WHEN last we discussed artist/activist Ai Weiwei, I predicted that his requests for either judicial review or a public hearing would be turned down flat - no ifs, ands or buts. After all, why should he be given preferential treatment when even General Motors in China doesn't get treatment like that? Regardless, I expect that Ai will continue to play his media options until such time as either his public no longer wants to fight the issue or 'finality' is mandated by the State Administration of Taxation.

The SAT is in a lose-lose situation - even if they are right in this matter, they have absolutely no idea how to play the media. Ai, as per a South China Morning News article of 30 March, stated that he will not treat the money he received from his supporters as donations but as loans that he will repay. He'd better do this as he is not a valid not-for-profit registered charity in China and taking in illegal donations is a 'no-no'!

Just about a year ago, on 3 April 2011, Ai was detained by the authorities, who released him on 22 June. The State Administration of Taxation has stated that he is technically still under investigation and could be taken in at any time for further questioning. One thing that Ai must remember is that the PRC taxes upon worldwide income, just like the U.S. Because of this and because of worldwide art sales, I think that the SAT probably has a decent case against Ai but will draw this out as long as they possibly can as doing this must might be the only way possible to minimize the bad press that they would most assuredly get in any other instance. A year from now, I'll likely be reporting this ongoing situation, which will stay 'ongoing' until such time as the public has finally lost sufficient interest and this case no longer makes news.

I was wrong...but I was right......

Here it is, the second week of May and the Chaoyang district court in Beijing has made an unusual decision to hear Ai's lawsuit. First, they took their time about it. Second, there is not much international press coverage of this - likely because all the international media is correctly focused upon blind activist Chen Guangcheng, rather than the self-promoting Ai. I still am convinced that the court will hear this and either turn it down directly or reduce the penalty by a small amount....but there is absolutely no doubt in my mind that: a) the decision will go the way I predict it to and b) that this will give me sufficient material to write, again about Ai Wei Wei!

Wen for Wenzhou!

China Daily, on 29 March, announced what is tantamount to 'landmark' pilot financial reforms for the coastal city of Wenzhou, allowing residents of this city to invest, privately overseas, to set up loan companies, develop privately owned financial services companies (in addition to loan companies), village banks and rural financial cooperatives. Premier Wen Jiabao, at a meeting of the State Council, announced this program.

True, initiatives like this are necessary for the ongoing financial reforms which China must continually experiment with, but why Wenzhou? Probably because of the unbelievable mountain of debt piled up with unofficial lenders as the banks just simply were not around to to help the SMEs there, as they were supposed to. Last year, unable to pay debts, many Wenzhou debt-laden entrepreneurs, some who ran not-so-small companies, simply fled the country after risking their businesses as collateral to unofficial loan sharks in what was tantamount to a real estate investment gamble. So many otherwise financially solid businesses went under, this way, not only leaving government in the lurch with a staggering bill of unpaid taxes but a domino effect took place with other unpaid bills bringing otherwise untroubled businesses into borderline bankruptcy.

While there was little press coverage about this outside of China, this could have been that proverbial straw which broke the China financial system's back. So, once again, I ask: why Wenzhou for the new program? Probably because the mountain of debt - tax and other - has really not yet been eliminated and the culture of current banking in China just cannot comprehend what it takes to service small, entrepreneurial growth. Wenzhou is a city with a innovation history. 'Let Wenzhou figure out how to climb out of the pile of bleep that it has gotten itself into' seems to be the belief behind the State Council's decision. I agree with the provisions of the program creating more village and rural banks and regulated lenders. I think this is good, as the successful financial experiments will be used elsewhere in China but nothing in the program curbs real estate speculation, which caused the problem in the first place.....and legally allowing Wenzhou to privately invest overseas? This will be interesting to follow.....

And then there's the case of the American Indian (feather, not dot!)

I am a member of the Professional Tax Advisory Committee of American Citizens Abroad. The following case was presented to our committee:

A Native American Indian who has lived in the U.S., with a social security number, now living in Canada, never having gotten a green card because he never had to (as he was covered under the Jay Treaty of 1794, wishes to return to the U.S. and get a green card. If he subsequently returns to Canada, would he have to continue to file tax returns, while living in Canada?

The give and take amongst the Committee members has been an extraordinarily refreshing break from the hum drum of daily tax matters that I normally am involved with.

Apparently, this 1794 treaty was amended by a 1928 law and the person involved might - or might not - be able to avail himself of some of the treaty provisions. The legal give and take, while a delight to read, brings out the cynically sarcastic best in me and I raise the following questions:

a) Why would anyone who, covered under some 'ancient' treaty provisions, can travel freely into and out of the U.S. possessing a social security number, ever possibly want to have a green card?

b) If that person got a green card, wouldn't getting that card 'override' provisions of a 1794 treaty, amended by a 1928 law?

c) Unless that person was earning a heck of a lot of money, would the IRS or the Immigration and Naturalization Service of the U.S. even care or get involved?

d) If that person chose to consult either myself or any practitioner, could that practitioner even justify the billing to be rendered based upon the time it would take to research this situation?

e) If, on the other hand, I told that person my 'gut reaction' to a situation like this, would I be committing malpractice?

No, my friends, I would not be in violation of absolutely anything if I rendered a gut reaction opinion on that matter because no one in the government would be in position to say that I was wrong....unless, of course, there were substantial sums of income involved for which a substantial amount of tax could be collected.

This is a great example of why the cloistered walls of academia have little in common with the real world. This is a gut reaction decision situation, one where a minute, at most, should be more than adequate and justifiable for an answer - not the 3 days of research that the schools require you to put in in order to answer.

Yeah, it certainly is interesting....but ultimately.....who cares???!