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Thursday, November 27, 2014

The IRS Scandal, Day 567

IRS Logo 2CP Politics:  IRS Scandal a Priority for New House Oversight Committee Chair:

Rep. Jason Chaffetz, R-Utah, will focus on the IRS scandal as the House's new head executive watchdog. He was appointed as the next chairman of the House Oversight and Government Reform Committee on Tuesday.

Replacing the term-limited Rep. Darrell Issa, R-Calif., the 47-year-old Chaffetz will now chair the committee that has been a leading force behind the House investigation into the scandal involving the Internal Revenue Service's targeting of conservative and Christian groups. ...

Chaffetz' appointment could spell continued trouble for the IRS. Fox News reported that Chaffetz "vowed" to make the probe into the IRS's practice of stalling 501(c) tax-exempt applications of conservative and religious political action groups the "centerpiece of his chairmanship."

Along with Issa's leadership, Chaffetz has been an influential part of the Committee's IRS investigation. In the Spring, Chaffetz called for an independent special prosecutor when the IRS announced that emails from IRS Director of Exempt Organizations Unit, Lois Lerner, had been lost in a 2011 hard drive and no backup copies were made to turn over for review.

Chaffetz said he sees a pattern in the coincidental loss of evidence when it comes to federal agencies turning over documents when pressed in investigations.

"This is a recurring theme, from Fast and Furious, right down to Benghazi and now this IRS. It's the same basic drumbeat," Chaffetz told Sean Hannity earlier this year. "I think they are trying to play out the clock."

Numerous conservative political groups have accused the IRS of stalling their tax-exempt applications for political reasons. When a political action group does not receive tax-exempt status, potential donors can not be guaranteed that their donations will be eligible for tax write-offs. The IRS' stalling of the applications has cost groups thousands in donations and grants, while other groups have have not been able to survive. A communications director for a Texas-based conservative group told the Christian Post in October that the IRS's stalling cost his group $80,000 in donations and grants.

"The IRS, more than anybody else, cannot be a political organization. But is what it looks like it is has been like lately," Chaffetz told Fox News' Sunday Morning Futures with Maria Bartiromo in June. ...

The House Ways and Means Committee, which is also involved in the IRS investigation, will also have a new chair as Rep. Paul Ryan, R-Wis., was appointed as the committee's chairman on Tuesday. In a statement, Ryan said his committee will work to "hold the IRS accountable."

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November 27, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, November 26, 2014

Law Professor Blogs Network in ABA Blawg 100 and ABA Blawg Hall of Fame

ABA Blog 100Kudos to our Law Professor Blogs Network bloggers named to the 2014 ABA Blawg 100 -- "the 100 best Web sites by lawyers, for lawyers, as chosen by the editors of the ABA Journal":

  • EvidenceProf Blog, edited by Colin Miller (South Carolina):  "Every weekday, law professors—primarily the University of South Carolina's Colin Miller—post on the very latest rulings regarding the admissibility of evidence in criminal cases and what sorts of lines of questioning should be permitted at criminal trials. He also notes differences between the federal rules of evidence and the rules of various states. Occasionally, he will comment on whether he thinks courts have reached the right outcomes in these evidence cases or note fishy behavior by prosecutors."
  • Wills, Trusts & Estates Prof Blog, edited by Gerry W. Beyer (Texas Tech):  "Death and taxes are certainties for which we may plan. But quite a few of life's uncertainties can be faced with equanimity as well, if we just make some prudent preparations, Texas Tech law professor Gerry W. Beyer tells us. His blog provides useful advice on doing so, along with book and article summaries and thoughtful news analysis. Entries are concise and accessible, even to those who are unversed in estate law topics."

Hall of Fame 2Two Law Professor Blog Network blogs are in the ABA Blawg 100 Hall of Fame:

In 2012, we established the Blawg 100 Hall of Fame for those blogs which had consistently been outstanding throughout multiple Blawg 100 lists. The inaugural list contained 10 inductees; this year, we added 10 more, bringing the total to 30.

  • Legal Profession Blog, by Alan Childress (Tulane), Michael Frisch (Georgetown), and Jeff Lipshaw (Suffolk):  "The posts here often have us wondering, 'What were they thinking?' If a lawyer strays from ethical boundaries, the professors who blog here are quick to pick up on the trail of any discipline with to-the-point, snark-free dispatches."
  • TaxProf Blog, edited by Paul Caron (Pepperdine): "Paul Caron, a professor at Pepperdine University School of Law, covers tax reform in the news and scholarship related to U.S. tax law, and he notes celebrity tax disasters. But we like TaxProf at least as much for Caron’s exhaustive coverage of news and debates covering legal education. He became the sole owner of the Law Professor Blogs Network and a makeover of that group of blogs soon followed."

November 26, 2014 in Legal Education | Permalink | Comments (0)

Are You a Jerk at Work?

Columbia Press Release,  Are You Seen as a Jerk at Work? A New Study Reveals That Many People Are Oblivious to How They Come Across to Counterparts and Colleagues:

The JerkWhen Jill Abramson was ousted from her position as the executive editor of The New York Times, it was reported that she was, among other things, too “pushy.” But did Abramson—who has also been described by the media as “polarizing” and “brusque”—know during the course of her tenure that others viewed her as being overly assertive? A new study from the Columbia Business School suggests that there’s a great chance she didn’t.

“Finding the middle ground between being pushy and being a pushover is a basic challenge in social life and the workplace. We’ve now found that the challenge is compounded by the fact that people often don’t know how others see their assertiveness,” said Daniel Ames, professor of management at Columbia Business School and co-author of the new study. “In the language of Goldilocks, many people are serving up porridge that others see as too hot or too cold, but they mistakenly think the temperature comes across as just right—that their assertiveness is seen as appropriate. To our surprise, we also found that many people whose porridge was actually seen as just right mistakenly thought their porridge came off as too hot. That is, they were asserting themselves appropriately in the eyes of others, but they incorrectly thought they were pushing too hard.”

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November 26, 2014 in Legal Education, Tax | Permalink | Comments (1)

Hoenig: What's Wrong With Trafficking in NOLs?

Tax Analysys Logo (2013)Mark Hoenig (Weil, Gotshal & Manges, New York), Trafficking in Net Operating Losses: What's So Bad?, 145 Tax Notes 919 (Nov. 24, 2014):

Hoenig examines the almost century-long history of Congress’s efforts to allow tax losses and limit their transfer. He explores the rationale for those efforts, assesses the system now in place, and asks whether an alternative set of rules might better serve policy and the economy.

November 26, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 566

IRS Logo 2Washington Examiner:  2,500 New Documents ID'd in White House-IRS Taxpayer Harassment Cases:

In a shocking revelation, the Treasury Inspector General has identified some 2,500 documents that “potentially” show taxpayer information held by the Internal Revenue Service being shared with President Obama’s White House.

The discovery was revealed to the group Cause of Action, which has sued for access to any of the documents. It charges that the IRS and White House have harassed taxpayers.

In an email from the Justice Department’s tax office, an official revealed the high number of documents, suggesting that the White House was hip deep in probes of taxpayers, likely including conservatives and Tea Party groups associated with the IRS scandal.

Power Line:  The IRS Scandal Rears Its Head:

The Obama Administration’s IRS scandal is multi-faceted. In addition to the persecution of conservative non-profits by Lois Lerner et al., the question has been percolating for some years whether Obama’s IRS has transferred confidential taxpayer information to Obama’s White House in violation of federal criminal laws. The issue first arose when Austin Goolsbee of the president’s Council of Economic Advisers told reporters that he had information about Koch Industries that could only have come, illegally, from confidential IRS files. When questions were asked, the administration immediately clammed up.

Years later, the judicial system may be poised to expose another layer of Obama corruption. A group called Cause of Action began a Freedom of Information Act lawsuit against the Department of the Treasury, and for several years, your taxpayer dollars have funded the administration’s cover-up.

But nothing lasts forever, and a federal court in Washington, D.C. has finally overruled the Treasury Department’s frivolous objections, and ordered Treasury to respond to Cause of Action’s request for documents. That request relates to the Department’s Inspector General’s investigation–which began a long time ago, and probably has long been concluded–and asks for “[a]ll documents pertaining to any investigation by [TIGTA] into the unauthorized disclosure of [26 U.S.C.] §6103 ‘return information’ to anyone in the Executive Office of the President.”

That is an extraordinarily narrow request for documents which, one would think, could have been responded to in a few hours. But the administration’s evasion has gone on for years. Now that the court has ordered the administration to respond, its lawyers have asked for more time

Cause of Action:  Press Release:

Monday the Treasury Inspector General for Tax Administration (TIGTA) informed Cause of Action that there exist nearly 2,500 potentially responsive documents relating to investigations of improper disclosures of confidential taxpayer information by the IRS to the White House. This disclosure, coming only after Cause of Action sued TIGTA over its refusal to acknowledge whether such investigations took place, and after the Court ordered TIGTA to reveal whether or not documents existed, signals that the White House may have made significant efforts to obtain taxpayers’ personal information. This disclosure, following on the heels of TIGTA’s admission that it recovered 30,000 “lost” Lois Lerner emails, renews Cause of Action’s concerns about the decaying professionalism of, and apparent slip into partisanship by, IRS’s senior leadership.

Cause of Action will continue to pursue the truth and to work for IRS accountability.

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November 26, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, November 25, 2014

Alarie Presents Policy Preferences and Expertise in Canadian Tax Adjudication Today at Columbia

AlarieBenjamin Alarie (Toronto) presents Policy Preferences and Expertise in Canadian Tax Adjudication, 62 Canadian Tax J. ___ (2014) (with Andrew Green (Toronto)), at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Both taxpayers and governments struggle to stay on top of the various complex sources of tax law and to apply them in a myriad of different contexts. Given the potential for confusion and disagreement (not to mention the sometimes very large financial stakes involved) it would make sense to have a process for taxpayers to appeal government decisions to an expert body that can provide authoritative, reasoned and rational solutions to tax disputes. For this reason Canada, like the United States, has a specialized tax court dedicated to hearing appeals from decisions of the tax administration. Yet there is some evidence in both Canada and the US that judges in tax cases may be influenced by their own personal policy preferences or other factors extraneous to the “true” legal merits in deciding appeals from decisions of the tax administration. This paper examines in more detail appeals from tax assessments in Canada to understand the relative influence of judicial tax expertise and the policy preferences of judges on appeals to the Tax Court of Canada and the Federal Court of Appeal.

Our analysis reveals three main results: (1) policy preferences of judges matter, but not that much; (2) resources matter — a lot; and (3) there are dynamics relating to affirmation of appeals that are difficult to explain, although a desire to avoid the apprehension of bias is possible.

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November 25, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

TIGTA: IRS Still Has Not Taken Necessary Steps to Prevent Billion Dollar Prisoner Tax Fraud

TIGTA The Treasury Inspector General for Tax Administration today released Prisoner Tax Refund Fraud: Delays Continue in Completing Agreements to Share Information With Prisons, and Reports to Congress Are Not Timely or Complete (2014-40-091):

Refund fraud associated with prisoner Social Security Numbers remains a significant problem for tax administration. The number of fraudulent tax returns filed using a prisoner’s Social Security Number that were identified by the IRS increased from more than 37,000 tax returns in Calendar Year 2007 to more than 137,000 tax returns in Calendar Year 2012. The refunds claimed on these tax returns increased from $166 million to $1 billion. ...

TIGTA found that the IRS has not yet shared fraudulent prisoner tax return information with Federal or State prison officials. TIGTA also found that the required annual prisoner fraud reports to Congress are not timely and that the reports do not address the extent to which prisoners may be filing fraudulent tax returns using a different individual’s SSN. TIGTA also followed up on a condition identified in a past review and found that IRS processes still do not ensure that all tax returns filed using a prisoner Social Security Number are assigned a prisoner indicator.

Figure 1

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November 25, 2014 in IRS News, Tax | Permalink | Comments (0)

Ranking of School Does Not Affect Quality of Teaching

Chronicle of Higher Education, Colleges’ Prestige Doesn’t Guarantee a Top-Flight Learning Experience:

NSSE Logo[T]his year’s National Survey of Student Engagement [Nessie], which was released on Thursday, ... took a stab at identifying educational quality on the institutional level, an attribute that is as important to higher education as it is hard to define. The survey collected data from 355,000 freshmen and seniors at 622 institutions in the spring.

Nessie researchers, who are based at Indiana University at Bloomington, created two indicators for quality. One, student-faculty interaction, asked students how often they talked with faculty members about career plans, course topics, or other ideas outside class, among other questions. The other measure, effective teaching practices, distilled student perceptions of how often their instructors clearly explained course goals and requirements, taught in an organized way, used examples to illustrate difficult points, or provided feedback.

The results were surprising, especially when they were grouped based on how selective a college is. ... [R]esearchers analyzed the measures of interaction and teaching according to selectivity, as defined by Barron’s Profiles of American Colleges.

The average student, the researchers found, experienced widely different degrees of educational quality in different colleges within the same category of prestige. And, in all but a few cases, the categories of selectivity had no meaningful relationship to the indicators of teaching and interaction. ...

"Conventional wisdom says that the more selective an institution is, the better it is going to be," Alexander C. McCormick, director of Nessie, said in an interview. "That’s not systematically true with these two measures." ...

NSSE

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November 25, 2014 in Law School Rankings, Legal Education | Permalink | Comments (2)

Who Pays for Employee Perks at High-Tech Companies?

CBS Moneywatch, Who Pays for Employee Perks at High-Tech Companies?:

Google MealBeginning in the 1990s, the high-tech industry has gained a reputation for offering employees not only generous pay, but also lavish, and even outlandish, perks. Massages, free food and even napping pods were but a few of the benefits companies lavished on engineers in hopes of retaining their talents.

Despite the dot-com bust and the Great Recession, financial crises that ushered in new age of austerity -- and massive layoffs -- in many sectors, tech companies today are showing even more largess with engineers and other key workers. In fact, there's a new job category: people in charge of devising newer and more effective treats for these elites. ...

The copious benefits tech players are bestowing is starting to raise questions about who foots the bill for the perks. The IRS, for one, has ruled that free food for employees represents a taxable benefit. A Wall Street Journal analysis concludes that workers who get two meals a day courtesy of their company could be on the hook for an additional $4,000 to $5,000 in taxes.

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November 25, 2014 in Tax | Permalink | Comments (0)

Crowd-Sourced Interview of Judge Richard Posner

PosnerRonald K.L. Collins (University of Washington), The Maverick – A Biographical Sketch of Judge Richard Posner: Part I:

Below is the first installment in a multi-part series of posts on Seventh Circuit Judge Richard Posner. The first two installments consist of an unconventional biographical profile of the Judge. These posts will be followed by a series of posts consisting of the Judge’s candid and often unexpected responses to numerous questions I posed to him along with those of 24 noted legal figures. In the process, Judge Posner bursts into the breach with frankness about his views on privacy, the exclusionary rule, NYT v. Sullivan, intellectual property rights, law and economics, constitutional interpretation, legal education and scholarship, and the politicization of the judiciary. With Posnerian resolve, he also speaks of his own life, his onetime thoughts on being a Supreme Court Justice, his cherished feline, and even his favorite rock stars. Given all that, we selected “Posner on Posner” as the title for this series.

November 25, 2014 in Legal Education | Permalink | Comments (0)

Legal Services Sector Shrank 2.9% in 2013

Matt Leichter, Commerce Dept.: Legal Services Sector Contracts (Again) in 2013:

Earlier this month the Commerce Department’s Bureau of Economic Analysis (BEA) updated its GDP by industry data. The chief finding for law-watchers is that in 2013 the legal services industry shrank by 2.9 percent. Ouch. The legal services industry includes all private law firms, and it employs about half of all lawyers. Meanwhile GDP grew by 2.2 percent, meaning that once again, the shriveling legal sector is being outdone by the rest of the economy.

Percent Change Real Value Added by Industry

November 25, 2014 in Legal Education | Permalink | Comments (2)

IRS Hires Outside Law Firm to Audit Microsoft

MicrosoftBloomberg, Microsoft Sues IRS Over Law Firm Contract Tied to Audits:

Microsoft sued the IRS seeking information about its contract with a law firm tied to audits of the software maker’s transactions with subsidiaries.

Microsoft wants the complete government contract between the IRS and Quinn Emanuel Urquhart & Sullivan LLP, the firm assisting the agency in examining federal income tax returns for 2004 through 2009, according to the complaint filed today under the Freedom of Information Act in federal court in Washington. The IRS “unlawfully withheld” the information, Microsoft said.

Microsoft submitted a public records request on Sept. 22 seeking information on the contract entered in May for $2.2 million, according to the filing. To date, the IRS hasn’t disclosed the records, Microsoft said. ...

The agency is examining Microsoft’s “transfer pricing,” transactions between the company and its offshore subsidiaries, according to the complaint.

November 25, 2014 in IRS News | Permalink | Comments (0)

2014 Moot Court Rankings

Moot Court2014 Moot Court Rankings:

1.  Florida Coastal
2.  Georgetown
3.  UC-Hastings
4.  South Texas
4.  Texas Tech
6.  Georgia
7.  Chicago-Kent
8.  Seton Hall
9.  Miami
10. Loyola-Chicago
11.Oklahoma
12. Stetson
13. Houston
14. Mississippi
15. Faulkner
16. Emory
17. George Washington
18. Wisconsin
18. Regent
20. San Diego
20. Georgia State
22. Hawaii
23. St. John's
23. William Mitchell
25. Pepperdine

November 25, 2014 in Law School Rankings, Legal Education | Permalink | Comments (0)

Tax Farming: Experimental Evidence on Performance Pay for Tax Collectors

Adnan Q. Khan (London School of Economics), Asim I. Khwaja (Harvard) & Benjamin A. Olken (MIT), Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors:

Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if taxpayers face undue pressure from collectors. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan into one of three performance-pay schemes or a control. After two years, incentivized units had 9.3 log points higher revenue than controls, which translates to a 46 percent higher growth rate. The scheme that rewarded purely on revenue did best, increasing revenue by 12.8 log points (62 percent higher growth rate), with little penalty for customer satisfaction and assessment accuracy compared to the two other schemes that explicitly also rewarded these dimensions. Further analysis reveals that these revenue gains accrue from a small number of properties becoming taxed at their true value, which is substantially more than they had been taxed at previously. The majority of properties in incentivized areas in fact pay no more taxes, but do report higher bribes. The results are consistent with a collusive setting in which performance pay increases collector's bargaining power over taxpayers, who either have to pay higher bribes to avoid being reassessed, or pay substantially higher taxes if collusion breaks down.

(Hat Tip: Bruce Bartlett.)

November 25, 2014 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 565

IRS Logo 2Glenn Reynolds (Tennessee), More on Those 'Found' Emails From Lois Lerner:

I’m cynical enough to suspect that they’ve been found for a long time, and the delay was to (1) get past the midterms; and (2) allow someone to vacuum the archives of any truly incriminating material.

American Thinker:  The Zelig Presidency:

For those familiar with Woody Allen movies, one of his more unusual ones was Zelig, a movie done in a black & white, semi-documentary form about a man played by Woody Allen who has a rare chameleon-like disorder where he takes on the physical and personality traits of those who he is in close proximity. The movie stands out for its uniqueness but is also a commentary on personality, how a person gets one and how it is defined, and is it even possible to be original anymore, especially when it comes to political, artistic and intellectual greatness.

In the case of Obama, he seems to be the Zelig president. He's been taking on the characteristics and actions of past presidents while displaying no originality. He is Nixon using the IRS to target his political enemies. Here he succeeded where Nixon did not. Nixon's IRS director refused to carry out his orders when instructed to do his bidding but Lois Lerner perfected political targeting to an art. (Her problem was that she got caught.)

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November 25, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, November 24, 2014

Akron Tax Journal Publishes New Issue

Akron LogoThe Akron Tax Journal has published Volume 29 (2014):

November 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Krawiec: Selling The Starred Footnote

Kimberly D. Krawiec (Duke), Selling The Starred Footnote:

I’m late to the game in blogging about this, but I just found out about it on Friday at a conference on the Ethical Limits of Markets hosted by the Institute For The Study of Markets and Ethics at Georgetown University’s McDonough School of Business (about which I’ll have more to say later). Jason Brennan and Peter Jaworski are selling acknowledgements in the preface of their book Markets without Limits, which will be published by Routledge Press, most likely in late 2015 or early 2016.

The book answers the question “Are there some things which you permissibly may possess, use, and give away, but which are wrong to buy and sell?” in the negative, in contrast to the numerous books already written on the topic which take the contrary position. Brennan and Jaworski are selling three tiers of acknowledgements: Silvermint Tier, Platinum Tier, and Gold Tier (The Silvermint Tier is so named because philosophy and women’s studies professor Daniel Silvermint is paying to have the highest tier named after him.)

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November 24, 2014 in Legal Education | Permalink | Comments (0)

NY Times: A Push for Legal Aid in Civil Cases Finds Its Advocates

New York Times, A Push for Legal Aid in Civil Cases Finds Its Advocates:

ShriveFree legal assistance in noncriminal cases is rare and growing rarer. A recent study in Massachusetts found that two-thirds of low-income residents who seek legal help are turned away. Nationally, important civil legal needs are met only about 20 percent of the time for low-income Americans, according to James J. Sandman, president of the Legal Services Corporation, a federal agency that finances legal aid groups. ...

Established in 2011, the [Eviction Asistance Center in Los Angeles] is part of an experiment by the California courts on the benefits of providing more lawyers and legal advice to low-income people in civil cases such as child custody, protective orders against abusers, guardianship and, most commonly, evictions. 

“We’re trying to level the playing field,” said Neal S. Dudovitz, the executive director of Neighborhood Legal Services of Los Angeles County, a group that manages the eviction center in the downtown courthouse. With funds from the Shriver project, as the experiment is known, supporting about 16 lawyers from four legal aid groups, the center is providing full or partial assistance to one-third of the 15,000 tenants who face evictions each year in this courthouse alone.

The California initiative and similar projects in New York, Massachusetts and elsewhere aim not only to help more needy clients but also to improve guidelines for the unavoidable and often painful legal triage: In a sea of unmet needs, who most needs a lawyer, who can do with some “self-help” direction? What happens to those who must be turned away?

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November 24, 2014 | Permalink | Comments (0)

Grewal: How King v. Burwell Jeopardizes the 2014-15 ACA Enrollment Season

Andy Grewal (Iowa), How King v. Burwell Jeopardizes the 2014-2015 ACA Enrollment Season:

Commentators have expressed concern that a government loss in King v. Burwell, which addresses whether taxpayers can enjoy tax credits for policies purchased on federal exchanges, will lead to a "death spiral." Because consumers will no longer enjoy tax credits, they would stay away from the federal exchanges, which would lead to higher prices, which would discourage more consumers, and so on.

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November 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Young Lawyers Seek to Shake Up Legal Profession With Mobile Apps

Boston Globe, Young Lawyers Seek to Shake Up Legal Profession With Mobile Apps:

AppsWilliam Palin is a 32-year-old lawyer who passed the bar exam in 2013. But it didn’t take him long to wonder why, when the rest of the world is increasingly conducting business on cellphones and tablets, the legal profession is so tied to paper, desktop computers, and e-mailed Microsoft Word documents.

So as a child of the digital age, he decided to act, joining a growing group of young, tech-savvy lawyers dedicated to developing technology to deliver legal services more efficiently.

Palin taught himself how to write code for mobile applications. He built two apps to speed up how lawyers work with each other and their clients. And in December he’s launching a Boston-Cambridge branch of a nationwide group called Legal Hackers, young lawyers focused on creating and adopting technological tools. ...

While many attorneys see mobile technology as a way to better serve existing clients and recruit new ones, the partners at major law firms play a big role in how aggressively the law business will adapt. And those established practitioners may be leery of adopting some new technologies for fear that will lead to breaches of confidentiality.

Legal Hackers hopes to bridge that generational divide — and the group seems to be making progress. In August, at the American Bar Association’s annual meeting, one panel was titled “Cracking the Code: Everything You Wanted to Know About Coding, Open Data & More But Were Afraid to Ask.” ...

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November 24, 2014 in Legal Education | Permalink | Comments (0)

Stop Bullying Old Professors

BullyingFollowing up on Tuesday's post, The Forever Professors: Academics Who Don’t Retire Are Greedy, Selfish, and Bad For Students:  Slate, Quit Picking on Old Professors: Bullying Boomers Into Retirement Won’t Help the Sad State of Higher Education in This Country, by Rebecca Schuman:

This week, academia is in a frenzy—well, an erudite tizzy—over an op-ed in the Chronicle of Higher Education by recently retired art professor Laurie Fendrich. In the piece, Fendrich, who’s 66, lauds her own decision to leave her position at Hofstra—and characterizes her aging colleagues as doddering dinosaurs who are clogging up the academic pipeline.

As in other professions, baby boomers “hanging on” past retirement age is a hot-button issue in higher education—and it’s easy to see why. In the university, the over-65s are the final generation for whom teaching college has provided a stable, (somewhat) respected, remunerative middle-class existence. They’ve had benefits and job security for longer than most of their younger colleagues have been alive. And they didn’t have to work nearly as hard to get all that—back in the ’60s and ’70s, when most of them began their careers, requirements for hiring and tenure were a fraction of what they are now. ...

Here’s where [Fendrich's] (or, at 66, almost dead) wrong. Students may benefit more from a sagacious senior than they do from many a thirsty, young tenure-track careerist. After all, the Old, with his tenure firmly in hand and few concerns about his future, actually has time for his students; that 33-year-old is on the terminal brink of nervous collapse under the weight of too much research expectation. Perpetually on the market for a more prestigious job, she’s been counseled over and over again not to “waste” too much time on teaching. ...

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November 24, 2014 in Legal Education | Permalink | Comments (4)

TIGTA: 50% of IRS Employees With Outside Jobs Do Not Obtain Required Approval; 93% of Employee Computer Records Are Out of Date

TIGTA The Treasury Inspector General for Tax Administration has released Controls Over Outside Employment Are Not Sufficient to Prevent or Detect Conflicts of Interest (2014-10-073):

Generally, IRS employees are allowed to engage in outside employment or business activities after obtaining written approval. Effective controls over outside employment can reduce the risk of conflicts of interest that could result in decisions that are not in the best interest of American taxpayers. ...

IRS records indicate that, in Calendar Year 2011, nearly 3,000 of the more than 6,000 active, full-time IRS employees who held jobs or participated in business activities outside the IRS did not obtain documented approval, as required by Department of the Treasury regulations and IRS policies. IRS Human Capital Office management was generally not aware of the number of employees with unapproved outside employment because responsibility has not been assigned for overseeing the overall outside employment process. In addition, the IRS stated that it does not have authorization to use taxpayer information (e.g., Form W-2, Wage and Tax Statement) to identify employees with unapproved outside income because Internal Revenue Code Section 6103 does not clearly provide that tax data can be used for this purpose.

It will be difficult for the IRS to monitor outside employment because 93 percent of the existing records in the database used to compile outside employment requests are out of date. Moreover, approval of outside employment requests is not always documented on the database or in Official Personnel Folders, in part because of confusing and incomplete guidance.

Improving controls will be important because TIGTA identified current and former IRS employees with both actual and potential conflicts of interest. One employee pled guilty to engaging in a criminal conflict of interest for accessing taxpayer information for the purpose of conducting a private tax and accounting business, 44 IRS employees prepared tax returns for compensation (a prohibited practice), and TIGTA’s analysis identified 20 employees with a high risk of potential conflicts of interest who received outside income without documented approval. For example, four employees operated businesses with annual gross receipts ranging from more than $500,000 to more than $7 million, and six employees had wages of more than $50,000 from outside of the IRS. Significant outside income could impact the employee’s effectiveness on the job.

November 24, 2014 in IRS News, Tax | Permalink | Comments (2)

'These [Law] Jobs are Going Boys and They Ain’t Coming Back'

SpringsteenDavid Barnhizer (Cleveland State), “These Jobs are Going Boys and They Ain’t Coming Back” [Bruce Springsteen, My Hometown]:

Lawyers and law schools reflect the needs of society and the power and structure of our economic system. At this point lawyers and law schools need to adapt the ways in which they “do business” or become uncompetitive. Lawyers and law schools are faced with economic and technological “tsunamis” in the nature of Joseph Schumpeter’s concept of “creative destruction” or Nikolai Kondratiev’s periodic “waves” of fundamental change. These transformational “events” generate non-linear shifts in form, process and needs that fundamentally alter how the system works. These dynamic forces are now destroying some traditionally organized institutions while empowering others and forcing the invention of new institutions and altered forms of traditional ones.

Projections of the future employment opportunities of lawyers tend to be both linear and crude, relying primarily on taking “what is” or what “has been” and assuming that some variation of that model will be what occurs in the future after what has been described as the “lawyer surplus” has been absorbed. Such assumptions and projections provide a degree of comfort to those whose livelihoods and careers depend on the stability of existing institutions and patterns of organization. Unfortunately, in the situation we now inhabit the assumptions are false and the projections inaccurate. The most recent “tweaking” of lawyer employment projections by the Bureau of Labor Statistics that raised its own estimates from around 23,000 to 40,000 will make many people feel better for a few moments but the fact is that it is almost certainly wrong.

Matt Leichter recently offered an analysis on whether the employment situation was getting better or worse. Unfortunately the answer Leichter offered was summed up in his report that the situation was becoming considerably worse rather than improving. In linking to Leichter’s report Paul Caron noted that the surplus was worsening and that there would be three new lawyers chasing each available job by 2022.

The fact is that the worlds of lawyers and law schools are “spinning on their axes” and undergoing transformations that are penetrating the very core of the activity. Dramatic effects are already being felt but even more striking changes are in store. One individual employed by a company seeking to understand (and capitalize) on the shifting context of law practice began his assessment with an observation of the current state of the legal profession. He described it as one in which: “The current state of the legal services industry is one of fear, denial, distrust and unmet expectations. Lawyers are asking if they ever thought law practice would reveal such fault lines in purpose, mission and economic opportunity. … Massive job losses, significant declines in legal service revenues and increased hostility toward the business model on which legal services are based are mere warning signs of a tsunami of change rapidly approaching the shore. What remains beyond debate is that the business of law has lost its luster and the legal industry landscape is littered with unmet expectations on the part of clients and lawyers alike.” Pretty dismal. ...

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November 24, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 564

IRS Logo 2Daily Caller:  How to Ensure The IRS Never Abuses Its Powers Again:

It is not so much whether or when or why the IRS abused its authority by targeting Tea Party and conservative groups. We know by now the answers are: of course, over a period of year, and to aid the re-election of President Obama.

Going forward, the most important question is: How can we prevent it from happening again? The answer may be more complicated than we think. ...

The evidence proves the IRS was used as an abusive political tool to hobble or destroy as many organizations as possible that opposed President Obama’s agenda. The partisan media may continue to suppress this fact, but the denial that it happened at all is growing more absurd by the day. Journalists raised to never trust anyone over the age of 30 now seem to accept any excuse – no matter how implausible – to explain away the scandal.

Once the problem came to light, the director of the IRS Exempt Organizations Division claimed to have “lost” her emails. At the same time, the IRS was known to sanction individuals for not maintaining seven years of receipts. Would the New York Times have accepted this excuse from the Koch Brothers? ...

[W]hat the IRS did to Tea Party organizations is tyranny personified and it cannot be ignored or forgiven, because it can happen to anyone who opposes the policies of the powerful. ...

This controversy presents us with an opportunity to remove the Internal Revenue Service from political influence altogether. Anyone who respects the separation of powers, regardless of whether they are conservative, liberal, moderate, libertarian or anything else, ought to see the wisdom in separating IRS enforcement and presidential appointments.

Appointments by the president are, by and large, intended to mirror his political decisions. The IRS, however, is different. Because of its massive power and essentially unlimited authority, it must be more than fair – it must be 100 percent non-political. Even if this is unattainable, every attempt must be made.

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November 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, November 23, 2014

Tax-Free Buyouts of Coaches' Contracts

Following up on my previous post, The Tax Treatment of Buyouts of Coaches' Contracts:  USA Today, Schools Buying Coaches' Contracts Instead of Buying Out:

StrongIt long has been a practice for universities that want to hire a new coach to pay the "buyout" to get him out of his contract at his old school.

The question has been, who pays the taxes?

To at least a few schools, the answer is nobody. The universities of Texas, Louisville and Alabama at Birmingham have found a way to structure deals to avoid tax implications – simply pay the coach's current school for the rights to his contract, and renegotiate it.

Using that approach, the schools say, the coach does not owe a buyout for terminating his contract because he technically doesn't terminate the contract. It transfers to his new school, which reaches a new deal with the coach, just as schools routinely renegotiate such contracts.

Thus, while Louisville received $4.375 million when coach Charlie Strong left for Texas, the money did not come from Strong. Instead, with Strong's blessing, Louisville sold his contract to Texas. Texas assumed all of that deal's rights and obligations, and agreed to pay Louisville $4.375 million, the same amount as Strong's buyout. ...

It's an approach intended to avoid taxes for coaches and the schools. Under federal tax law, it is undisputed that a payment made by an employer to meet an employee's personal obligation must be treated as taxable income to the employee. But to the schools, a buyout payment is viewed as a business expense. ...

How the IRS or a tax court would view these deals is is an open question, said Jeffrey H. Kahn, a professor at Florida State's law school. Kahn and his father, Douglas A. Kahn, a professor at the University of Michigan law school, wrote a 2007 law review article about buyouts [Tax Consequences When a New Employer Bears the Cost of the Employee's Terminating a Prior Employment Relationship, 8 Fla. Tax Rev. 539 (2007)].

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November 23, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Muller: The NCBE's Role in Declining MBE Scores and Bar Pass Rates

Following up on my previous posts (here, here, here, and here):  California released its July 2014 bar exam results on Friday:  a 48.6% overall pass rate (down 7.2 percentage points from 2013) and 61.0% first-time takers pass rate (down 6.7 percentage points from 2013).  (For more, see Vikram Amar (UC-Davis) and Dan Filler (Drexel)).  Derek Muller (Pepperdine) notes that California is the 20th state (out of 34 states that have released their results thus far) with at least a 5 percentage point bar passage rate decline:

Muller

Derek argues that neither the decline in student quality or the exam soft computer malfunction can explain these declining MBE scores and bar passage rates.

November 23, 2014 in Legal Education | Permalink | Comments (2)

Top 5 Tax Paper Downloads

The IRS Scandal, Day 563

IRS Logo 2New York Post editorial:  Silence of the Schumer:

It wasn’t so long ago Chuck Schumer was obsessing over the idea that the tax code was being abused for partisan purposes.

Back in March 2012, he and six fellow Democratic senators wrote the IRS demanding more scrutiny for 501(c)4 groups who claimed they were involved in “social welfare” but were “devoted chiefly to political election activities who operate behind a facade of charity work.”

Later, the IRS started singling out conservative organizations for special treatment and delay.

But times have changed. Now we have a story in The New York Times about an individual deeply involved in politics who has a 501(c)4 that, as the Times puts it, appears to rank “among the most delinquent nonprofit organizations in the nation.”

The individual: the Rev. Al Sharpton. His organization: the National Action Network, which has failed to pay payroll taxes over the years. Sharpton says this wasn’t intentional but stemmed from a dispute on how to classify some independent contractors.

Nonetheless, Sharpton still flies first class and collects a nice salary from NAN as he zips between New York, Ferguson, Mo., and Washington, DC.

As the Times also reports, it’s the “kind of practice by nonprofit groups that the United States Treasury’s inspector general recently characterized as ‘abusive’ or ‘potentially criminal’ if the failure to turn over or collect taxes is willful.”

Considering how eager Sen. Schumer was to ensure 501(c)4’s weren’t gaming the tax system, we felt sure we would hear the senator thumping loudly for the IRS to take a hard look at the National Action Network.

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November 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, November 22, 2014

Top Incomes Soared as Tax Rates Fell

Al Jazeera:  Top Incomes Soared as Tax Rates Fell, by David Cay Johnston (Syracuse):

For those at the very top 2010 will be remembered as a very good year. While most Americans struggled to recover from the worst economic collapse since the Great Depression, top incomes soared while tax burdens for those incomes fell.

The 400 tax returns for those with the highest reported incomes showed 31 percent more income in 2010 than in 2009, when the recession officially ended at midyear. Soaring stock prices fueled the increase at the top. On average incomes of $265.1 million the top 400 paid 18 percent in federal income taxes, down from 19.9 percent in 2009. The lowest tax on the top 400 was 16.6 percent in 2007.

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Bloomberg:  Top 400 U.S. Households Paid 18% Average Tax Rate in 2010, by Richard Rubin:

The top 400 taxpayers in the U.S. paid an average tax rate of 18 percent in 2010, the lowest since 2007, according to Internal Revenue Service data released today. ...

The data show the highest-income U.S. households rebounding from the recession in 2009. The minimum adjusted gross income needed for the exclusive list rose 28 percent, to $99.1 million, and the average income of those on the list reached $265 million.

The IRS data offer a glimpse into the finances of the wealthiest U.S. households, who now receive more than twice the share of national income than they did in 1995. These taxpayers had 1.31 percent of all adjusted gross income in the U.S. in 2010 and paid 2.01 percent of the income taxes, though they make up less than 0.001 percent of the population, according to the IRS.

IRS Statistics of Income Division, The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992–2010:

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November 22, 2014 in Tax | Permalink | Comments (5)

Maryann Jones, Hired as Charleston Law School President Under Renewable 3-Month Contract, Resigns After 8 Days on the Job

ICCharleston Post and Courier, New Charleston School of Law President Steps Down:

Maryann Jones has stepped down as the Charleston School of Law's president after only eight days on the job.

The law school has been embroiled in a controversy for more than a year over the possible sale to the for-profit InfiLaw System, which owns three other law schools.

Two of the school's three owners, George Kosko and Robert Carr, are in favor of the sale. But Ed Westbrook, the third owner, is pushing to form a nonprofit corporation to run the 10-year-old school, which also is for-profit.

But the owners voted unanimously Nov. 13 to hire Jones as president.

In an email sent late Thursday to Kosko, Carr and Abrams, Jones said she decided not to take the reins of the private, downtown law school, and would not sign a contract. "The level of vitriol, with all sides making me a lightning rod for an unfortunate situation that was not of my making, makes this truly a situation that I am unwilling at this stage of my life to undertake." Jones stated in the email.

Westbrook earlier Thursday had sent Jones a letter expressing his disappointment in her speaking to faculty and students in support of a sale to InfiLaw. To get his vote, Jones had agreed to be objective, and to learn more about alternatives for the school, Westbrook stated.

He also stated that he was disappointed that Jones hadn't yet met with him and his attorney Dawes Cooke to discuss the school's future. Westbrook's letter also revealed that Jones was being offered only a three-month contract.

FITS News, CSOL President Steps Down Due To Bullying By Director

Prior TaxProf Blog coverage:

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November 22, 2014 in Legal Education | Permalink | Comments (15)

USC Book Panel Discussion on Kleinbard's We Are Better Than This

Kleinbard Flyer

Prior TaxProf Blog coverage:

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November 22, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 562

Wall Street Journal:  IRS Finds Missing Emails of Former Top Official Lerner in Targeting Probe:

The watchdog agency for the Internal Revenue Service said it has found as many as 30,000 missing emails that could be relevant to a long-running congressional inquiry into alleged IRS targeting of conservative groups.

Investigators for the Treasury Inspector General for Tax Administration recently recovered the emails from IRS backup tapes, according to a spokeswoman for the watchdog agency. The emails belong to a former top IRS official, Lois Lerner, who has been a focus of congressional inquiries. ...

Top IRS officials had told lawmakers that backup tapes were routinely recycled and therefore weren't useful in the effort to find the missing email records. The agency said it had used other employees’ hard drives to recover thousands of the missing emails.

But TIGTA investigators succeeded in locating thousands of Ms. Lerner’s emails on the backup tapes. ...

The IRS said in a statement: “As Commissioner Koskinen has stated, the IRS welcomes TIGTA’s independent review and expert forensic analysis. Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found.”

The revelations promise to draw new attention to the targeting controversy, just before lawmakers return to Washington for the new Congress next year. TIGTA officials told lawmakers on Friday about the discovery of the missing emails, but congressional aides said it could take some weeks before the emails are sorted and in shape to examine. The emails must be decrypted and in some cases must be redacted to remove taxpayer-identifying information, aides said.

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November 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, November 21, 2014

Hickman Presents Treasury's Retroactivity Today at Miami

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at Miami today as part of its Legal Theory Workshop Series hosted by Leigh Osofsky:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code.

November 21, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

November 21, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

November 21, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

UC-Irvine Cuts Class by 29% in Bid for Top 20 Inaugural U.S. News Ranking

UC-Irvine (2015)UC-Irvine Law School will be ranked by U.S. News for the first time this March, and Dean Chemerinsky has unabashedly stated that the school's goal is to "be a top 20 law school, by every measure, from the moment we open our doors and from our first rankings."  To help achieve that goal, the school cut its Fall 2014 entering class by 29.4% to 89 students (from 126 in 2013), to keep its median LSAT at 164 (and increase its median GPA by 0.01 to 3.53).  This year's class is 55.5% below Dean Chemerinsky's goal of classes of 200 students.

Update:  Above the Law, Law School Slashes Students To Game U.S. News Rankings

November 21, 2014 in Law School Rankings, Legal Education | Permalink | Comments (21)

California’s Tax Hikes Versus Kansas’ Tax Cuts: Early Results Now In

Tax Justice Network, California’s Tax Hikes Versus Kansas’ Tax Cuts: Early Results Now In:

From a new paper by Paul Caron of Pepperdine University and Joseph Bankman of Stanford University:

The conventional wisdom in California two years ago was that raising taxes on the wealthy would harm the economy and doom any politician who dared touch this third rail. Instead, the public embraced this approach at the ballot box and, after enjoying the fruits of an economic turnaround, appears poised to reward the Governor with a landslide re-election.

LafferIt seems that the absurd Laffer Curve, which is often used to make the ridiculous proposition that tax cuts increase revenue, didn’t work in this case. Now in Kansas, they went the other way. ... “Kansas’ budget problems keep getting worse. . . . state revenues dropped 11 percent in the fiscal year 2014 (which ended in June) after the tax cuts took effect. But that may not even be the whole picture. A close look at the state’s new revenue projections makes clear they are highly optimistic, even after this week’s cut in the forecast.”

Back to the Caron / Bankman paper, which does an unusual and welcome thing for academics.

Get this: it urges scholars to take their heads out of the sand and get stuck into the real world. In fact, this is the central argument of the paper (which is entitled California Dreamin’: Tax Scholarship in a Time of Fiscal Crisis [48 U.C. Davis L. Rev. 405 (2014)]).

We have found that the need for more revenue is a common conversation topic among tax scholars. However, it is not a common topic in tax scholarship. Indeed, it is not even clear that it “qualifies” as scholarship, as that term is commonly defined. In law, at least, highly praised scholarship is generally marked by a masterful description of the law that suggests the need for change.

Quite so, and strong and unusual medicine.

Now here is some discussion that we at TJN and quite a few others have been saying for years. It’s worth quoting at length.

In recent years, legal tax scholars have made normative claims based on those arguments. However, those normative claims are quite limited and explicitly apolitical . . . . writing about the fiscal crisis, in contrast, throws the scholar directly into the political world. . . . Legal tax scholars who write on this subject run the risk of being dismissed as political, or lacking requisite knowledge.

Unfortunately, scholars in allied fields face similar problems. Economists are also reluctant to write on subjects so entwined with politics and often have less knowledge of specific tax provisions than legal tax scholars. Political scientists lack economic sophistication and knowledge of the tax law, and know less about the politics of tax preferences than either lawyers or economists. The fiscal crisis thus falls between at least three disciplines. As a result, scholars in each of those disciplines are reluctant to write on a subject they believe is central to the nation’s health.

They cite honourable exceptions, such as this highly recommended book by Ed Kleinbard [We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014)], if you’re interested in the U.S. tax system.

And they conclude:

Two years ago, both California and the nation were imperiled by long- term, structural, budget imbalances. California has reduced that peril by raising (already high) personal tax rates on the wealthy. The political success of that approach suggests that at the national level, Americans might be willing to support higher rates to maintain government services and move toward fiscal solvency.

November 21, 2014 in Scholarship, Tax | Permalink | Comments (0)

Viard: Moving Away From the Realization Principle

Tax Analysys Logo (2013)Alan D. Viard (American Enterprise Institute), Moving Away From the Realization Principle, 145 Tax Notes 847 (Nov. 17, 2014):

Viard describes the realization principle’s flaws and the federal tax system’s incremental movement toward mark-to-market taxation.

November 21, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

CBO: Options for Reducing the Deficit, 2015 to 2024

Congressional Budget Office, Options for Reducing the Deficit: 2015 to 2024:

This document provides estimates of the budgetary savings from 79 options that would decrease federal spending or increase federal revenues over the next decade. 

36 of these 79 options are tax increases:

Individual Income Tax Rates
1.  Increase Individual Income Tax Rates
2.  Implement a New Minimum Tax on Adjusted Gross Income
3.  Raise the Tax Rates on Long-Term Capital Gains and Dividends by 2 Percentage Points

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November 21, 2014 in Congressional News, Gov't Reports, Tax | Permalink | Comments (0)

The IRS Scandal, Day 561

IRS Logo 2Legal Insurrection:  IRS Fears Employees Being “Seized With Spontaneous Diarrhea”, by WIlliam Jacobson (Cornell):

Hey, remember the Reader Poll we did about whether it was okay to follow and try to interview Lois Lerner in her neighborhood? ... 

Someone noticed the comments to the blog post.  The IRS.  And it’s not happy.

In a federal FOIA lawsuit by Judicial Watch seeking records of Lerner emails and IRS efforts to retrieve the emails, the IRS used two of the comments to the Legal Insurrection Reader Poll post to justify the IRS no longer disclosing the identities of IRS personnel.

Think about that. The IRS is reading our comments. Don’t they have anything better to do, like hassle conservative groups seeking tax-exempt status? On second thought, keep reading our comments and leave conservative groups alone.It’s all set forth in the IRS’s opposition to Judicial Watch’s Motion to Compel Discovery. You can read the whole thing here.

The Legal Insurrection post is Exhibit D to the IRS affidavit. ...

Does the IRS really fear “public whipping with a buggy whip” and being in such fear its employees are “seized with spontaneous diarrhea”?

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November 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, November 20, 2014

Polsky: A Compendium of Private Equity Tax Games

Gregg D. Polsky (North Carolina), A Compendium of Private Equity Tax Games:

This paper will describe and analyze tax strategies, lawful and unlawful, used by private equity firms to minimize taxes. While one strategy — the use of “carried interest” — should by now be well understood by tax practitioners and academics, the others remain far more obscure. In combination, these strategies allow private equity managers to pay preferential tax rates on all of their risky pay (through carried interest), pay preferential tax rates on much of their non-risky pay (through management fee waivers and misallocations of their expense deductions), and push much of the residual non-risky pay down to their funds’ portfolio companies who, unlike the fund, can derive significant tax benefits from the resulting deductions (through monitoring fees and management fee offsets).

November 20, 2014 in Scholarship, Tax | Permalink | Comments (0)

Zelinsky: The Giving Pledge and Reform of the Estate Tax Charitable Deduction

Giving PledgeEdward A. Zelinsky (Cardozo), Why the Buffett-Gates Giving Pledge Requires Limitation of the Estate Tax Charitable Deduction, 16 Fla. Tax Rev. 393 (2014):

The Buffett-Gates Giving Pledge, under which wealthy individuals promise to leave a majority of their assets to charity, is an admirable effort to encourage philanthropy. However, the Pledge requires us to confront the paradox that the federal estate tax charitable deduction is unlimited while the federal income tax charitable deduction is capped. If a Giving Pledger leaves his wealth to charity, the federal fisc loses significant revenue since the Pledger thereby avoids federal estate taxation as charitable bequests are deductible without limit for federal estate tax purposes. Despite its laudable qualities, the Giving Pledge is a systematic (albeit inadvertent) threat to the estate tax base.

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November 20, 2014 in Scholarship, Tax | Permalink | Comments (0)

Number of Ultra Rich Increased 6% in 2014

Wealth-X and UBS World Ultra Wealth Report 2014:

12,040 new ultra high net worth (UHNW) individuals were minted this year, pushing the global UHNW population to a record 211,275, a 6% increase from 2013. The combined wealth of the world’s UHNW individuals – defined as those with US$30 million and above in net assets – increased by 7% to US$29.725 trillion in 2014, almost twice the GDP of the world’s largest economy, the United States.

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November 20, 2014 in Tax | Permalink | Comments (0)

Harvey: Corporate Tax Aggressiveness -- Recent History and Policy Options

J. Richard (Dick) Harvey (Villanova), Corporate Tax Aggressiveness -- Recent History and Policy Options, 67 Nat'l Tax J. 831 (2014):

This paper examines corporate tax aggressiveness from the 1990s to 2014. The paper also discusses various public indicia of corporate tax aggressiveness and analyzes selected data from 21 public companies. Finally, the paper discusses several policy options for further reducing corporate tax aggressiveness, including: (1) improvements to the IRS whistleblower program, (2) increased transparency, and (3) changes to the penalty structure surrounding aggressive tax positions. 

November 20, 2014 in Scholarship, Tax | Permalink | Comments (0)

Pepperdine/Tax Analysts Symposium Papers: Tax Reform in a Time of Crisis

TaxSymposiumHeaderHere are links to the eleven published papers from the Pepperdine/Tax Analysts Symposium on Tax Reform in a Time of Crisis (Jan. 17, 2014):

Thanks to the paper commentators:  Donald Korb (Partner, Sullivan & Cromwell; former IRS Chief Counsel), Nancy Staudt (Dean, Washington University), and Eric Zolt (UCLA)

November 20, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (2)

Sander: The Mismatch Critique of Law School Affirmative Action and Its Opponents

MismatchRichard Sander (UCLA), Mismatch and the Empirical Scholars Brief, 48 Val. U. L. Rev. 555 (2014):

In April 2013, the Valparaiso University Law Review held a symposium on diversity in legal education, commemorating the contributions of Justice Randall Shepard and featuring a number of distinguished speakers. I was invited to participate in a panel on Fisher v. University of Texas, a then-pending Supreme Court case that seemed likely to revise the rules under which universities can consider race in higher education admissions. The conference organizers generously allowed me to participate by videoconference, as did my co-panelist Professor Eboni Nelson. They and I agreed that my talk should explore some of the empirical issues that might frame how the Supreme Court viewed Fisher.

I approached the event with some concern. I had been the bête noire of many diversity advocates ever since 2005, when the Stanford Law Review published my long analysis and critique of law school affirmative action programs. I had advanced, and since steadfastly defended, something called “the mismatch hypothesis,” which postulated that very large preferences--racial or of any other kind--may undermine student learning, because professors tend to teach to the middle of their class, and students far below the middle will have trouble keeping up and advancing as concepts build day by day. Critiques of my essay had been many, but I had answered them, and an increasingly broad array of other scholars had published articles that found other strong evidence of mismatch in a wide variety of academic contexts. Certainly, the evidence for mismatch was mixed--at least in some contexts--and social scientists who found evidence of mismatch never argued--to my knowledge--that the existence of mismatch should preclude affirmative action policies. But just as certainly, universities tended to completely ignore the mismatch problem, and this was quite disturbing. The Supreme Court's decision to review the Fifth Circuit's holding in Fisher--and to thus reconsider the constitutionality of university racial preferences--increased the level of interest and anxiety about mismatch research.

Lawyer and journalist Stuart Taylor, Jr., had joined forces with me to write a broadly accessible book on the effects of racial preferences, called Mismatch, which appeared in October 2012. That, along with two briefs that Stuart and I wrote as amici curiae to the Court on Fisher, helped to elevate the mismatch hypothesis to a prominent place in the public discussion of Fisher. The New York Times, The Economist, the Wall Street Journal, and NPR's All Things Considered all ran prominent articles on mismatch, generally treating it as, at the very least, an idea to be reckoned with seriously. The general tone was well-captured by The New York Times' David Brooks, who wrote: “[A]ffirmative action programs ... perpetrated some noteworthy wrongs .... The evidence on this is hotly disputed, but Richard Sander and Stuart Taylor Jr. make a compelling case ....”

Yet at law school events during the 2012-2013 academic year, when I was invited to speak about any aspect of Fisher, a strangely repetitive pattern emerged. Regardless of whether the topic at hand was mismatch, or some entirely different part of the affirmative action issue, panel members who disliked my mismatch research would start to recite from a document known as the Empirical Scholars Brief. This document, they would suggest, was the definitive refutation of Richard Sander, the other “mismatch” researchers, and all that we were taken to represent. Often they would distribute copies of the Empirical Scholars Brief to the audience, like revivalists passing out the Gospel of St. James. But--and this was the oddest part--these panelists were never interested in engaging or debating any of the claims that were actually in the Empirical Scholars Brief (which I will sometimes, as shorthand, refer to as the “ESB”). One panelist, at an AALS panel in a large ballroom, disclaimed any intention of getting into the details. “I'm not a trained quantitative empiricist,” she said, “instead I'm compelled to rely on critiques by other empiricists.” Pretty much exactly the same thing happened at the Valparaiso symposium. Professor Nelson began our panel with a very thoughtful discussion of the “deference” issue--that is, when and to what degree the Supreme Court should defer to the educational judgment of universities in evaluating their diversity programs. Professor Sumi Cho followed with some rather discursive remarks on the importance of diversity. I then spoke about some of my empirical findings on university behavior--a sort of empirical comment on some of the same issues Professor Nelson had raised. When we finished, and the question and answer portion began, Professor Cho distributed a copy of the ESB to the audience, with the standard comment that the audience could better evaluate my comments if they knew what other social scientists thought of my work. With my time up, and on my remote monitor, I was not in a very good position to respond to and engage the ESB claims. I encouraged anyone in the audience to ask me to discuss any specific claim they could identify, but there were no takers. It felt to me like a completely non-substantive, ad hominem, and unfair attack.

It therefore seems appropriate to take the opportunity afforded by the written version of the symposium to provide the sort of thoughtful engagement that I would have liked to provide the live symposium audience. What follows is an assessment--though it may sound more like an expose--of the “Empirical Scholars Brief.” The thrust of my analysis is that the ESB is not just substantively wrong, but it is also a deeply dishonest document that relies on outright falsehoods and misleading claims to support an argument, which should be embarrassing to its signatories, and is entitled to no substantive weight in discussions of mismatch and affirmative action.

Richard Sander (UCLA), The Stylized Critique of Mismatch, 92 Tex. L. Rev. 1637 (2014):

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November 20, 2014 in Legal Education, Scholarship | Permalink | Comments (7)

Seven Companies Spent More on CEO Pay Than Federal Taxes

IPS_Fleecing_Uncle_Sam_Report_Nov2014 coverInstitute for Policy Studies and the Center for Effective Government, Fleecing Uncle Sam: A Growing Number of Corporations Spend More on Executive Compensation Than Federal Income Taxes:

Of America’s 30 largest corporations, seven (23 percent) paid their CEOs more than they paid in federal income taxes last year.

  • All seven of these firms were highly profitable, collectively reporting more than $74 billion in U.S. pre-tax profits. However, they received a combined total of $1.9 billion in refunds from the IRS.
  • The seven CEOs leading these tax-dodging corporations were paid $17.3 million on average in 2013. Boeing and Ford Motors both paid their CEOs more than $23 million last year while receiving large tax refunds.

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November 20, 2014 in Tax, Think Tank Reports | Permalink | Comments (4)