TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, March 30, 2017

Batchelder Presents Accounting For Behavioral Biases In Business Tax Reform Today At Duke

BatchelderLily Batchelder (NYU) presents Accounting for Behavioral Biases in Business Tax Reform: The Case of Expensing at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

One of the fundamental questions in business tax reform is whether to allow firms to immediately expense investments or require economic cost recovery. The conventional view is that expensing would generate stronger growth effects holding revenues constant. This view is rooted in traditional models of corporate finance that assume firms look at the net present value of expected tax payments when incorporating taxes into investment decisions. But this traditional view ignores the possibility that firms focus on more salient measures of taxes as well. If so, they may respond less to expensing than this theory suggests because expensing does not lower their financial accounting tax liability and, all else equal, requires a higher statutory rate.

This paper considers whether firms undervalue expensing due to a focus on these non-economic tax metrics and, if so, what this implies about business tax reform if the goal is to increase US investment. It develops a framework for what cost recovery rules are optimal, and then uses new and existing data to parameterize this framework, holding constant long-run revenues and the relative tax treatment of debt and equity. 

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March 30, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Roberts Presents A Structural Examination Of Energy Tax Subsidies At Vanderbilt

RobertsTracey M. Roberts (Cumberland) presented Picking Winners and Losers: A Structural Examination of Tax Subsidies to the Energy Industry, 41 Colum. J. Envtl. L. 63 (2016), at Vanderbilt yesterday as part of its Faculty Workshop Series:

The shibboleth that “government should not be picking winners and losers” has dominated the public discourse over renewable energy subsidies. This way of framing the debate ignores the nation’s long history of support for fossil fuels and obscures the economic theory behind the subsidies. This article contributes to the discussion in four ways.

First, the article examines the situations in which government intervention in a market economy may be justified and then evaluates the tax subsidies to both fossil fuels and renewable energy resources in light of that theory.

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March 30, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Blair-Stanek:  Crises And Tax

Andrew Blair-Stanek (Maryland), Crises and Tax, 67 Duke L.J. ___ (2017):

How can law best mitigate harm from crises like storms, epidemics, and financial meltdowns? This Article uses the law-and-economics framework of property rules and liability rules to analyze crisis responses across multiple areas of law, focusing particularly on the Internal Revenue Service’s numerous actions to battle the 2008-09 financial crisis.

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March 30, 2017 in Scholarship, Tax | Permalink | Comments (0)

Trade Group: IRS Wastes 22% Of Its Budget ($2.76 Billion) On Information Technology

IRS Logo 2International Association of IT Asset Managers,  IT Waste at the Internal Revenue Service:

IRS IT Spending/Waste By The Numbers:

  • $11.2 billion - Total IRS budget in 2016. 
  • 79,890 - Total IRS employees as of FY2015.
  • $4,600-$4,900 - Average amount spent per employee on IT in the private sector.
  • $37,051 - Average amount spent per employee on IT at the Department of Treasury.
  • $31,000 - According to IAITAM, private sector-style IT Asset Management protocol implementation would save roughly $31,000 per employee at the IRS. 
  • More than three times – How much the potential ITAM-related savings per employee stack up in comparison to the average $9,118 federal income tax bill for Americans.
  • 22 percent - Total potential ITAM-related savings would add up to $2.76 billion
    or nearly one quarter of the total 2016 IRS budget.

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March 30, 2017 in IRS News, Tax | Permalink | Comments (0)

Wayne State Moves To Fire Five Underperforming Tenured Professors; President Seeks 'Accountability For Individuals And Excellence For The University'

Wayne State TenureDetroit News, Wayne State: 5 Professors ‘Not Doing Anything,’ Should Lose Tenure:

In a move rarely seen in academia, Wayne State University is trying to fire multiple faculty members depicted as abusing their tenure by doing as little work as possible.

Hearings to revoke tenure start Wednesday for the first of five WSU medical school professors who allegedly are performing poorly in research, scholarship or teaching. Another five professors, including some outside the 996 faculty members in the medical school, also may face dismissal proceedings, university officials said.

Only two other times in WSU’s 149-year history has the university begun proceedings to take away a professor’s tenure, which is an indefinite appointment. In both cases, the faculty member prevailed.

But this is the first time the university is attempting to terminate several professors. They will lose their jobs if tenure is revoked. ...

Already, the university announced in August that 37 medical school faculty could lose their positions through retirement or termination for underperforming in their academic assignments — which has led to the departure of two dozen faculty.

WSU President M. Roy Wilson told The Detroit News that the dismissal hearings are aimed at accountability for individuals and excellence for the university. The professors facing the hearings are “grossly underperforming” and “not doing anything,” he said, making it difficult to move the university toward its mission as a premier urban research institution.

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March 30, 2017 in Legal Education | Permalink | Comments (1)

NY Times:  Pages From Trump’s Tax Returns Raise A Decade’s Worth of Questions

Trump Tax ReturnsNew York Times, Pages From Trump’s Tax Returns Raise a Decade’s Worth of Questions:

Like or loathe Donald J. Trump, you have to give him this: He’s done more to shine a spotlight on the loopholes and fundamental unfairness of the tax code than any other American president.

In doing so, he’s made a powerful case for tax reform, though perhaps not quite along the lines he has in mind.

This, of course, has happened despite Mr. Trump’s strenuous efforts to conceal his returns, reneging on a campaign promise to release them at some point, and defying a decades-long tradition in which presidential candidates have made public, at minimum, their recent tax returns.

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March 30, 2017 in Tax | Permalink | Comments (4)

David Han, Derek Muller, And Victoria Schwartz Are Awarded Tenure At Pepperdine

HMS

Congratulations to my good friends and colleagues David Han, Derek Muller, and Victoria Schwartz, who received official notification yesterday that they have been awarded tenure by the Pepperdine Board of Regents.   For links to their fantastic recent scholarship, see below the fold:

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March 30, 2017 in Legal Education, Scholarship | Permalink | Comments (1)

The IRS Scandal, Day 1421: More On A Hidden Cause Of The IRS Scandal

Cause of ActionFox News, IRS Still Allowed to Target Political Groups, According to Watchdog Org:

The IRS is still able to target certain political groups despite being publicly exposed for the unfair practice more than five years ago, according to a new report by a watchdog group.

A rule in place at the IRS allows the federal agency to delay the applications of non-profit groups looking for tax-exempt status, claims the Washington-based Cause of Action in its report, A Hidden Cause of the IRS Targeting Scandal. The IRS admitted in 2013 that leading up to the 2012 election the agency unfairly targeted right-leaning groups as well as those with “Tea Party” or “patriot” in their name. More than five years after the practice was exposed, Cause of Action says the IRS has not made changes to end the practice. “The regulation that allows them to do this is still there,” John Vecchione, executive director of Cause of Action told Fox News. “It’s bureaucratic inertia until someone makes a change.”

The findings claims the IRS is able to target these groups while still complying with its own rules. Cause of Action claims changing this practice would be a simple and quick fix. “The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion,” the authors of the report said in their findings. “Doing so would eliminate the agency procedure than enabled the targeting scandal. To date, the agency has not made the required changes to its rules.”

Officials for the IRS refute the report’s claims. “The IRS strongly disputes the report and any suggestion or allegation that Exempt Organizations is targeting taxpayers,” reads a statement provided to Fox News. “The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration.”

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March 30, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, March 29, 2017

O’Brien Presents Canada’s International Investment Agreements and Direct Taxation Today At Toronto

O'BrienMartha O’Brien (University of Victoria Faculty of Law) presents Canada’s International Investment Agreements and Direct Taxation at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The General Framework
The promotion of international trade and investment has been a central policy goal of Canadian federal and provincial governments for many years. From the signing of the Canada-United States Free Trade Agreement (CUSFTA) in 1988, the inclusion of Mexico in the North American Free Trade Agreement (NAFTA) in 1993, and the conclusion of numerous BITs and other free trade agreements that include investment chapters (referred to as international investment agreements or “IIAs”) through the 1990s and 2000s, Canada has a record of actively pursuing bilateral and multilateral trade and investment agreements.

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March 29, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

New Lawyers 2010 to 2017: Lower LSATS, Lower Bar Passage … More DUIs

NCBEKeith Lee (Hamer Law Group, Birmingham, AL), New Lawyers 2010 to 2017: Lower LSATS, Lower Bar Passage…More DUIs??:

The National Conference of Bar Examiners (NCBE) recently released a large data dump indicating a downward trend in a number of areas. The numbers are troubling if you’re concerned about the future of the profession.

What are the trends in LSAT scores at the 25th percentile?

  • Law Schools with increasing 25th percentile LSAT scores: 6
  • Law Schools with flat 25th percentile LSAT scores: 5
  • Law Schools with decreasing 25th percentile LSAT scores: 183 ...

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March 29, 2017 in Legal Education | Permalink | Comments (4)

AALS Call For Papers:  The Challenges And Opportunities Of Exotic Hybrids

AALS (2018)The AALS Section on Agency, Partnership, LLCs and Unincorporated Association, in conjunction with the AALS Sections on Taxation, Securities, and Business Associations, have issued a Call for Papers for a program on The Challenges and Opportunities of Exotic Hybrids—Series LLCs, Up-C’s and Master Limited Partnerships at the 2018 AALS Annual Meeting in San Diego:

Business entity structures continue to evolve as legal innovations mature into recognized business association forms. For example, variants on LLC and limited partnership forms can be used to maximize asset protection, leverage tax advantages, access capital markets, and achieve other business objectives. The program will introduce attendees to several “exotic” hybrid structures and discuss the challenges and opportunities associated with each. The program will be informative — inviting subject matter experts to educate audience members — and exploratory, critically examining the tax, governance, private ordering, securities, and policy implications of new entity structuring tools.

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March 29, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NY Times Op-Ed:  Why Steven Mnuchin Wants A Stronger IRS (And Trump Should Too)

Trump IRSNew York Times op-ed: Why Steven Mnuchin Wants a Stronger I.R.S., by Dennis J. Ventry Jr. (UC-Davis):

President Trump’s Treasury secretary, Steven Mnuchin, knows that investing in the Internal Revenue Service yields significant returns — he said as much during his confirmation hearings. And he’s right: Every dollar spent on the agency returns $4 in revenue for the federal government, and as much as $10 when invested in enforcement activities.

Mr. Mnuchin’s boss doesn’t seem to care, but he should. And not just because the I.R.S. more than pays for itself. Cutting funds for the I.R.S., which has already endured years of budget cuts, would make it impossible for the president to pay for things he says he cares about, including infrastructure, Social Security and the military.

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March 29, 2017 in Tax | Permalink | Comments (3)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through March 1, 2017) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

66,153

Reuven Avi-Yonah (Mich.)

12,003

2

Michael Simkovic (S. Hall)

35,620

Lily Batchelder (NYU)

8575

3

Paul Caron (Pepperdine)

32,790

Michael Simkovic (S. Hall)

4717

4

D. Dharmapala (Chicago)

30,008

D. Dharmapala (Chicago)

4135

5

Louis Kaplow (Harvard)

27,810

Michael Graetz (Columbia)

2928

6

Vic Fleischer (San Diego)

23,507

Ed Kleinbard (USC)

2813

7

James Hines (Michigan)

22,666

Richard Ainsworth (BU)

2711

8

Ed Kleinbard (USC)

22,244

Dan Shaviro (NYU)

2368

9

Richard Kaplan (Illinois)

21,776

William Byrnes (Texas A&M)

2353

10

Ted Seto (Loyola-L.A.)

21,706

Paul Caron (Pepperdine)

2305

11

Richard Ainsworth (BU)

20,033

Louis Kaplow (Harvard)

2292

12

Katie Pratt (Loyola-L.A.)

19,898

Robert Sitkoff (Harvard)

2076

13

Robert Sitkoff (Harvard)

18,633

David Weisbach (Chicago)

1949

14

David Weisbach (Chicago)

18,469

Steven Bank (UCLA)

1871

15

Brad Borden (Brooklyn)

17,978

David Gamage (Indiana)

1836

16

Carter Bishop (Suffolk)

17,918

Omri Marian (UC-Irvine)

1822

17

Chris Sanchirico (Penn)

17,387

Jeff Kwall (Loyola-Chicago)

1795

18

Jen Kowal (Loyola-L.A.)

17,255

Francine Lipman (UNLV)

1663

19

Francine Lipman (UNLV)

17,279

Yariv Brauner (Florida)

1624

20

Dan Shaviro (NYU)

16,833

Jordan Barry (San Diego)

1555

21

Bridget Crawford (Pace)

16,705

Brian Galle (Georgetown)

1540

22

Dennis Ventry (UC-Davis)

16,394

Christopher Hoyt (UMKC)

1502

23

David Walker (Boston Univ.)

15,568

Vic Fleischer (San Diego)

1465

24

Steven Bank (UCLA)

14,590

Brad Borden (Brooklyn)

1450

25

Gregg Polsky (Georgia)

13,712

Bridget Crawford (Pace)

1406

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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March 29, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Muller:  More Students Are Receiving More Scholarship Money To Attend Law School

Following up on Saturday's post, Average Inflation-Adjusted Student Debt Declined At 71% Of Law Schools Over Past Three Years:  Derek Muller (Pepperdine), The Percentage of Law School Enrollees Receiving Scholarships Continues to Climb:

While law schools have been raising their tuition, often quicker than inflation... , they may well be increasing scholarship awards at an even faster pace. ... The figures below include all schools from reporting years 2012 to 2016, which reference academic years 2011 to 2015.

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March 29, 2017 in Legal Education | Permalink | Comments (2)

Newman:  Should Olympic Medals Be Taxed?

Olympic RingsJoel S. Newman (Wake Forest), Should Olympic Medals Be Taxed?:

Ronda Rousey won the Bronze Medal in judo at the Beijing Olympics in 2008. She was the first American woman to do so. The medal itself would have brought her a measly four bucks, if she had been crass enough to sell it. Her reward from the United States Olympic Committee for her unique accomplishment was, as she put it, “Ten grand and a handshake.” A few months after she came home from Beijing, she was living in her car.

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March 29, 2017 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1420: A Hidden Cause

Cause of ActionCause of Action, Sensitive Case Reports: A Hidden Cause of the IRS Targeting Scandal:

Executive Summary:
Beginning in February 2010, the Internal Revenue Service (“IRS’) singled out certain non-profit organizations for extra scrutiny when they applied for tax-exempt status. Numerous subsequent congressional investigations and media reports demonstrated that the targeting involved invasive questioning and years-long delays, and focused disproportionately on right-leaning groups, especially those with “Tea Party” in their name. These reports, however, have almost entirely overlooked a hidden cause of the targeting scandal,which remains in effect today. As a result, American taxpayers are at risk for similar treatment in the future.

Contrary to the conventional storyline, there exists an institutional policy that was the first impetus in prompting IRS employees to target groups based on their political viewpoints. That policy is embodied in an internal IRS rule—which is still on the books—that singles out applications from any group interested in issues that might garner attention from either the media or Congress. In such cases, the merits of the application are ignored as IRS employees develop “Senstive Case Reports” for consideration by those above them in the IRS hierarchy. The result is a process that interferes with the unbiased review of applications for tax-exempt status designed to apply to all eligible organziations, regardless of their political viewpoints or affiliations.

Seven years after the targeting scandal began, the rule that enabled this inexcusable behavior still exists. Until that rule is removed from the internal manual used by all IRS employees, targeting of politcal opponents will remain a very real threat. Fortunately, removing the offending provisions is a simple process that can be started at any time and completed without the need for new legislation or formal notice-and-comment rule-making.

Findings:

  • Targeting was—and is—IRS policy, not a violation of it.
  • The employees who initiated the targeting cited an internal “Sensitive Case Report” process that singled out applications that might attract media or congressional attention.
  • Sensitive Case procedures remain in effect today.
  • The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion. Doing so would eliminate the agency procedure that enabled the targeting scandal. To date, the agency has not made the required changes to its rules.

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March 29, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, March 28, 2017

Yale Presents Mutual Fund Tax Overhang Today At Georgetown

Yale (Ethan) (2017)Ethan Yale (Virginia) presents Mutual Fund Tax Overhang at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

The built-in-gain in a mutual fund’s portfolio is referred to as “tax overhang.” Tax is imposed on investors who buy shares in mutual funds with tax overhang even though the gain accrued before their investment. The consequence is accelerated tax, increasing the shareholders’ effective tax rate. This article (1) explains why this occurs and why it is a problem, (2) describes the magnitude of the problem, (3) describes and illustrates avoidance strategies funds use to avoid the bad effects of tax overhang, (4) argues that reform is warranted, and (5) describes and evaluates the options for reform.

March 28, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mason Presents A U.S. Perspective On State Aid Today In Luxembourg

Mason (2016)Ruth Mason (Virginia) presents A U.S. Perspective on State Aid at the University of Luxembourg today:

Tax Rulings as State Aid FAQ, 154 Tax Notes 451 (Jan. 23, 2017):

In this report, the first in a series of reports on EU state aid, Mason provides background on state aid law as it applies to income taxes, including the legal standard, recovery mechanism, and case selection by the Commission.

State Aid Special Report — Part 2: Legitimate Expectations, 154 Tax Notes 615 (Jan. 30, 2017):

In this report, the second in a series of reports on EU state aid, Mason evaluates the claims Treasury’ made in its White Paper that recovery in the recent tax ruling cases would violate taxpayers’ legitimate expectations that those rulings did not constitute state aid.

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March 28, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Brooklyn Symposium:  Reconsidering The Tax Treaty

Brooklyn Logo (2016)Symposium, Reconsidering the Tax Treaty, 41 Brook. J. Int'l L. 967-1301 (2016):

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March 28, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Leff:  Tax Benefits Of Government-Owned Marijuana Stores

CannabisBenjamin M. Leff (American), Tax Benefits of Government-Owned Marijuana Stores, 50 U.C. Davis L. Rev. 659 (2016):

Over a year ago (March 7, 2015), a little store called the Cannabis Corner opened up in the small town of North Bonneville, Washington, about an hour by car from Portland, Oregon. The Cannabis Corner is the first marijuana store to be operated by a “public development authority,” an independent entity created by a state or local government. Public development authorities are generally exempt from federal income taxes under section 115 of the Internal Revenue Code. For a marijuana business, this exemption is especially valuable because section 280E of the Code currently prevents marijuana businesses from deducting many of the ordinary expenses other businesses regularly deduct, resulting in extremely high federal income taxes.

This Article is the first to address whether independent governmental affiliates that sell marijuana are exempt from federal income tax under section 115 of the Internal Revenue Code.

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March 28, 2017 in Scholarship, Tax | Permalink | Comments (0)

ABA Places Arizona Summit Law School On Probation Following 25% Bar Pass Rate

Arizona Summit Logo (2015)Following up on my previous post, ABA Places Charlotte Law School On Probation, Censures Valparaiso:  the ABA has placed Arizona Summit Law School on probation:

The Council determined that the Law School's admissions practices, academic program (including its academic standards and academic support), and outcomes (graduation and bar passage) have resulted in the Law School now being in a position where only immediate and substantial action can bring about sufficient change to put the Law School on a realistic path back to being in compliance within the time allowed by the Standards and Rules of Procedure.

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March 28, 2017 in Legal Education | Permalink | Comments (1)

Society Of American Law Teachers Opposes ABA Proposal To Allow Adjuncts To Teach More Law School Courses

SALT LogoFollowing up on last week's post, ABA Proposes To Eliminate Requirement That More Than 50% Of Law Teaching Be Performed By Full-Time Faculty:  National Law Journal, ABA May Open Door to More Adjunct-Taught Classes:

The American Bar Association is considering deep-sixing a rule requiring full-time faculty to teach at least half of every law school’s upper-level courses—a proposal likely to ruffle the feathers of professors who fear it would allow schools to essentially outsource the second and third year to adjuncts.

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March 28, 2017 in Legal Education | Permalink | Comments (1)

NY Times Op-Ed:  How To Con Black Law Students

ASBCNew York Times op-ed: How to Con Black Law Students: A Case Study, by Elie Mystal (Above the Law):

This month, Bethune-Cookman, a historically black university in Daytona Beach, Fla., announced an “affiliation” deal with Arizona Summit Law School, a for-profit institution in Phoenix. A joint scholarship program will send Bethune-Cookman students and students from other historically black colleges to the law school. Other programs, including intensive LSAT prep classes, have been announced as part of the deal.

Bethune-Cookman doesn’t have a law school, so it makes sense that it would want to partner with an accredited institution. But there’s a problem: Arizona Summit, formerly known as the Phoenix School of Law, may be accredited, but only 25 percent of its graduates passed the Arizona bar exam on their first try last year.

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March 28, 2017 in Legal Education | Permalink | Comments (0)

Magbanua’s Attorneys Chide Prosecutors' Fishing Expedition To Determine Who Is Paying Her Attorneys' Fees In Markel Murder Case

MagnaubaTallahassee Democrat, Magbanua's Attorneys: State on a 'Fishing Expedition':

Katherine Magbanua’s attorneys say prosecutors are on a fishing expedition to figure out who is paying her legal fees.

Last month, Assistant State Attorney Georgia Cappleman set out to figure out whether the former in-laws of slain Florida State University law professor Dan Markel were paying for two Miami lawyers defending Magbanua, who is suspected of being the conduit in the murder-for-hire plot.

Cappleman said the money trail leads to co-conspirators in the case. But in a Friday court filing, Magbanua’s attorneys Tara Kawass and Christopher DeCoste say prosecutors are doing so on the basis of “conjecture rather than proof.” They want Leon Circuit Court Judge James Hankinson to deny the request. A case management conference is scheduled for May 1. ...

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March 28, 2017 in Legal Education | Permalink | Comments (2)

Monday, March 27, 2017

Viswanathan Presents Tax Compliance In A Decentralizing Economy Today At Pepperdine

Viswanathan (2017)Manoj Viswanathan (UC-Hastings) presents Tax Compliance in a Decentralizing Economy at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

Tax compliance in the United States has long relied on information from centralized intermediaries—the financial institutions, employers, and brokers that help ensure income is reported and taxes are paid. Yet while the IRS remains tied to these centralized entities, consumers and businesses are not. New technologies, such as the on-demand sharing platform economy (companies such as Airbnb, Uber, and Instacart) and the blockchain (the platform on which Bitcoin is based) are providing new, decentralized options for exchanging goods and services. Without legislative and agency intervention, these technologies pose a critical threat to the reporting system underlying domestic and international tax compliance.

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March 27, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Burman Presents Is U.S. Corporate Income Double-Taxed? Today At NYU

Burman (2016)Leonard E. Burman (Tax Policy Center) presents Is U.S. Corporate Income Double-Taxed? (with Kimberly Clausing (Reed College)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler:

Every public finance student learns that corporations are subject to two levels of taxation—at the company level through the corporate income tax and the individual level through taxation of dividends and capital gains. Though observers frequently lament this double taxation of equity-financed corporate investment, double taxation is not important per se; the issue is the overall level of tax. (Most investors would prefer two 10 percent taxes to a single 30 percent tax.) Still, the overall effective tax rate depends on both corporate and individual income taxes.

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March 27, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Buchanan Presents Social Security Is Fair To All Generations Today At UC-Irvine

BuchananNeil Buchanan (George Washington) presents Social Security is Fair to All Generations: Demystifying the Trust Fund, Solvency, and the Promise to Younger Americans at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

The birth of the Baby Boom generation created a profound policy challenge for the Social Security system: Should the system continue to be run as a pay-as-you-go system, or should the large new cohort of workers be forced to save for their own future retirements? Although the outward structure of the Social Security system was not changed, the Baby Boomers were, in fact, required to save for their own retirements. They did so by paying higher taxes than would otherwise have been necessary, thus contributing to total national saving in a way that allowed the economy to grow more quickly than it would have otherwise. In turn, Boomers bequeathed to their children the economic wherewithal to support their parents in retirement, even while the post-Boomers will enjoy higher living standards during both their working lives and in their retirements. It is possible, however, that this supposed generational sacrifice was illusory, that the Baby Boomers were otherwise impoverishing their children and grandchildren, even as they paid extra money into the Social Security system each year.

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March 27, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Schenk Delivers Pugh Lecture Today At San Diego On Horizontal Equity Redux

Schenk (2017)Deborah Schenk (NYU) delivers the annual Richard Crawford Pugh Lecture on Tax Law & Policy at San Diego today on Horizontal Equity Redux:

For many decades, tax policy scholars have defined “equity” in terms of “horizontal equity” and “vertical equity.” In recent years the concept of horizontal equity has come under attack on two grounds: first, that it has no content independent of vertical equity, and second, that its classic definition preferences pretax income without any justification. Yet, the concept has remarkable staying power. All major law casebooks reference horizontal equity, as do many scholarly articles. This lecture explores why that is so and offers both an explanation and a justification for its continued use as a principle of tax policy.

March 27, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oh:  Are Progressive Tax Rates Progressive Policy?

Jason Oh (UCLA), Are Progressive Tax Rates Progressive Policy?, 92 NYU L. Rev. ___ (2017):

Why do income tax systems across the world consistently feature progressive marginal rates? The existing literature tells a political story focusing on the top of the rate schedule and the preferences of the poor and middle class. According to this standard view, higher rates at the top result from the poor and middle class using the political process to “soak the rich.” However, this explanation is inconsistent with research showing that public policy is generally more responsive to the preferences of the rich. Explaining marginal rate progressivity as a universal (and exceptional) triumph of the poor and middle class rings hollow.

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March 27, 2017 in Scholarship, Tax | Permalink | Comments (1)

UC-Hastings Dean:  The California Bar Exam Flunks Too Many Law School Graduates

California Bar ExamLos Angeles Times op-ed: The California Bar Exam Flunks Too Many Law School Graduates, by David L. Faigman (Dean, UC-Hastings):

Graduates who fail face [the bar exam] losing jobs already started, not getting jobs that were promised, debt, embarrassment and more debt. Simply taking the exam again costs more than $700, and add to that the cost of further bar review classes, living expenses in the meantime and income lost. All told, thousands more dollars may be piled onto law school debt that is increasingly well above $100,000. ...

Given the stakes for the individual law graduate, as well as the state’s obligation to ensure that those given a license to practice law are qualified, one would think the state bar, which administers the test, would have sound reasons for how it sets the line — the “cut score” — between passing and failing. If you thought that about California, you would be mistaken.

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March 27, 2017 in Legal Education | Permalink | Comments (8)

Christians:  BEPS And The New International Tax Order

Allison Christians (McGill), BEPS and the New International Tax Order, 2017 BYU L. Rev. ___:

Nations across the world are currently engaged in a coordinated international effort, ostensibly to curb excessive tax avoidance by the world’s biggest multinational companies. This Article contends, however, that the most likely impact will be to entrench a monopoly held by a small number of rich countries over the policymaking processes that created the tax avoidance problem to begin with. To examine this contention and probe possible solutions to it, the Article examines the legal and institutional components of the coordination project, referred to as Base Erosion and Profit Shifting (BEPS), by situating them historically and analyzing their multi-functionality as both norm diffusion and institutional reinforcement mechanisms.

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March 27, 2017 in Scholarship, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, March 26, 2017

SUNY-Buffalo Law School Dean Finalist Charged With Embezzling $7 Million

SUNY 2Buffalo News, Candidate for Dean of UB Law School Charged in Embezzlement Scheme:

A finalist to become the next dean of the University at Buffalo Law School was indicted this week on federal fraud charges related to the alleged embezzlement of millions of dollars from investors in a company he helped run.

The U.S. Attorney's Office District of Minnesota charged Edward S. Adams, 64, a law professor at the University of Minnesota, with eight counts of mail fraud and six counts of wire fraud.

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March 26, 2017 in Legal Education | Permalink | Comments (1)

The Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5. The #1 paper is now #103 in all-time downloads among 12,615 tax papers:

  1. [1,664 Downloads]  The Known Unknowns of the Business Tax Reforms Proposed in the House Republican Blueprint, by Michael J. Graetz (Columbia)
  2. [563 Downloads]  How Donald Trump can Keep His Campaign Promises, Grow the Economy, Cut Tax Rates, Repatriate Offshore Earnings, Reduce Income Inequality, Keep Jobs in the United States, and Reduce the Deficit, by David S. Miller (Proskauer, New York)
  3. [439 Downloads]  Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, by Lily L. Batchelder (NYU)
  4. [368 Downloads]  Predicting Stock Market Prices with Physical Laws, by Jack Manhire (Texas A&M)
  5. [258 Downloads]  House Plan's Bad Math: Over-Estimates of Revenue from a Border Adjustment, by David Kamin (NYU) & Brad Setser (Council on Foreign Relations)

March 26, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

This Week's Ten Most Popular TaxProf Blog Posts

Princeton Seminary Revokes Award To Tim Keller Because Of His Traditional Theological Views

Princeton KellerWall Street Journal, A Seminary Snubs a Presbyterian Pastor: Princeton Rescinds an Honor to Tim Keller Over His Traditional Theological Views:

Princeton Theological Seminary announced earlier this month that it would award the Rev. Tim Keller its Kuyper Prize for Excellence in Reformed Theology and Public Witness. The seminary lauded Mr. Keller for his commitment to spreading Christianity in cities, his bestselling books on religion, and his work helping to launch hundreds of churches. But thanks to some of his conservative views, Mr. Keller’s warm welcome didn’t last long.

In 1989 Mr. Keller founded Redeemer Presbyterian Church in Manhattan, which is part of the Presbyterian Church in America. The church now has a weekly attendance of around 5,000, and it is particularly popular among young professionals. It also maintains orthodox positions: opposing the ordination of women and practicing LGBT individuals while supporting traditional marriage. This made theologically progressive students, alumni and faculty furious over the decision to honor Mr. Keller. They wrote letters, signed petitions and planned demonstrations to pressure the seminary to rescind the award.

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March 26, 2017 in Legal Education, Tax | Permalink | Comments (8)

The IRS Scandal, Day 1417:  Satan, Tea Parties, and the IRS

IRS Logo 2Sam Brunson (Loyola-Chicago), Satan, Tea Parties, and the IRS:

Did you hear that the IRS granted a Satanic cult tax-exempt status in ten days?!? Meanwhile, Tea Party groups’ exemption applications languished for months or even years?!?

I know, it sounds pure conspiracy theory: the IRS loves Satan and hates conservatives. But it’s true! Or, at least, kind of! But it needs to be contextualized, because comparing the exemption application of Reason Alliance, Ltd. (the putative Satanic cult) and Tea Party groups is inapposite.

First things first, though: the framing of this “controversy” is purely a product of the Outrage Industrial Complex, as represented by Fox News and Judicial Watch. And I’m sure the invocation of “Satanic cult” is going to get them clicks and shares. But Satanic cult? The Reason Alliance is the tax-exempt offshoot of The Satanic Temple, which strikes me as basically a relatively-clever piece of performance art meant to object to religions enjoying tax-exempt status, and which otherwise functions as a much funnier, and more self-aware, version of the Freedom From Religion Foundation and Americans United for the Separation of Church and State. Because The Satanic Temple objects to religions’ exemption from taxation, it has chosen not to pursue tax-exempt status itself. Apparently, though, in the interest of facilitating donations from individuals whose charitable giving is more elastic, it created the Reason Alliance to permit deductible charitable giving.

But the substance of the outrage here isn’t Satan; rather, it’s that Satan could essentially bypass the line (of Tea Party groups, probably) in getting his exemption from tax. ...

But did Satan bypass the line? In a word, no. ...  The Reason Alliance filed a Form 1023-EZ. ... [T]he Reason Alliance merely chose a faster route to exemption.

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March 26, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, March 25, 2017

Muller:  Average Inflation-Adjusted Student Debt Declined At 71% Of Law Schools Over Past Three Years

2018 U.S. News LawFollowing up on last week's post, 2018 U.S News Law School Rankings: Average Student Debt:  Derek Muller (Pepperdine), Most Law Schools Have Become More Affordable in the Last Three Years:

It seems like a crazy headline, but it turns out that the decline in supply of prospective law students has yielded the expected decline in cost at most law schools over the last three years.

A few years ago, I noted that 30 law schools had become more affordable over a three-year period. I thought I'd see what might have changed since then. ...

I calculated 3.0% inflation between 2013 (the class whose debt load is included in the 2015 rankings) and 2016 (the class whose debt load is included in the 2018 rankings) and adjusted the 2013 figures accordingly. The debt figures listed on the site are an average for those who incurred debt; to arrive at a more accurate picture of the debt load of the class as a whole, I then factored in the percentage of students who graduated without any debt to reach an overall average.

Among the 163 schools, 115 saw a decline in overall debt loads; just 48 saw an inflation-adjusted increase.

Thirteen law schools had a 25% or more decline in inflation-adjusted student debt between 2013 and 2016:

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March 25, 2017 in Legal Education | Permalink | Comments (2)

Amazon Beats IRS In $1.5 Billion Tax Court Case

Amazon logoSeattle Times, Amazon Wins $1.5 Billion Tax Battle With IRS:

Amazon.com scored a big victory Thursday against the IRS in a case that the company says could have cost it about $1.5 billion [Amazon.com v. Commissioner, 148 T.C. No. 8 (Mar. 23, 2017)].

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March 25, 2017 in IRS News, New Cases, Tax | Permalink | Comments (1)

A Day In The Life Of Deanell Tacha

A day in the life of Pepperdine Dean Deanell Tacha:

Thursday morning:  testify before Senate Judiciary Committee in Washington, D.C.:
Tacha 1

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March 25, 2017 in Legal Education | Permalink | Comments (0)

Hickman Presents Restoring The Lost Anti-Injunction Act At British Columbia

Hickman (2017)Kristin Hickman (Minnesota) presented Restoring the Lost Anti-Injunction Act, 103 Va. L. Rev. __ (2017) (with Gerald Kerska (J.D. 2017, Minnesota)), yesterday at University of British Columbia Allard School of Law as part of its Tax Law and Policy Workshop Speaker Series:

Should Treasury regulations be eligible for pre-enforcement review? The D.C. Circuit’s recent decision in Florida Bankers Association puts its interpretation of the Anti-Injunction Act at odds with both general administrative law norms in favor of pre-enforcement review of final agency action and also the Supreme Court’s interpretation of the nearly identical Tax Injunction Act in Direct Marketing Association v. Brohl. In fact, cases interpreting the Anti-Injunction Act more generally are fragmented and inconsistent.

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March 25, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1416:  The Root Problem Is The Law, Not The IRS

Hackney (2017)Philip Hackney (LSU) delivered the Norman A. Sugarman Memorial Lecture in Nonprofit Law at Case Western yesterday on Improving IRS Charity Oversight: Responsible Congressional Delegation, Responsive IRS Rulemaking:

Whether you think it fair or unfair, there is a large segment of American society who believes the IRS targeted conservative groups trying to obtain tax-exempt status from at least 2011-2013, leading to explosive accusations on the professional integrity and political bias of the agency.

In this lecture, Professor Hackney, James E. & Betty M. Phillips Associate Professor of Law, LSU Law Center, will clarify how this charge is unfair or at the least deeply misguided, explaining that root problem is not the alleged political litmus test by the IRS in considering tax exempt status in the charitable sector, but rather the law — both in its construction and implementation.

Congress has provided vague legal standards for the IRS to implement in the tax exempt arena, resulting in costly enforcement attempts that have undermined the public’s confidence that the laws are being enforced in a fair and impartial manner. To solve this issue, Congress should enact standards in this arena, but that the Treasury Department and the IRS ought to implement rules.

This lecture will consider the political, legal, and technical challenges to adopting such a rule-based regime for charity oversight.

See Philip Hackney, Charitable Organization Oversight: Rules v. Standards, 13 Pitt. Tax Rev. 83 (2015).

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March 25, 2017 in IRS News, IRS Scandal, Scholarship, Tax | Permalink | Comments (5)

Friday, March 24, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses a recent Tax Court case denying a couple's claimed $18,000 charitable deduction for used clothing donated to their church.

KristanDeducting that gold mine in your closet.

Thrift shop values. Tax pros might expect Goodwill and Salvation Army to be the largest industrial enterprises in the nation, going by the values clients provide for used clothing they give away. The Tax Court gave us a lesson last week on the sort of tax value you can squeeze out of last year’s wardrobe.

A Colorado couple must have really cleared out the closets and attic in 2013, as they claimed a charitable donation of $18,000 for donation of used clothing to a church. Unfortunately, the court record is light on just what those clothes were:

Other than generalized references to various clothing designers and the quality of the items petitioners claimed to have donated, no details as to the number of specific items donated or the value of any specific item have been provided. Petitioners did not present any written substantiation for the charitable contribution deduction, nor could petitioner recall how the value of the donations was calculated.

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March 24, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new paper by Wei Cui (University of British Columbia), Taxation Without Information: The Institutional Foundations of Modern Tax Collection.

HemelWei Cui’s new paper, Taxation Without Information: The Institutional Foundations of Modern Tax Collection, challenges the now-conventional wisdom that effective tax collection depends upon third party reporting. Cui suggests that effective tax collection in fact depends upon the existence of business firms for whom compliance with the law—tax as well as non-tax—is the norm. Cui argues that this insight should lead us to rethink our assumptions not only about modern tax collection, but also about modern business firms: “we should stop thinking of business firms as ‘fiscal intermediaries,’” Cui writes, and instead “conceive of firms as sites of social cooperation under the rule of law” (p. 3).

Cui’s paper is ambitious, important, and—I think—largely right. He has persuaded me that third party reporting is not nearly as integral to tax collection as I previously believed. If there is a weak point in his argument, it is this: the evidence he produces in support of his “social cooperation” theory is equally consistent with the claim that business firms facilitate legal compliance precisely because they fail to engender close cooperation among their members.

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March 24, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Weekly Legal Education Roundup

Ousted Cincinnati Law School Dean Is Exploring Her Legal Options

UC BardFollowing up on my previous posts (links below):  Cincinnati Enquirer, UC Law School Dean Out For Now, Exploring Legal Options:

The dean of University of Cincinnati's College of Law, Jennifer Bard, was placed on administrative leave Wednesday. Interim provost Peter Landgren made the announcement in an email Wednesday to the law school community. ...

Bard, who joined UC as dean in July 2015, said in a statement she was "surprised at the precipitous action the University took so soon after this matter became public and revealed the deep divisions within the Law School Community and tensions over the use of the school's resources."

Under Bard's leadership, applications grew, more students passed the bar, the school’s national reputation improved, the Board of Trustees approved a new building and fundraising increased, according to Bard.

Bard said she was recruited to reduce a "significant financial deficit" and "establish sound financial controls," which she has made significant progress in doing.

She said Landgren's action raises serious questions about UC's failure to support the financial goals for which she was hired and the due process to which she is entitled. Bard's legal counsel is currently evaluating her legal options, the statement said.

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March 24, 2017 in Legal Education | Permalink | Comments (1)

Tulane Hosts 7th Annual Tax Roundtable

Tulane (2015)7th Annual Tulane Tax Roundtable:

Lily Batchelder (NYU)
Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing
Discussant:  Steve Sheffrin (Tulane)

Daniel Hemel (Chicago)
The Federalist Safeguards of Progressive Taxation
Discussant:  Lily Faulhaber (Georgetown)

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March 24, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

University of Minnesota Law Professor Charged In Multi-Million Dollar Corporate Fraud Scheme

AdamsEdward Adams, Howard E. Buhse Professor of Finance and Law at the University of Minnesota Law School, has been indicted for stealing $4.4 million from investors and paying $2.5 million to his own law firm.

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March 24, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1415:  ‘Media Attention’ And IRS Abuse

IRS Logo 2Wall Street Journal op-ed: ‘Media Attention’ and IRS Abuse: A Simple Rule Fix Could End Partisan Targeting Tomorrow, by John J. (President & CEO, Cause of Action Institute):

The Internal Revenue Service’s targeting of Americans for their political views may have ended with the Obama administration — or even with its exposure in 2013. But it could easily recur. Even now, an internal IRS rule singles out applicants for nonprofit status who might be tied to anything newsworthy.

The genesis of the targeting scandal was Section 7.29.3 of the Internal Revenue Manual. As noted in a report my organization is issuing Wednesday, this manual dictates how IRS employees handle everything from customer service to criminal investigations. This particular section tells them to flag for further review any application for tax-exempt status that might “attract media or Congressional attention.”

That’s a broad, vague and subjective command that career IRS employees are nevertheless required to follow. Emails between IRS personnel make clear that low-level employees were guided by this rule throughout the targeting scandal. They repeatedly cited “media attention” on the Tea Party as the reason to single out and delay applications from conservative groups.

This rule means that IRS enforcement reflects the ideological biases of the media. Aside from a small number of groups related to the Occupy Wall Street movement and the defunct advocacy group Acorn, libertarian and free-market groups were almost exclusively targeted.

These provisions of the IRS manual have nothing to do with the merits of a nonprofit application and everything to do with keeping the agency from looking bad. It is inappropriate for a group’s tax-exempt status to be deep-sixed because of negative publicity. In the targeting scandal, this approach allowed partisan concerns to overtake the application process, resulting in the unfair treatment of political viewpoints at odds with the Obama administration.

Equal justice under the law demands that the IRS abandon the “newsworthy” criterion. To date, however, the agency has promised only to stop making lists of targeted groups “until further notice.” Even if the halt were permanent, it wouldn’t be enough. IRS officials are still required to follow the manual and pull high-profile applications for enhanced scrutiny.

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March 24, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)