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Thursday, December 18, 2014

News Worsens for Law Schools: Fall 2015 Applicants Are Down 9.1%; 'J.D. R.I.P.'?

LSAC, Three-Year ABA Volume Comparison:

As of 12/12/14, there are 88,926 fall 2015 applications submitted by 13,816 applicants. Applicants are down 9.1% [8.5% two weeks ago] and applications are down 10.5% [9.5% two weeks ago] from 2014.

Gainesville Scene, Thinking About Law School? Think Again:

Enrollment to law schools around the country has dwindled by more than 37 percent since 2010. The decline steadied this year at 8 percent, the first single-digit figure in four years, but this is not sign of an upward swing, according to Alfred Brophy, a professor at the University of North Carolina School of Law.

Via: Quartz

“In the median term, I don’t think (the number of applicants) will increase because I think the structural reasons why people aren’t going to law school aren’t going to change,” he said. “Who knows? Maybe Ebola will wipe us out.” ...

George Dawson, interim dean of the University of Florida Levin College of Law, mused that the legal field “may have lost its luster.” Brophy points to various factors when speculating what could be causing the decline: Tuition costs are skyrocketing ahead of inflation, jobs are scarce and, ironically, the legal field just isn’t that lucrative.

In 1985, the average attorney brought home about $90,000 per year, which, adjusted for inflation, equals almost $200,000. But a six-digit paycheck is now an elusive reality for law-school grads. These days, the average U.S. attorney is paid a yearly salary of less than $62,000. ...

“Thirty years ago if you were looking to get on the escalator to upward mobility, you went to business or law school,” said William D. Henderson, a professor of law at Indiana University, in a 2013 New York Times article. “Today, the law school escalator is broken.”

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December 18, 2014 in Legal Education | Permalink | Comments (2)

Schizer: Limiting Tax Expenditures

David Schizer (Columbia), Limiting Tax Expenditures, 68 Tax L. Rev. ___ (2014):

The federal government devotes over a trillion dollars each year to tax provisions that pursue “nontax” goals. Scaling back these tax expenditures should be a high priority. Yet one-size-fits-all limits are often proposed, and are not good policy. Each tax expenditure generates its own mix of positive externalities and private benefits (or “programmatic benefits”). To choose the right limit, we should consider what programmatic benefits we would lose. The goal should be to reap programmatic benefits at lower cost. Different strategies are appropriate for each tax expenditure, including: tightening the definition of favored conduct; focusing on claimants who are easiest to motivate; favoring claimants who use the subsidy more effectively; calibrating how much favored activity we subsidize; and changing the government agency that administers the subsidy. We also should account for excess burden and distribution. Does repeal or a limit influence labor or savings decisions? Does it affect planning and administrative costs? Does it bring is closer to the distribution we want?

In addition to proposing this three-part framework for limiting tax expenditures, which focuses on programmatic benefits, excess burden, and distribution, this Article also analyzes seven different limits. They have very different effects. For example, a “cap” eliminates the subsidy for high levels of favored activity. In contrast, a “floor” disallows the subsidy for low levels. “Haircuts,” “maximum fractions,” and “phaseouts” preserve the subsidy for both high and low levels of favored activity, but in weakened form. Each limit offers a different mix of strengths and weaknesses, making it a better fit for some tax expenditures than others.

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December 18, 2014 in Scholarship, Tax | Permalink | Comments (1)

Marquette Suspends Tenured Professor for Blogging, Orders Him Off Campus

McAdamsInside Higher Ed, Suspended for Blogging:

Marquette University has suspended with pay and barred from campus the tenured professor who criticized a graduate student instructor in a personal blog, pending an investigation into his conduct.

John McAdams, an associate professor of political science at Marquette, last month wrote a controversial blog post accusing a teaching assistant in philosophy of shutting down a classroom conversation on gay marriage based on her own political beliefs. He based the post on a recording secretly made by a disgruntled student who wished that the instructor, Cheryl Abbate, had spent more time on the topic of gay marriage, which the student opposed. McAdams said Abbate, in not allowing a prolonged conversation about gay marriage, was “using a tactic typical among liberals,” in which opinions they disagree with “are not merely wrong, and are not to be argued against on their merits, but are deemed ‘offensive’ and need to be shut up.”

The story was picked up by various other blogs, and the second-year graduate student soon received critical messages via email, regular mail and online comment boards – some of which included lewd or profane remarks or threats. She also received support from academics across the country, many of whom accused McAdams of violating his ethical and pedagogical responsibilities towards all Marquette students, even teaching assistants.

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December 18, 2014 in Legal Education | Permalink | Comments (0)

Sanchirico Presents Two Tax Papers in Italy

SanchiricoChris Sanchirico (Pennsylvania) presents two papers at the 10th Annual Conference of the Italian Society of Law and Economics at the University of Rome:

As American as Apple Inc.: International Tax and Ownership Nationality, 68 Tax L. Rev. ___ (2014):

The ownership nationality of large US multinational companies plays an implicit but important role in the current debate over how such companies should be taxed. This paper identifies that role and investigates what is actually known about where these companies’ shareholders reside. 

Self-Constructed Assets and Efficient Tax Timing:

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December 18, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

What The Next Generation Of Economists Is Working On

538 (2015)FiveThirtyEight, What The Next Generation Of Economists Is Working On:

The new economists are heading east this winter.

Every January, soon-to-be economics doctorates invade a city, in search of employment; this year it’s Boston. The American Economics Association’s Annual Meeting is the discipline’s cattle call.

Hundreds of wide-eyed, besuited, name-tagged graduate students will spend the first weekend of the new year racing from hotel room to hotel room, giving half-hour job interviews about their research papers, what they’re interested in teaching about and future projects. If they’re lucky, they’ll get a callback — typically a “flyout” to an office or campus. Hirers include central banks, investment banks, consultancies, corporations, government agencies, nonprofits, think tanks and universities across the world — from Aarhus to Zhongnan.

Job Openings for Economists — known affectionately, or not, as JOE — lists 1,217 open positions, as I write.

So what do all these young men and women do, exactly — what are their academic interests, and what is their research about? Let’s preview the next generation of economists.

I visited the job candidate websites of top economics Ph.D. programs [Berkeley, Caltech, Chicago, Columbia, Harvard, Michigan, Minnesota, MIT, Northwestern, NYU, Penn, Princeton, Stanford, UCLA, UCSD, Wisconsin, and Yale] to canvas the interests of the graduating class. There are 308 candidates listed by the 17 schools I looked at — an average of about 18 candidates a school. I recorded their primary field — the main subset of economics in which they work. I also recorded the title of their job market paper. In many academic job markets, including economics, a candidate submits to a potential employer a curriculum vitae, letters of reference and a job market paper. The last is important, and is meant to showcase the candidate’s research interests and skills. In many ways it’s the culmination of their doctoral work.

These are the fields in which this year’s economist crop works. I’ve included just those fields that appeared at least twice.

Econ

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December 18, 2014 in Tax | Permalink | Comments (0)

WSJ: How Google, GE and U.S. Firms Play the Tax ‘Audit Lottery'

Wall Street Journal, How Google, GE and U.S. Firms Play the Tax ‘Audit Lottery’:

Buried deep in American companies’ securities filings is an indicator for how aggressively they are working to shield their income from the IRS and other tax authorities.

The obscure entry—under the heading “uncertain tax positions” or “unrecognized tax benefits”—is where companies account for tax breaks that push the envelope. And they are adding up.

Exxon Mobil reported that it had $7.8 billion of these uncertain tax positions outstanding as of Dec. 31, including $1.5 billion from 2013 alone. Pfizer reported $6.1 billion, including $1.2 billion from 2013. Google reported $3.1 billion at the end of September, up from $2.6 billion at the end of 2013.

WSJ

All told, companies in the S&P 500 had amassed $188 billion in unrecognized tax benefits by the end of their 2013 fiscal years—$21 billion of which was related to that year’s taxes, according a Wall Street Journal analysis of figures from Calcbench Inc., a financial data provider. The companies have added between $19 billion and $22 billion of new uncertain tax positions each year since 2010.

Accounting rules define these tax benefits as ones that tax authorities have strong grounds to reject, by the companies’ own analysis. Seeking those breaks is perfectly legal, and since companies have already lowered their profit numbers as if the taxes had been paid, there’s little risk in rolling the dice. A win down the road will boost profits, while a loss typically does no additional damage. Either way, companies often get to use the disputed cash in the meantime. ...

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December 18, 2014 in Tax | Permalink | Comments (2)

SMU Law Prof's Comments Prompt Sexual Harassment Policy Review

National Law Journal, SMU Law Prof's Comments Prompt Harassment Policy Review:

SMU LogoA complaint by a student at the Southern Methodist University Dedman School of Law that her professor in 2010 referred to her as a “bitch” and “hired bimbo” spurred a federal investigation into the university’s handling of complaints involving sexual harassment, sexual violence and other Title IX violations.

In a report released Dec. 11, the U.S. Department of Education’s Office for Civil Rights found that SMU lacked adequate procedures to respond to complaints and did not always do so in a timely manner. The university has voluntarily agreed to review its Title IX complaint procedures, to better publicize its policies and do more to report and track complaints, among other things.

The Education Department began its investigation in 2011 after the female law student raised concerns about the university’s handling of her harassment claims. Her complaint, which government investigators said they had substantiated, was one of three detailed in the report. ...

The law student, referred to in the report at “Complainant 1,” alleged that her professor, also unnamed, called her “just one of those girls who thinks she’s so pretty.” She added that the professor said that not paying attention in class was “like looking at a beautiful woman only she’s wearing dirty panties.”

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December 18, 2014 in Legal Education | Permalink | Comments (2)

Kwall & Wilbur: The Outer Limits of Realization

Florida Tax ReviewJeffrey L. Kwall (Loyola-Chicago) & Katie K. Wilbur (Varnum, Grand Rapids, MI), The Outer Limits of Realization: Weiss v. Stearn and Corporate Dilution, 16 Fla. Tax Rev. ___ (2014):

The Supreme Court’s 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation (“Oldco”) transferred its business to a new corporation (“Newco”) in a transaction where the Oldco shareholders surrendered all their stock for 50% of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100% to 50%. Because the Oldco shareholders surrendered control of the enterprise, the 50% interest they received in Newco was fundamentally different from the 100% interest they had owned in Oldco. Nevertheless, the Court held that the receipt of the Newco shares was not a taxable event (a “realization event”) to the Oldco shareholders. The Court reached this result by ignoring the dilution that occurred in the case.

In 1991, the Supreme Court resurrected the Weiss v. Stearn decision in the Cottage Savings case. There, the Court relied on Weiss v. Stearn to establish that the exchange of property triggers a realization event only if the property received is “materially different” from the property surrendered. Once again, the Court ignored the dilution that occurred in Weiss v. Stearn. As a result, Supreme Court jurisprudence sheds no light on the question of whether corporate dilution can trigger realization.

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December 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

GAO: IRS Needs to Strengthen its Oversight of Charities

GAOGovernment Accountability Office, Better Compliance Indicators and Data, and More Collaboration with State Regulators Would Strengthen Oversight of Charitable Organizations (GAO-15-164):

IRS oversight of charitable organizations helps to ensure they abide by the purposes that justify their tax exemption and protects the sector from potential abuses and loss of confidence by the donor community. In recent years, reductions in IRS's budget have raised concerns about the adequacy of IRS oversight.

GAO was asked to review IRS oversight of charitable organizations. In this report, GAO (1) describes the charitable organization sector, (2) describes IRS oversight activities, (3) determines how IRS assesses its oversight efforts, and (4) determines how IRS collaborates with state charity regulators and U.S. Attorneys to identify and prosecute organizations suspected of engaging in fraudulent (or other criminal) activity.

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December 18, 2014 in Gov't Reports, Tax | Permalink | Comments (0)

The IRS Scandal, Day 588

IRS Logo 2Washington Times editorial:  Obama’s IRS Faces Scrutiny With Republican-led Congress:

The corruption of the Internal Revenue Service is still under investigation, but the public has learned a lot already: The IRS targeted conservative and tea party groups for extra scrutiny and harassment, Lois G. Lerner tried to hide behind the Fifth Amendment to avoid prosecution for violating the rights of taxpayers, and the president of the United States assured one and all that there was not even a “smidgen of corruption” at the agency when he knew better.

What the public did not know until recently was that the White House requested and received from the IRS the tax records of 2,500 taxpayers for White House inspection. President Obama is not the first president to try to use the IRS against his enemies, but he is the first to do it wholesale. President Kennedy shared tax information with The Washington Post about Sen. Barry Goldwater and senior members of his 1964 presidential campaign team. They were subjected to grueling audits. President Nixon tried to get the IRS to go after his enemies when he faced impeachment. ...

To argue that this is part of a cover-up is to argue the obvious. The arrogance of a government that abuses the rights of its citizens, ignoring specific laws to do so, must be held to account like everyone else, and if justice is done a flurry of subpoenas for a number of White House and IRS officials will follow soon after the Christmas holidays. Congress has disregarded oversight duties in this matter, and soon there will be a new Congress and the 114th Congress will have an opportunity to take these duties seriously.

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December 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, December 17, 2014

ABA 509 Enrollment Data on All Ranked Law Schools, 2011-2014

Keith Lee has mined the ABA 509 Information Reports for all ABA-accredited law schools for 2011-2014 in There Will Be Blood: ABA 509 Matriculant Data On All Ranked Schools.  126 of the 146 ranked schools experienced enrollment declines from 2011 to 2014; only 18 law schools increased enrollment:

  1. Wyoming (129 in U.S. News):   23.2%
  2. George Washington (20):   13.7%
  3. Pepperdine (54):   12.4%
  4. Baylor (51):  11.3%
  5. Washington University (18):  11.1%
  6. Notre Dame (26):  9.3%
  7. UC-Berkeley (9):  7.9%
  8. Chapman (140):  5.6%
  9. Duke (10):  4.7%
  10. Florida (49):  4.1%
  11. Hawaii (100):  3.5%
  12. Penn State (51):  3.2%
  13. Oklahoma (58):  2.6%
  14. Brooklyn (83):  2.3%
  15. Colorado (43):  1.8%
  16. Harvard (2):  0.7%
  17. NYU (6):  0.4%
  18. Georgetown (13):  0.2%

Check out the many great charts. Here are the Top 51 law schools:

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December 17, 2014 in Law School Rankings, Legal Education | Permalink | Comments (5)

Tax as a Percentage of GDP: 1965 to 2013

December 17, 2014 in Tax | Permalink | Comments (0)

Madison: The Tax Consequences of Services Provided by Single People in a Relationship

Allen D. Madison (South Dakota), The Taxation of Gratuitous Services Gone Out of 'Control', 45 U. Mem. L. Rev. 115 (2014):

How does the IRS’s ruling that both parties to an exchange of services are subject to income tax apply in the dating context? When meeting, dating, living together, or potentially raising a child together, single people provide services for each other. Most are unaware that potential tax liability lurks behind their performance and receipt of services. This article proposes a framework for determining when a service is gratuitous and thus subject to income tax and then applies that framework to the four potential phases of singlehood.

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December 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

Morse: Important Developments in Federal Income Taxation (2014)

Edward A. Morse (Creighton), Important Developments in Federal Income Taxation (2014):

This outline, prepared for the 52nd Annual Great Plains Tax Institute in Omaha, Nebraska (December 4-5, 2014) covers significant developments in federal income taxation along with a few other interesting or noteworthy tax topics. It is not intended to provide exhaustive coverage, but it offers a selective treatment of items likely to interest practitioners and advisors within a broad range of professional practices. Coverage in this outline generally includes events from the prior Institute through December 1, 2014.

December 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

Crane Reviews Halperin & Warren, Understanding Income Tax Deferral

JotwellCharlotte Crane (Northwestern), Keeping Us Honest About the Timing Flaws in the Income Tax (Jotwell) (reviewing Daniel I. Halperin (Harvard) & Alvin C. Warren Jr. (Harvard), Understanding Income Tax Deferral):

The recent attempt of Halperin and Warren to lay out with some precision what is at stake in the various phenomena loosely called “deferral” is a welcome contribution and should become a go-to primer. The essay includes the math critical to the analysis, but in a way that does not require the reader to be able to reproduce it in order to get the full message. It is also a useful review of the literature produced by tax academics in law schools (significantly by Halperin and Warren themselves) that connects the relatively simple financial principles regarding the time value of money with the on-the-ground tax policy debates in which they properly appear.

December 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

Shaviro: The Case for 1986-Style Corporate Tax Reform

Tax Analysys Logo (2013)Daniel N. Shaviro (NYU), Evaluating the Case for 1986-Style Corporate Tax Reform, 145 Tax Notes 1267 (Dec. 15, 2014):

Shaviro explores the relationship between taxing corporate income at the entity level and the difficulties in evaluating whether a corporate rate cut would be desirable without significant structural changes.

December 17, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Harvard Law Prof: Are Today's Students Too Sensitive to Study Rape Law?

The New Yorker:  The Trouble With Teaching Rape Law, by Jeanne Suk (Harvard):

I New Yorkermagine a medical student who is training to be a surgeon but who fears that he’ll become distressed if he sees or handles blood. What should his instructors do? Criminal-law teachers face a similar question with law students who are afraid to study rape law.

Thirty years ago, their reluctance would not have posed a problem. Until the mid-nineteen-eighties, rape law was not taught in law schools, because it wasn’t considered important or suited to the rational pedagogy of law-school classrooms. The victims of rape, most often women, were seen as emotionally involved witnesses, making it difficult to ascertain what really happened in a private encounter. This skepticism toward the victim was reflected in the traditional law of rape, which required a woman to “resist to the utmost” the physical force used to make her have intercourse. Trials often included inquiries into a woman’s sexual history, because of the notion that a woman who wasn’t virginal must have been complicit in any sex that occurred. Hard-fought feminist reforms attacked the sexism in rape law, and eventually the topic became a major part of most law schools’ mandatory criminal-law course. Today, nobody doubts its importance to law and society.

But my experience at Harvard over the past couple of years tells me that the environment for teaching rape law and other subjects involving gender and violence is changing. Students seem more anxious about classroom discussion, and about approaching the law of sexual violence in particular, than they have ever been in my eight years as a law professor. Student organizations representing women’s interests now routinely advise students that they should not feel pressured to attend or participate in class sessions that focus on the law of sexual violence, and which might therefore be traumatic. These organizations also ask criminal-law teachers to warn their classes that the rape-law unit might “trigger” traumatic memories. Individual students often ask teachers not to include the law of rape on exams for fear that the material would cause them to perform less well. One teacher I know was recently asked by a student not to use the word “violate” in class—as in “Does this conduct violate the law?”—because the word was triggering. Some students have even suggested that rape law should not be taught because of its potential to cause distress. ...

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December 17, 2014 in Legal Education | Permalink | Comments (3)

Seto: More on the 2016 New Lawyer Job Projections

Seto (2014)TaxProf Blog op-ed:  More on the 2016 New Lawyer Job Projections, by Theodore P. Seto (Loyola-L.A.):

On Dec. 10, Matt Leichter published a response to my TaxProf Blog op-ed of Nov. 19 analyzing new Bureau of Labor Statistics projections of the likely demand for lawyers over the next several years. While I am flattered that anyone would spend an entire article responding to my rather pedestrian analysis, I am bemused to be accused of “optimism” and “exuberance.” If I am guilty of these faults, it is entirely unintentional. My goal is to be as ploddingly fact-based as possible.

In particular, Mr. Leichter quotes me as claiming that “by 2016, the number of law graduates [will] exceed the new projected annual job growth rate, creating ‘a significant excess of demand over supply.’” What I actually wrote was: “Based on 2012 and 2013 matriculation rates and historical drop-out rates, we should expect 40,082 ABA-accredited law school graduates in 2015 and 35,954 in 2016. If the new BLS projections are accurate, we should see demand and supply in relative equilibrium in 2015 and a significant excess of demand over supply beginning in 2016. (These estimates only take into account JD-required jobs. Demand from JD-advantage employers is not included.)”

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December 17, 2014 in Legal Education | Permalink | Comments (8)

Why Does Uncle Sam Hate American Expats?

Wall Street Journal op-ed:  Why Does Uncle Sam Hate American Expats?, by Neil Gandal (Tel Aviv University, Department of Economics):

FATCAIt’s not easy to be an American living abroad these days, and some are even giving up U.S. citizenship. The reason is ill-considered legislation most people never heard of: the Foreign Account Tax Compliance Act.

Here’s the background: The number of Americans living abroad increased from 70,000 in 1966 to between three million and four million in 1996 and more than seven million today, according to several estimates. There are many reasons Americans have moved, including the globalization of the economy and increased cross-border migration generally.

The U.S. is the only developed country in the world that requires citizens who live abroad to file tax returns. This is so complicated that it is virtually impossible to do without an accountant, and that can cost more than $1,000 a year, even for very simple tax returns.

But that’s only the beginning. There are additional reporting requirements for Americans who live abroad. The FBAR (Foreign Bank Account Report) requires holders of foreign financial accounts to report detailed information about all such accounts each year. It can take many days to obtain and compile the information and then prepare the form.

The Foreign Account Tax Compliance Act of 2010 made matters worse. Fatca compliance costs for foreign banks are so high that many banks have closed the accounts of Americans living abroad. Joining the ranks of the “unbanked” is becoming the straw that breaks the camel’s back. The Economist has reported that approximately 3,000 expats gave up their U.S. citizenship or green cards in 2013; prior to Fatca it was only a few hundred a year. A recent survey by the deVere Group suggests that a large majority may have done so because of the law. ...

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December 17, 2014 | Permalink | Comments (20)

The IRS Scandal, Day 587

IRS Logo 2Forbes:  Did You Hear The One About Lois Lerner Walking Into A Bar?, by Peter J. Reilly:

Judicial Watch has come out with the latest in the perennial never ending IRS scandal.  It has managed to pry loose from the Justice Department e-mails that show that Lois Lerner, who was imported into the IRS from the Federal Election Commission, met with the Justice Department to discuss whether people who had lied on their exemption applications about political activities should be prosecuted.  The Justice Department is not releasing further documents which would explain why it did not prosecute anybody.  As I’ve been following this drama, I’ve often found myself looking at it from a different angle than everybody else, which is what makes me think of this as a story about Lois Lerner walking into a bar.

The IRS is tasked with a pretty big job having to collect over $2 trillion dollars.  Since Congress has decided to use Title 26( Internal Revenue Code) as its go to title to encourage or discourage this that and the other thing, the IRS gets diverted quite a bit from its core mission of collecting revenue.  To work for the IRS as a revenue agent, the education requirement is a bachelors degree with 30 hours in accounting.  So your core enforcement people in the IRS are accountants.  Task twenty odd thousand accountants with collecting $2 trillion dollars and a bunch of miscellaneous stuff, some of the miscellaneous stuff is going to slide by.  So it is understandable that they did not do such a hot job on squelching 501(c)(4) organizations that were engaging in political activity.

Then along comes Lois Lerner who is not a career IRS employee.  She is excited about violations of the campaign financing laws and now can put numerous minions into zealously scrutinizing applications, thinking up more and more devious ways in which 501(c)(4) status can be abused.  None of the thing that my father always told me about how to behave in a bar was to never talk about religion or politics.  Lois Lerner apparently could talk of nothing other than politics and that may be what is behind this mess.  That’s why Lois Lerner walking into the IRS is like her walking into a bar.  It was not good for Lois Lerner and it was not good for the bar.ot being a career IRS employee, she did not have IRS culture embedded in her. ...

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December 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, December 16, 2014

1L Enrollment Shrank 4.5% in 2014, to the Lowest Level Since 1974 (When There Were 53 Fewer Law Schools)

ABA Journal, 1L Enrollment Drops Nearly 30 Percent From 2010 High:

First-year enrollment at ABA-approved law schools dropped this year to the lowest point since 1974, when there were 53 fewer accredited law schools.

The 204 ABA-accredited law schools enrolled 37,924 full- and part-time first-year students in the fall of 2014, a drop of 4.4 percent from 2013 and a drop of 27.7 percent from the historic high of 52,488 in 2010, according to an ABA press release.

Sixty-four schools reported a drop in first-year enrollment of 10 percent or more since last year. Thirty-three law schools bucked the trend, however, reporting an increase in 1L enrollment this year of 10 percent or more.

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December 16, 2014 in Legal Education | Permalink | Comments (2)

Johnston: How Google and Apple Make Their Taxes Disappear

Newsweek:  How Google and Apple Make Their Taxes Disappear, by David Cay Johnston (Syracuse):

Google AppleAround the world, countries are desperately seeking ways to stop multinational companies from earning profits within their borders without paying taxes on them, while stashing trillions in tax havens like the Cayman Islands. The British government, after a search, says it knows how to tax the profits Google earns in the United Kingdom. Its solution is simple and elegant, and it probably won’t change a damn thing.

The proposal has come because Britain and many other countries are tired of getting just the table scraps after companies enjoy what tax lawyers call Dutch Sandwiches washed down with a Double Irish. Those are popular names for tax strategies that let companies earn profits in countries with high taxes, but report profits where little or no tax is paid, such as Ireland. The people charged with enforcing tax laws say that is cheating, and some officials and pundits in Europe have invoked what President Ronald Reagan said in a 1983 radio address about tax cheats: “When they do not pay their taxes, someone else does—you and me.”

Four years ago, Bloomberg News reporter Jesse Drucker revealed how Apple, Google, Microsoft and other big companies duck taxes on European profits, which set off ongoing coverage of the issue in Europe, where most individuals and small businesses are heavily taxed. Google pays as little as 2.4 percent tax on its offshore earnings, compared with the official 35 percent tax rate on American profits and the 28 percent rate in Britain, its second largest market. Google’s worldwide pretax profits grew 72 percent from 2009 to 2013, but profits booked offshore grew more than five times faster, from $7.7 billion to $38.9 billion.

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December 16, 2014 in Tax | Permalink | Comments (3)

Law Firms Profits Projected to Grow 5% in 2015

Citi Private Bank & Hildebrandt Consulting, 2015 Client Advisory:

Based on our review of financial data, our discussions with law firm leaders, and other economic data available to us, we project that 2015 revenue for the law firm industry will likely rise in the six percent range, and PPEP in the five percent range. ... We believe transactional work will continue to drive growth, and litigation demand is likely to remain flat, placing continued pressure on firms with a strong dependence on litigation. ...

Just as the uptick in transactional activity is likely to drive demand growth in 2015, we expect to see continued pressure on firms who rely more heavily on litigation. While litigation traditionally drove firm revenue in downward economic cycles, over the past few years, with some exceptions, like intellectual property prosecution or investigations, it has either been flat or declining, as seen in Chart 3. 

Chart 3

December 16, 2014 in Legal Education | Permalink | Comments (0)

How Many Of Your Colleagues Are Hungover Today? 1.6%.

FiveThirtyEight, How Many Of Your Co-Workers Are Hungover?:

I’ve thought about this relatively often, because my career path — from the restaurant business to journalism — has been dominated by occupations where some people roll into work with shades and water bottles. There’s a bit of data on this. ...

Survey

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December 16, 2014 in About This Blog, Legal Education | Permalink | Comments (0)

Local Government Rejects InfiLaw, Backs Nonprofit Takeover of Charleston Law School

Charleston Post and Courier, Charleston County Legislative Delegation Supports Nonprofit Organization, not InfiLaw, Taking the Reins at Charleston School of Law:

ICThe Charleston County Legislative Delegation Monday voted to support a plan for a nonprofit organization to take over the Charleston School of Law instead of the for-profit InfiLaw System.

Thirteen of the 22 delegation members attended a meeting at McClellanville Town Hall, where the vote was taken. Ten voted in favor of supporting the nonprofit launched by Ed Westbrook, one of the school's three owners. [Three] abstained. ...

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December 16, 2014 in Legal Education | Permalink | Comments (0)

Barry & Caron: Tax Regulation, Transportation Innovation, and the Sharing Economy

Jordan M. Barry (San Diego) & Paul L. Caron (Pepperdine), Tax Regulation, Transportation Innovation, and the Sharing Economy, 81 U. Chi. L. Rev. Dialogue ___ (2015):

Many emerging companies’ business models center on helping consumers to share assets in new ways. This “sharing economy” has already experienced tremendous growth and attracted considerable investment capital and talent. Yet, as is often the case with economic innovations, existing regulatory structures have hindered the growth of the sharing economy, reducing its popularity and slowing its development.

This Article explores the tension between innovation and regulation, both in general and in a specific context: the intersection of the transportation sector of the sharing economy and the qualified transportation fringe benefit rules of Internal Revenue Code Section 132. We illustrate how regulators’ legitimate concerns combine with the uncertainty surrounding new ways of doing business to create regulatory environments that place new industries at a disadvantage. We also argue that two of the most common approaches that regulators adopt to foster new industries – expanding regulation to encourage new industries and restricting regulation to spur innovation – are both flawed. In tax and other areas of law, these approaches tend to operate cyclically, with each coming into fashion for a time until its flaws are deemed unbearable and it gets replaced by the other. This cycle will continue until someone comes up with a better innovation.

December 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Dean, Unemployed Young Lawyer Living With Parents Differ on Value of Law School

Vegas Seven, Now’s the Time to Break into Law:

Daniel Hamilton, the dean of UNLV’s Boyd School of Law:  ... “This is the best time to apply and go to law school in a generation,” he says. “The competition is fierce, and the ability to negotiate tuition is widespread.” Negotiate tuition? Yep. Nowadays, applicants can—and should—leverage multiple offers to get the best deal, Hamilton says. “A student applies to law school at UNLV or anywhere else, and calls you up and says, ‘I’ve got this offer at school A and this offer at school B. Let’s talk.’” ...

Anyone pursuing a law degree today is likely in it for the right reasons, which is to say they’re wholeheartedly devoted to pursuing a legal career. “I think it’s fair to say that in decades prior you could apply to law school as a kind of holding pattern,” Hamilton says. “[These changes] in legal education have done away with law school as a default option.”

Cedar Rapids Gazette op-ed:  Law School Is Broken, by Steve Waechter ("a 2009 [Drake] law graduate who lives at home and works in a factory to pay down student loans"):

American law schools take bright, ambitious young people and leave them broke, humiliated, deeply indebted and disaffected. They do this by squeezing them for student loan money for three years and then hurling them into an economy that can barely employ half of them. ...

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December 16, 2014 in Legal Education | Permalink | Comments (0)

Harvard 3L: Delaying Exams Is Not a Request from 'Coddled Millennials'

Following up on last week's post, Columbia Law School Lets Students Postpone Exams Due to Grand Jury Decisions; Harvard, Georgetown Students Demand Similar Treatment:

HarvardNational Law Journal op-ed:  Delaying Exams Is Not a Request from 'Coddled Millennials', by William Desmond (Harvard 3L):

Over the last week, much has been said about law students’ petitioning for exam extensions in light of the circumstances surrounding the deaths of Michael Brown and Eric Garner at the hands of police officers. Students at Harvard Law School, Columbia Law School, Georgetown University Law Center and several other schools requested that their administrations allow extensions on final exams for students who have been confronting the aftermath of the recent failed grand jury indictments of the officers who killed the unarmed black men.

In response, opponents of exam extensions have declared that to grant these requests would be a disservice to the students. Law students, they argue, must learn how to engage critically with the law in the face of intense adversity. Drawing comparisons to events surrounding the Civil Rights Movement and other times of intense turmoil, these opponents portray today’s law students as coddled millennials using traumatic events as an excuse for their inability to focus on a three-hour exam. In essence, law students are being told to grow up and learn how to focus amidst stress and anxiety—like “real” lawyers must do.

Speaking as one of those law students, I can say that this response is misguided: Our request for exam extensions is not being made from a position of weakness, but rather from one of strength and critical awareness.

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December 16, 2014 in Legal Education | Permalink | Comments (6)

Faculty Fathers: Toward a New Ideal in the Research University

Faculty FathersMargaret W. Sallee (SUNY-Buffalo), Faculty Fathers: Toward a New Ideal in the Research University (SUNY Press, 2014):

For the past two decades, colleges and universities have focused significant attention on helping female faculty balance work and family by implementing a series of family-friendly policies. Although most policies were targeted at men and women alike, women were intended as the primary targets and recipients. This groundbreaking book makes clear that including faculty fathers in institutional efforts is necessary for campuses to attain gender equity. Based on interviews with seventy faculty fathers at four research universities around the United States, this book explores the challenges faculty fathers—from assistant professors to endowed chairs—face in finding a work/life balance. Margaret W. Sallee shows how universities frequently punish men who want to be involved fathers and suggests that cultural change is necessary—not only to help men who wish to take a greater role with their children, but also to help women and spouses who are expected to do the same.

(Hat Tip: Inside Higher Ed.)

December 16, 2014 in Book Club, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 586

IRS Logo 2Wall Street Journal op-ed:  Congress Can Pry Open a Clammed-Up IRS, by Charles Lipson (University of Chicago, Department of Political Science):

The agency pleads that it can’t share the documents that it may have shared illegally because that would be illegal.

The White House and IRS are entangled in a sticky court case with major political ramifications. It concerns allegations that the IRS illegally shared private taxpayer information with the White House related to conservative individuals or organizations. The Treasury Department said this month that although it has found a cache of documents that may be pertinent, it is not allowed by law to release them. The question now is who can find out whether the Obama White House has in effect weaponized the IRS, turning it into an agency that targets Americans out of favor with the administration.

Most likely, for reasons outlined below, Congress will have to be the one to find out. While we are far from knowing if any violations of the law have occurred, this is a serious issue. Misuse of the IRS was an article in Richard Nixon ’s impeachment—and he was only accused of trying to politicize the tax agency. ...

Treasury has clammed up again, trying to keep its contacts with the White House secret and reiterating that it is exempt from disclosure. The administration has offered a bizarre rationale: It would be illegal to turn over documents the IRS shared illegally since it is illegal for the IRS to share the files with anyone, including the court.

There still is a wide gap between our knowing that there is a cache of “responsive documents” and anyone establishing a direct connection between White House political operatives and the IRS. However revealing the documents may be, they would need to be followed up by interviews and depositions, which may lead to more documents. Only a thorough investigation can accomplish that.

A politicized Justice Department cannot be trusted to conduct an impartial investigation or to appoint a reliable outside prosecutor. This means that any serious inquiry is up to Congress.

Republican leaders are understandably cautious about this approach. When they take control of Congress in January, their overriding goal is to establish a track record for governing, not a pattern of investigating the Obama administration’s past transgressions. But this case should be an exception. Any White House interference with the IRS is a fundamental assault on the rule of law and the disinterested application of the tax code. If allowed to stand, it will serve as a pernicious precedent for future administrations. 

Congress should proceed carefully but steadily. ... If the documents show repeated, politicized contacts between the IRS and the White House—and only then—the House and Senate should vote to establish a joint congressional committee to investigate. ... The heavy lifting, particularly taking depositions under oath, should be done behind closed doors, beginning with lower-level people who might have seen unauthorized documents or their political uses. Give them transactional immunity and make clear they face serious legal peril if they fail to testify fully and truthfully. Then follow the chain of testimony up the organizational chain. A well-conducted investigation would either clear the White House’s senior political aides or implicate them in serious wrongdoing. 

The search for the truth here ought to be a bipartisan issue. It may yet become one as Democrats back away from the Obama White House.

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December 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, December 15, 2014

Brookings Hosts Conference Today on The Long Run Outlook for the Federal Budget

BrookingsThe Brookings Institution hosted a conference today on The Long Run Outlook for the Federal Budget: Do We Know Enough to Worry?:

Other commentators:

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December 15, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Elkins Presents The Achilles Heel of Corporate Taxation Today at Hebrew University

Elkins (2015)David Elkins (Netanya) presents The Achilles Heel of Corporate Taxation at Hebrew University of Jerusalem today as part of its Tax Colloquium Series:

A great deal of the complexity and inconsistency of the corporate tax structure can be traced to a 1921 decision in which the Supreme Court refused to bifurcate the amount paid for shares and to consider part of that amount as consideration for the right to participate in the distribution of already accumulated earnings. Although the government won that case, it turned out to be one of its most pyrrhic victories, as the consequent misallocation of basis created perhaps the most basic corporate tax shelter. Congress, instead of attacking the root of the problem by providing for bifurcation, chose to make it inconvenient for taxpayers to exploit what it viewed as an isolated glitch in the system (and in the process created a great deal of collateral damage). The Commissioner, with some degree of success, tends to look askance at corporations that engage in legitimate self-help by withdrawing profits before selling their shares. Bifurcation would contribute to the equity, efficiency, and simplicity of the corporate tax structure by equalizing the tax treatment of the various methods by which corporate shareholders realize their right to capital and earnings.

December 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tobin: The IRS and a Crisis of Confidence -- A New Regulatory Approach for a New Era

Florida Tax ReviewDonald B. Tobin (Dean, Maryland), The Internal Revenue Service and a Crisis of Confidence: A New Regulatory Approach for a New Era, 16 Fla. Tax Rev. 429 (2014):

The Internal Revenue Service is not usually thought of as the agency charged with enforcing the nation’s campaign finance laws. It has found itself, however, at the center of a firestorm over both its involvement and its ineptitude in enforcing certain rules that regulate the campaign activities of tax-exempt organizations. For historical, legal, and practical reasons, the Internal Revenue Code regulates the political activity of tax-exempt groups, in some instances providing for disclosure of campaign donors and expenditures, and in other instances limiting the amount of political activity engaged in by tax-exempt organizations. As campaigns become more sophisticated and complicated, pressure is placed on the rules regulating the political activity of tax-exempt organizations. The current structure regulating the political activity of tax-exempt organizations is unworkable, and the recent crisis resulting from the IRS’s use of partisan criteria to determine what applications for exempt status should come under further inquiry highlights the breakdown in the current regulatory regime.

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December 15, 2014 in Scholarship, Tax | Permalink | Comments (0)

The Artisanal Attorney

Artisinal 2John Frank Weaver, I Am An Artisanal Attorney:

Are you tired of large corporate law firms making the same cookie cutter litigation? Do you fondly remember a time when quality mattered in law suits, when there was art and craftsmanship in every court motion filed, when company records were drafted using the traditional methods and tools? If you have become dissatisfied with mass-produced legal representation, stop by my scriveners shop; for I am an artisanal attorney.

Not long ago, while attending a small-batch honey wine tasting at a meadery with friends, I realized that we bought only organic produce at the local farmers market, ate only free range meat prepared by our traditional neighborhood butcher, and filled our apartments with only free trade, hand crafted furniture. We—and many others like us—insist on authenticity in everything in our lives. We don’t want to eat. We want the fullness that only comes from a meal created by the human experience. We don’t want to drink. We want the buzz that is produced by the draught of a person’s skill. It occurred to me that people who demand realness in their food and homes should also demand it in their legal representation. That was when I became an artisanal attorney.

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December 15, 2014 in Legal Education | Permalink | Comments (1)

NY Times: Should U.S. Expand, Jack Up $500k Price of VIP Passport Program?

New York Times:  Some of the Rich Collect Art. Others Collect Passports., by Robert Frank (CNBC):

VIP 2Along with stock and real estate portfolios, the global rich are now buying a new form of economic security: passport portfolios.

Wealthy investors from around the world are increasingly shopping for visas or citizenship in other countries, hoping for a personal hedge against their own volatile governments or economies. A vast majority are new millionaires and billionaires from emerging-market countries, especially China, Russia and nations in the Middle East. Often, they’re shopping for passports or entree into Europe, the United States, Canada and Australia.

Experts estimate that these “economic citizens” are spending $2 billion a year on second or third passports and visas. Demand is so strong that governments around the world have started an arms race of sorts for V.I.P. visas, offering ever-faster residencies and passports for ever-higher prices. Over the past year, Australia [$4.15 million], Canada, Britain [$3.14 million] and several other European countries have raised the prices or investment requirements of their so-called golden visas and created a new fast lane for citizenship. ...

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December 15, 2014 in Tax | Permalink | Comments (0)

Average American's Wealth Down 40% Since 2007, Inequality Has Widened Across Racial Lines

Pew Research Center, Wealth Inequality Has Widened Along Racial, Ethnic Lines Since End of Great Recession:

The Great Recession, fueled by the crises in the housing and financial markets, was universally hard on the net worth of American families. But even as the economic recovery has begun to mend asset prices, not all households have benefited alike, and wealth inequality has widened along racial and ethnic lines.

Pew 1

The wealth of white households was 13 times the median wealth of black households in 2013, compared with eight times the wealth in 2010, according to a new Pew Research Center analysis of data from the Federal Reserve’s Survey of Consumer Finances. Likewise, the wealth of white households is now more than 10 times the wealth of Hispanic households, compared with nine times the wealth in 2010. ...

Pew 3The current gap between blacks and whites has reached its highest point since 1989, when whites had 17 times the wealth of black households. The current white-to-Hispanic wealth ratio has reached a level not seen since 2001. ...

Leaving aside race and ethnicity, the net worth of American families overall — the difference between the values of their assets and liabilities — held steady during the economic recovery. The typical household had a net worth of $81,400 in 2013, according to the Fed’s survey — almost the same as what it was in 2010, when the median net worth of U.S. households was $82,300 (values expressed in 2013 dollars).

The stability in household wealth follows a dramatic drop during the Great Recession. From 2007 to 2010, the median net worth of American families decreased by 39.4%, from $135,700 to $82,300

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December 15, 2014 in Tax | Permalink | Comments (12)

InfiLaw Ramps Up Lobbying For Approval of Acquisition of Charleston Law School

Charleston Post and Courier, InfiLaw Making Case to Lawmakers for Charleston School of Law Sale:

ICThe for-profit InfiLaw System has ramped up its behind-the-scenes efforts as a decision on whether the company will be allowed to own and operate the Charleston School of Law bounces back to the state.

That decision has become a political hot potato after the American Bar Association earlier this month deferred its decision on whether to allow the controversial sale of the private school to go through, and lobbed the matter back to the state's Commission on Higher Education. The company, which owns three law schools, must get a license from the state's Commission on Higher Education and the sale must be approved by the American Bar Association, but it remains unclear when either will be considered.

Kathy Heldman, a spokeswoman for InfiLaw, said the company recently has ramped up efforts to get its message out to state lawmakers and others, but it isn't doing anything extreme. The company's efforts "are consistent with what many other companies do in situations like this," she said.

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December 15, 2014 in Legal Education | Permalink | Comments (2)

Ph.D.s Rising, Jobs Falling

Inside Higher Ed, Doctorates Up, Career Prospects Not:

Universities are awarding doctoral degrees at an accelerating pace, despite the fact that the career prospects of those who receive their Ph.D.s appear to be worsening. ...

American universities awarded 52,760 doctorates in 2013, up 3.5 percent from nearly 50,977 in 2012 and nearly 8 percent from 48,903 in 2011. Those large increases followed several years of much smaller increases and one decline (in 2010) since the onset of the economic downturn in 2008, as seen in the chart below.

The numbers suggest that more people are seeking terminal degrees and that universities are welcoming them with open arms -- but the data on what the Ph.D. holders do with their new degrees raise questions about whether the credentials will pay off for the individuals themselves, at least in the short term.

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December 15, 2014 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 585

IRS Logo 2San Diego Union-Tribune:  Is AG Ignoring Lessons From IRS Scandal?:

A Virginia-based conservative group filed a federal First Amendment lawsuit this week accusing California Attorney General Kamala Harris of engaging in the kind of activity that was the subject of the recent scandal involving the Internal Revenue Service. Are state officials trying to chill the speech of conservative nonprofits?

“Not only did IRS employees improperly target groups based on politics, but they also improperly demanded a host of details about the groups’ activities, according to a report on the abuses by a Treasury Department inspector general,” according to a Washington Post report about the federal scandal. The IRS even demanded information about some of these groups’ smallest donors.

Now the Americans for Prosperity Foundation is saying the state of California is improperly demanding information about its donors – and is threatening unusually harsh penalties if the group doesn’t comply. One other conservative group has filed a separate lawsuit against the attorney general, which is now in the Ninth Circuit. ...

Harris has long been touted as a rising national political star. If so, then she ought to learn some lessons from a scandal that gave the IRS such a black eye.

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December 15, 2014 in IRS News, IRS Scandal, Law Firm Tax Rankings, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, December 14, 2014

College For Grown-Ups

Remaking College 2NY Times: op-ed:  College For Grown-Ups, by Mitchell L. Stevens (Stanford):

A Ccruel paradox of higher education in America is that its most coveted seats are reserved for young people. Four-year residential colleges with selective admissions are a privileged elite in the academic world, but their undergraduate programs effectively discriminate on the basis of age. Admissions officers typically prefer that the best and brightest be children.

Yet leaving home at a young age to live on a campus full-time is not without serious financial, psychological and even physical risk. People make major investment decisions when they are choosing colleges, but with minimal information about quality and fit. Meanwhile flagship public universities, which rely on tuition to offset diminished public subsidies, condone Greek systems that appeal to many affluent families but also incubate cultures of dangerous play. The so-called party pathway through college is an all-encompassing lifestyle characterized by virtually nonstop socializing, often on the male-controlled turf of fraternity houses. Substance abuse and sexual assault are common consequences.

Even at the schools where the party pathway is carefully policed, life on a residential campus can be a psychological strain. A substantial body of research demonstrates that first-generation college students, those from low-income families and racial minorities are particularly at risk for feelings of exclusion, loneliness and academic alienation. The costs of leaving college can be large for everyone: lost tuition, loan debt and a subtle but consequential diminishment of self-esteem.

The source of these problems is baked into the current organization of residential higher education. Virtually all selective schools arrange their undergraduate programs on the presumption that teenagers are the primary clients. Administrators plan dormitory architecture, academic calendars and marketing campaigns to appeal to high school juniors and seniors. Again the cruel paradox: In the ever-growing number of administrators and service people catering to those who pay tuition, there are grown-ups all over campus, but they are largely peripheral to undergraduate culture.

If we were starting from zero, we probably wouldn’t design colleges as age-segregated playgrounds in which teenagers and very young adults are given free rein to spend their time more or less as they choose. Yet this is the reality.

It doesn’t have to be that way.

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December 14, 2014 in Legal Education | Permalink | Comments (1)

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 #97 in all-time downloads among 10,578 tax papers:

  1. [1340 Downloads]  A Compendium of Private Equity Tax Games, by Gregg D. Polsky (North Carolina)
  2. [397 Downloads]  Obama Care Fails the Origination Clause: Why Sissel and Hotze Should Be Reversed, by Steven J. WIllis (Florida) & Hans G. Tanzler (Florida)
  3. [231 Downloads]  Piketty in America: A Tale of Two Literatures, by Joseph Bankman (Stanford) & Daniel Shaviro (NYU)
  4. [206 Downloads]  A Conceptual Framework for the Regulation of Cryptocurrencies, by Omri Marian (Florida)
  5. [168 Downloads]  Corporate Inversions and the Unbundling of Regulatory Competition, by Eric L. Talley (UC-Berkeley)

December 14, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Witte: From Critical Legal Studies to Christian Legal Studies

Law Bible 4John Witte Jr. (Emory), Foreword: From Critical Legal Studies to Christian Legal Studies, in Law and the Bible: Justice, Mercy and Legal Institutions (Robert Cochran & David VanDrunen, eds.  2013):

This text reflects briefly on the precocious rise of Christian legal studies in North American and European law schools, and the past, present, and potential role of Scripture and the Christian tradition in shaping modern understandings of public, private, penal, and procedural law.

December 14, 2014 in Book Club, Legal Education, Scholarship | Permalink | Comments (1)

The IRS Scandal, Day 584

IRS Logo 2Las Vegas Review-Journal editorial:  IRS Defies Order to Turn Over Tax Documents:

Back in February, President Barack Obama said the apparent targeting of conservative organizations by the IRS was not illegal or politically motivated, but rather the result of “some bone-headed decisions,” and that “not even a smidgen of corruption” was at play. A few months — and developments — later, however, the president’s words are even less believable than they were then.

First, nonprofit watchdog group Cause of Action filed a Freedom of Information Act request for documents from the IRS indicating that the agency had been sharing individuals’ private tax data with the White House. (The group was trying to obtain information proving the existence of an independent investigation into alleged unauthorized access to the Koch brothers’ tax returns by former White House senior economics adviser Austan Goolsbee.) When the agency dragged its feet and ultimately denied the request, Cause of Action sued. A judge ruled in Cause of Action’s favor, ordering the IRS to turn over all of the documents by December 1.

Despite the court order, however, the IRS has continued to stonewall, refusing to share the requested records. While the Treasury Inspector General for Tax Administration (TIGTA) claimed initially that the IRS would comply and turn over more than 2,000 pages of documents, it abruptly reneged, saying in a letter to Cause of Action on December 1 that, yes, they did indeed have 2,043 pages of documents relating to the FOIA request, but that Cause of Action couldn’t see them due to federal privacy laws.

So, if you’re keeping score at home, the IRS claimed that turning over the documents would be an invasion of privacy — despite the fact that the agency already invaded that privacy by having the documents in the first place.

These new developments highlight a very cozy and, in all likelihood, very much illegal relationship between the Obama administration and the IRS. We still don’t know the full extent and depth of the IRS targeting scandal, but this case could provide evidence of coordination. For now, we are left with a ton of questions:

What, exactly, was the White House doing with more than 2,000 pages of documents containing private tax data of various Americans? Is the IRS helping the Obama administration go after the “dark money” groups the president and his party have long condemned? And what are we to make of the fact that as many as 30,000 supposedly destroyed emails from former IRS Exempt Organizations Director Lois Lerner have suddenly turned up — emails from January 2009 through June 2011, the time period during which the IRS was ramping up its conservative targeting efforts?

Does the IRS just have really bad luck with computers? Are those in charge of finding the emails incompetent? Or is there something more coordinated and corrupt going on? And, if so, how much did President Obama know about it?

When President Obama took office, he swore that his would be “the most transparent” presidency in history, but his administration’s hostility regarding actual transparency, as well as the free press, remains alarming and unacceptable. All of the requested IRS records need to be made public, and if the Obama administration and the IRS won’t do it, then the Republican-led Congress needs to push for hearings to get to the bottom of the matter.

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December 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, December 13, 2014

Four Charts That Explain Why America Has Too Many Law Schools

Bloomberg Businessweek, Four Charts That Explain Why America Has Too Many Law Schools:

It is probably the worst time in decades to be a law school. The four charts below show why we don't need to be minting any new ones. 

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December 13, 2014 in Legal Education | Permalink | Comments (0)

Life and Death in the Federal Income Tax Class

TedTheodore Eisenberg, Henry Allen Mark Professor of Law at Cornell, died suddenly of a heart attack on February 23, 2014 at the age of 66 (remembrance here).  I was a student of Ted's in his bankruptcy class, and I later convinced him to participate in our law school rankings symposium at Indiana.  Although Ted was primarily known for his empirical research in bankruptcy, civil rights, and the death penalty, he also taught federal income tax.  Here is an excerpt from a student evaluation in Ted's federal income tax class as a visiting professor at Harvard Law School from In Memoriam: Theodore Eisenberg [1947-2014], 100 Cornell L. Rev. 1, 3 (2014):

Thank you, Professor Eisenberg, for making a course I feared taking since day one of HLS enjoyable. Really enjoyable. There were days when I thought, My god, it can’t be, I like tax. Prof. Eisenberg is the best teacher I’ve had at HLS. An unpretentious, patient, searching attitude and a brilliant teaching style. I can’t say enough in favor of this unique, witty, and motivating professor. Profs at HLS should be required to take lessons from Eisenberg on how to teach a law school class. Made a class of 150 seem like a class of 15. A great communicator. I’m not afraid of tax anymore. EISENBERG IS A GOD. HLS does not deserve him. But HLS stu- dents do. 

TyreUNLV, Q&A: New Grad Tyre Graym:

You've had significant health issues during your studies. Did that influence the direction you wanted to take with your degree?
I suffered from focal segmental glumerulosclerosis, which is a chronic kidney disease. On Sept. 11, 2012, while sitting in Professor (Francine) Lipman’s federal income tax course, I received the call I had been waiting to get for about three years: A kidney was available and I needed to rush to the hospital. At 4 a.m. on the next day, I received a kidney transplant. ...

My long-term goals include establishing a nonprofit that will provide legal advice to people who are candidates for transplant and major medical procedures. I believe that I can and will be able to raise awareness about kidney disease and organ donation.  I am here today because of the selfless act of another. If through my efforts, I can do the same for one other person, my time on this earth will have been well spent.

December 13, 2014 in Legal Education, Tax | Permalink | Comments (0)

NY Times: Life Insurers Use State Laws to Avoid $100 Billion in U.S. Taxes

New York Times DealBook, Life Insurers Use State Laws to Avoid as Much as $100 Billion in U.S. Taxes:

Some companies have been called economic traitors for seeking to lower their tax bills by moving overseas. But life insurers are accomplishing the same goal without leaving the country, saving as much as $100 billion in federal taxes, much of it in the last several years.

The insurers are taking advantage of fierce competition for their business among states, which have passed special laws that allow the companies to pull cash away from reserves they are required to keep to pay claims. The insurers use the money to pay for bonuses, shareholder dividends, acquisitions and other projects, and because of complicated accounting maneuvers, the money escapes federal taxation.

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December 13, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 583

IRS Logo 2The Blaze:  Did the IRS Share Confidential Taxpayer Data With the White House? It May Take Several More Months to Find Out:

A government watchdog group has been forced to ask a federal court to insist that the government hand over thousands of documents that could show the IRS gave confidential taxpayer information to the White House.

The Treasury Inspector General for Tax Administration, an internal oversight arm of the Treasury Department, indicated last month it was willing to hand over up to 2,500 documents that could show the IRS improperly shared this information with the Obama administration.

TIGTA had collected these documents after Austan Goolsbee, the former chair of the White House’s Counsel of Economic Advisers, implied that Koch Industries doesn’t pay any corporate income tax, which raised questions about how Goolsbee would know that.

But last week, TIGTA told Cause of Action, the group seeking those documents, that it could not hand them over after all. TIGTA said the rules of the tax code would prevent it from making them public. TIGTA said the documents contain confidential taxpayer data that cannot be released.

As a result, Cause of Action filed a new motion in the U.S. District Court for the District of Columbia that asks the court to dispute TIGTA’s decision. That motion indicates a resolution of the fight could still take several months.

Under Cause of Action’s proposed motion, the group would file a motion for summary judgment in late January, TIGTA would file its own arguments in late February, and all replies would be due by early April.

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December 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, December 12, 2014

Pepperdine Survived Today's Rain

The view from the law school atrium (via Al Sturgeon):

Rainbow Law School

The view from the pool (via Marcelo Ferreira):

Pool

December 12, 2014 in Legal Education, Tax | Permalink | Comments (1)

WSJ: Bonus Depreciation Fails to Boost Jobs, Capital Investment

Wall Street Journal, A Tax Break Fails to Produce Jobs:

With Congress poised to extend a raft of tax breaks, consider this: One such break has helped AT&T and Verizon slash their recent tax bills by billions of dollars without leading to the intended increase in investment or jobs.

The measure, known as “bonus depreciation,” lets companies offset their income with investments they have made more quickly. It was enacted in 2008 as part of the economic stimulus package with the goal of giving companies an incentive to build more factories or upgrade more equipment, creating jobs and giving a boost to sluggish economic growth in the process.

But that isn’t how it has worked, at least at AT&T and Verizon, whose vast networks of towers and cables make them two of the country’s biggest investors in infrastructure.

AT&T estimated its federal tax bill last year at $3 billion, down from about $5.9 billion in 2007, before the tax relief was enacted. Verizon estimated that it would get $197 million back last year, compared with a 2007 bill of $2.6 billion.

Meanwhile, the companies have kept their capital spending relatively flat since the stimulus was adopted, and their employee count has dropped by more than 100,000 people, a fifth of their combined work forces.

WSJ

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December 12, 2014 in Scholarship, Tax | Permalink | Comments (2)