like the Massachusetts Budget and Policy Center, which mentioned that this was really only one example of an individual who made the decision to leave the state and mentioned that surtax as a reason, and that might not represent every high-earning individual in Massachusetts.

And I thought this was also interesting, but the person who I had spoken with at this policy center had mentioned that the NBA itself also has a luxury tax. Teams that go above a certain threshold, they are required to pay a tax. Just recently, the USA Today sports-owned website — it's called the HoopsHype — said that eight teams are expected to be responsible for tax payments that would total roughly, let's say, between $516 [million] and $517 million.

David D. Stewart: Now some people are saying that they intend to leave Massachusetts. Have we seen any indication that people actually are?

Emily Hollingsworth: See, that's been interesting. When I spoke with the Massachusetts Department of Revenue for this article, they said that it would likely be during the 2024 tax filing season that would sort of fully reflect the surtax and its effects.

David D. Stewart: Well, I guess we should also keep an eye out on the Red Sox and see how their roster shapes up for this year. Well, Emily, thank you for being here.

Emily Hollingsworth: Thank you.

David D. Stewart: Joining me now is Tax Notes legal reporter Nathan Richman. Nate, welcome back.

Nathan Richman: Well, thanks for having me.

David D. Stewart: What do you have for me?

Nathan Richman: Well, this year, I've actually got a couple for you. I've got one about a cello and one about some forgeries. Which would you like to hear first?

David D. Stewart: Let's go with the cello.

Nathan Richman: OK. So this was a collection case. The estate of Ghiada Firestone owed the IRS some money, and the estate's representative Omar Firestone was on the receiving end of some IRS collection action. They wanted $2.5 million after a $1.9 million liability grew. This started in 2012.

David D. Stewart: So this is the interest in penalties and sort of stuff. Yeah.

Nathan Richman: And the latest collection case involved a 200-year-old fine Italian violoncello circa 1816 that the IRS wanted to collect this debt from, and the court agreed and ordered if it's not in the U.S., you must repatriate it.

David D. Stewart: So the court order is to import a cello and give it to the IRS.

Nathan Richman: Potentially. The—

David D. Stewart: Does the IRS have a chamber orchestra?

Nathan Richman: Not that I know of. Omar tried to play a somewhat fine tune by inventing a living trust to give this cello to. He as settlor gave the trust to himself as trustee for the benefit of himself as beneficiary, particularly that he had a life estate to continue to play the cello until he died.

David D. Stewart: That seems a bit tricky.

Nathan Richman: Or very simple, which seemed to be how the court regarded it saying, "Yes, this is definitely your cello." The government at one point tried to short-circuit this whole thing, claiming that Omar had no standing, he doesn't have an interest in the cello. To which the court said, "If he doesn't have an interest in the cello, what are we doing here? If your theory is correct, you don't get to collect anyway." So dismissed that false note.

David D. Stewart: So what is — assuming they don't have a chamber orchestra — what is the IRS going to do with a cello?

Nathan Richman: I would assume sell it.

David D. Stewart: OK, fair enough.

Nathan Richman: This is an antique instrument, so.

David D. Stewart: Is there a valuation assigned to this cello?

Nathan Richman: Not that I've seen yet.

David D. Stewart: OK. I guess we'll just have to wait for it to come up for auction.

Nathan Richman: Exactly.

David D. Stewart: OK. Well, tell me about the forgeries.

Nathan Richman: The forgeries, the forgeries are even more fun. So Mr. Benjamin Soleimani left Iran, where he was born, in the 1960s. He only ever returned once, in 1976. And Judge Joseph Gale, the Tax Court judge writing up the opinion in Mr. Soleimani's case, noted he did get detained for a little bit when he went back once.

So unsurprisingly, he did not go back again. Even more unsurprisingly, when after the revolution, he was labeled a "friend of the Shah." So he was not exactly welcome. In 1981 Soleimani's uncle tells him that there are three properties purchased in '76, '77, and '78 in Tehran, in Soleimani's name.

Everything's good. We're just sitting around. Soleimani in 2006 decides to sell these properties. So he enlists his friend, conveniently named Witness 1. Witness 1 proceeds to do some research and says that in 2007 the Iranian government seized these three properties.

So Soleimani says, "OK, I'll just deduct the $5.58 million they were supposedly worth." The IRS doesn't agree with this, and there's some dispute. So apparently Witness 1, while he was looking into all of these, engages a lawyer named Mohammed Ali Soltanpour to go to the Iranian government and pull registry documents, that sort of thing.

And he comes back with a document supposedly issued to Mr. Soltanpour, saying here are these properties, Soleimani used to own them. The Iranian government now seized them. Cut to the trial.

Everything has been presented, including these documents Witness 1 says came from Soltanpour, but Judge Gale is starting to look at everything after the trial and notices that some of the documents don't align with where the properties supposedly are in Tehran. And in response, the Soleimanis supplement their expert witness report.

This seems a little unfair. So the parties all agree, the IRS can get its own expert witness. Expert witness goes to everywhere Soltanpour apparently went. And lo and behold, it turns out nobody has ever heard of Soltanpour. His bar number was never issued. So there are some questions.

David D. Stewart: I would say that does definitely raise a lot of questions. A lot of red flags.

Nathan Richman: Red flags, indeed. So the IRS argues the documents were all forged. Soltanpour doesn't exist, and there's another trial to get to the bottom of this. During that trial, alliteratively Witness 1 starts to waffle, and Judge Gale is left to conclude that yes, this is all a big forgery.

Soleimani argues, "Oh wait, maybe somebody just was using a pseudonym, using the name Soltanpour to get these documents for all this protection." Which doesn't really seem to make sense to Gale because why do the documents get issued to a pseudonym? It seems like you wouldn't be allowed to do that.

So this argument doesn't really go very far. Even Soleimani's expert doesn't really buy this idea of an alias being useful to get any of these documents. The deficiency's upheld. The IRS tried to get a fraud penalty tacked on right after the second trial, which Gale said, "Well, it wasn't really fair for a late-breaking argument from them. It's also not fair for a late-breaking argument from you. And also it's not clear who did the forging."

While Witness 1 waffled, Soleimani was actually pretty consistent with his story that he never met Soltanpour. It was all Witness 1's doing. So it's entirely plausible that the Soleimanis were the victims, not the perpetrators of this, that it could just have been Witness 1's foibles.

David D. Stewart: This is one of those cases where as you're listening to it, you start to question whether you're capable of knowing anything. Is there anything true?

Nathan Richman: Or just be careful of friends in other countries supposedly doing your work for you.

David D. Stewart: Yeah, I'll take that note, and I'll keep that in mind next time I'm trying to buy or sell or have confiscated property in another country.

Nathan Richman: I wonder what situation you would want to have your property confiscated in another country. But that's all your business, not mine.

David D. Stewart: Fair enough. Nate, thank you for being here.

Nathan Richman: Thank you for having me.

David D. Stewart: Joining me now is Tax Notes reporter Sarah Paez. Sarah, welcome back to the podcast.

Sarah Paez: It's great to be here, Dave.

David D. Stewart: So what do you have for me?

Sarah Paez: Well, for starters, it's probably going to cost you more to go on vacation next year.

David D. Stewart: OK. What's happening?

Sarah Paez: Well, a lot of popular vacation locations are starting to tax tourists.

David D. Stewart: So what's the reason behind these new taxes?

Sarah Paez: Well, basically, a lot of popular locations, including Valencia, Spain, Bali, Indonesia, even Barcelona, are realizing that extra visitors put extra pressure on their infrastructure and crowd their streets. There's more trash to pick up. So they're wanting some sort of monetary compensation for that.

David D. Stewart: How are they implementing this? I'm assuming it's not a turnstile at the gate.

Sarah Paez: No. Well, it sort of ranges, but for example, Bali, Indonesia, is going to start charging a one-time $10 fee on foreign tourists entering the island. And their goal is to raise revenue to preserve cultural sites and protect the environment.

David D. Stewart: All right. So what are they doing in Spain?

Sarah Paez: Well, in Barcelona, which already actually has a tourism tax, they plan to increase their fee to €3.25 per night. And that's basically tacked onto your accommodation. So your hotel, your Airbnb, basically where you're staying.

Valencia, which is also in Spain, actually plans to introduce a tourism tax also on accommodation for the first time. Starting this month, travelers would pay anywhere between €0.50 and €2 per night depending on their level of accommodation. And that would be up to seven nights. And officials are expecting to use that revenue, and they actually are saying that it's going to rake in about €30 million annually. They want to use it to pay for environmental projects.

David D. Stewart: All right, so what else are we seeing? What's going on in Portugal?

Sarah Paez: Well, the town of Olhão, which is on the very popular Algarve coast in Portugal, they've just started charging a €2 per night tourism tax, and that's also charged on accommodation. So hotels, Airbnb stays, and so that rate applies for anybody visiting between the months of April and October. And then in the off-season, they reduce the tax, but it's still there. It's €1 a night.

And so these authorities plan to use this revenue to mitigate the effects of tourism on cleanliness, safety, and they want to invest in regional infrastructures to actually support tourism more. But basically what you're seeing in a lot of these locations is trash pileups. You're seeing increased strain on water, sewer systems, more traffic, just more people walking around, and that just increases the strain on local authorities to provide services.

David D. Stewart: Yeah. And it seems like these fees are not particularly onerous. I'm not sure that they'll be changing my travel plans anytime soon.

Sarah Paez: Probably not. Honestly, they're pretty low fees. And we've come to expect this in the U.S. too. If you travel to a different state, you're probably going to get a 10 percent tourism tax on your New York City hotel stay. So really, these destinations are just kind of latching on to an already popular thing and just getting the money where they can.

David D. Stewart: Well, this falls into the category, I think, of one of those taxes I'm sort of happy to pay. Sarah, thank you for being here.

Sarah Paez: Thank you, Dave.

David D. Stewart: Before we go, I'd like to thank our Producer and Engineer Jordan Parrish, Audio Engineer Peyton Rhodes, Acquisitions and Engagement Editor in Chief Paige Jones, Senior Executive Editor for Commentary Jasper Smith, Associate Acquisitions Editor Alexis Hart, and all the reporters and contributors who make this show possible.

And thank you to all the listeners out there. We couldn't do it without your continued support. Happy holidays, and we wish you a happy and healthy new year.

And now instead of coming attractions, joining me now with an important reminder is Acquisitions and Engagement Editor in Chief Paige Jones. Paige, what do you have for us?

Paige Jones: Thanks, Dave. Just a quick reminder to our listeners that the submissions period for the Tax Notes Student Writing Competition is open. This annual award recognizes superior student writing on unsettled questions in tax law or policy. Eligible students must be enrolled in an accredited undergraduate or graduate program during the academic year. Submissions are due by June 30. Visit taxnotes.com/students for more details.

David D. Stewart: That's it for this week. You can follow me online @TaxStew. That's S-T-E-W. And be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. And as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.

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