TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, February 10, 2016

The IRS Scandal, Day 1007

IRS Logo 2The IRS yesterday approved the tax-exempt 501(c)(4) status of Karl Rove's Crossroads GPS more than five years after the group filed its application:

Continue reading

February 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, February 9, 2016

Marron Presents Should Governments Tax Unhealthy Foods And Drinks? Today At NYU

MarronDonald Marron (Urban Institute) presents Should Governments Tax Unhealthy Foods and Drinks? (with Maeve Gearing (Tax Policy Center) & John Iselin (Tax Policy Center)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

What we eat and drink can cause obesity, diabetes, hypertension, and other conditions. In response, many governments have enacted or are considering taxes on unhealthy food and drinks. This report evaluates the rationale behind such taxes; reviews evidence on their effects; analyzes different ways of structuring them; draws lessons from taxes on tobacco, alcohol, and carbon emissions; and offers a framework for assessing their benefits and costs. Taxing can influence what people eat and drink, but it is not a silver bullet. Governments must balance potential health gains against taxes’ limits and costs.

Continue reading

February 9, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Lederman Presents IRS Reform: Politics As Usual? Today At Indiana-Indianapolis

Ledderman (2016)Leandra Lederman (Indiana-Bloomington) presents IRS Reform: Politics As Usual? at Indiana-Indianapolis today as part of its Faculty Workshop Series:

The IRS is still reeling from accusations that it “targeted” Tea Party and other tax-exempt organizations. Although multiple government investigations found no politically motivated behavior—only mismanagement—Congressional hearings were quite inflammatory. Congress recently followed up those hearings with a set of IRS reforms. Congress’s approach is reminiscent of the late 1990s, when highly publicized Congressional hearings regarding alleged abuses by the IRS resulted in a major IRS reform and restructuring, although the allegations subsequently were largely debunked. This Article argues that the recent allegations against the IRS also were overblown. It looks to the aftermath of the 1998 IRS reform, which included a major downturn in enforcement, for lessons for the present day. The Article concludes that Congress as a whole can do a better job of keeping politics from undermining tax administration.

Continue reading

February 9, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Hines Presents High Tax Heresy Today At Georgetown

Hines (2016)James Hines, Jr. (Michigan) presents High Tax Heresy at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg::

An efficient and equitable income tax offers exclusions, deductions and credits that narrow the tax base and thereby require higher tax rates than would be necessary with a broad based income tax. Base narrowing features can make the tax system more efficient by focusing collection on revenue sources that are little affected by taxation, and they can promote equity by tailoring tax obligations to individual circumstances and supporting tax rate progressivity. Economic theory does not say that an efficient and equitable income tax system has a broad base and a low rate, and in fact the theory has never said that. Experience with efforts to reduce tax rates and broaden tax bases is that reforms can easily become focused on low statutory tax rates, to the detriment of efficiency and equity.

February 9, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Federal Student Aid, Not Faculty Salaries, Is Primary Driver Of Escalating Tuition

Grey Gordon (Indiana) & Aaron Hedlund (Missouri), Accounting for the Rise in College Tuition:

We develop a quantitative model of higher education to test explanations for the steep rise in college tuition between 1987 and 2010. The framework extends the quality-maximizing college paradigm of Epple, Romano, Sarpca, and Sieg (2013) and embeds it in an incomplete markets, life-cycle environment. We measure how much changes in underlying costs, reforms to the Federal Student Loan Program (FSLP), and changes in the college earnings premium have caused tuition to increase. All these changes combined generate a 106% rise in net tuition between 1987 and 2010, which more than accounts for the 78% increase seen in the data. Changes in the FSLP alone generate a 102% tuition increase, and changes in the college premium generate a 24% increase. Our findings cast doubt on Baumol’s cost disease as a driver of higher tuition.

Inside Higher Ed, Why Is Tuition So High?:

Higher education's critics tend to blame high prices on overpaid professors or fancy climbing walls. At public colleges, lobbyists tend to blame reductions in state support. But a new study places the blame elsewhere: the ready availability of federal student aid.

Continue reading

February 9, 2016 in Legal Education | Permalink | Comments (0)

Stark:  Reforming Proposition 13 To Tax Land More And Buildings Less

Prop 13Kirk J. Stark (UCLA), Reforming Proposition 13 to Tax Land More and Buildings Less:

Advocates for reforming Proposition 13, California’s historic property tax limitation initiative, typically emphasize the measure’s implicit preference for owners of commercial and industrial property. Unlike most property tax regimes, Prop 13 assesses property at the owner’s purchase price rather than the property’s market value. In a rising real estate market, this “acquisition value” rule favors longtime owners relative to more recent purchasers. Reform advocates claim that, because commercial and industrial property changes ownership less frequently than residential property, Prop 13 has shifted tax burdens from commercial and industrial property owners to homeowners. To counter this trend, reformers advocate a “split roll” property tax in which commercial and industrial property would be regularly reassessed to market value.

Continue reading

February 9, 2016 in Scholarship, Tax | Permalink | Comments (0)

Cornell President Elizabeth Garrett Has Colon Cancer

Garrett 2Elizabeth Garrett (age 52), former USC Provost who became Cornell's President on July 1, 2015, announced yesterday that she has colon cancer:

I have been diagnosed recently with colon cancer. I am receiving the best possible care from a team of doctors at Weill Cornell Medicine and am beginning an aggressive treatment program. Because of this treatment and my illness, I will be reducing my travel schedule and lightening my commitments over the next months. The senior leadership of the university will be handling many of my commitments, representing me and keeping me up to date as we continue to move Cornell forward to meet the challenges of the 21st Century.

Continue reading

February 9, 2016 in Legal Education | Permalink | Comments (0)

Fleischer:  What Is Hillary Clinton’s Attitude Toward Wall Street?

NY Times Dealbook (2013)New York Times Deal Book:  Hillary Clinton’s Attitude Toward Wall Street Is Subjective, by Victor Fleischer (San Diego):

What is Hillary Clinton’s attitude toward Wall Street? The question evokes ... heated and overly confident responses online, even among Democrats. Mrs. Clinton is deep in the pocket of Wall Street, as evidenced by her lucrative speeches to Goldman Sachs. Or she is a progressive fighter with a smart and sophisticated plan to rein in Wall Street’s excesses. ...

There is no right answer. She is either of these things, depending on how your brain processes information. On tax policy, Mrs. Clinton has a strong team in place and has put forth some sensible proposals, focusing the weight of her tax increases on those who earn more than $5 million annually. Some observers subtract the evidence of being too friendly to Wall Street, focusing on her detailed policy proposals. Consider her first major tax proposal of the campaign, on capital gains. Rather than suggest that we abolish the capital gains preference, she proposed a gradual step-down in rates depending on the length of time an investor holds assets, with the lowest rate of 20 percent available after five years.

Continue reading

February 9, 2016 in Political News, Tax | Permalink | Comments (0)

NY Times:  Vanguard Faces A Peculiar Tax Challenge

VanguardFollowing up on my previous posts (links below):  New York Times, Vanguard, a Champion of Low Fees, Faces a Peculiar Tax Challenge:

Vanguard may have committed a sin while pursuing a virtue.

Its virtue — providing simple, diversified investments at very low cost — is well known. Its sin — if that’s what it deserves to be called — involves obscure details of tax accounting and corporate structure. It’s not easy stuff.

It’s worth examining anyway. If a Vanguard whistle-blower is correct, Vanguard could end up owing the Internal Revenue Service a great deal of money, and millions of shareholders could end up paying somewhat higher fees. It seems most likely that even if Vanguard owes some money — and it says it does not — the outcome won’t have a big impact on investors. Yet the dispute illuminates the unique structure and operations of a widely influential mutual fund company. ...

Continue reading

February 9, 2016 in Tax | Permalink | Comments (1)

Seto:  A Forced Labor Theory Of Property And Taxation

Theodore P. Seto (Loyola-L.A.), A Forced Labor Theory of Property and Taxation, in The Philosophy of Tax Law (Oxford University Press 2016):

One of the great accomplishments of civilization is to force its members to work and save more than they otherwise might. It does this, first and foremost, through property law, which restricts the access of ordinary members to the necessities of life unless they work. In exchange, civilization facilitates the accumulation of social capital, making work more productive and life ultimately more pleasant. Property deprives humans of their natural liberty to hunt and gather. Taxation permits civilization to make payment for this deprivation and justify the resulting forced labor. This is civilization’s grand bargain.

Continue reading

February 9, 2016 in Scholarship, Tax | Permalink | Comments (3)

Libson:  The Tax Treatment Of Mixed Business And Personal Expenses

Adi Libson (Bar-Ilan), Taxing Status: Tax Treatment of Mixed Business and Personal Expenses, 17 U. Pa. J. Bus. L. 1139 (2015):

What is the proper tax treatment of mixed business and personal expenses? This question has much baffled legislators, courts and legal academics. This Article proposes a new approach to this question that justifies the strict elimination of any deduction for mixed expenditures.

Continue reading

February 9, 2016 in Scholarship, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1006

IRS Logo 2USA Today op-ed:  Washington's Culture of Corruption Rots On, by Glenn Reynolds (Tennessee):

Last week saw the passage of a grim milestone in government corruption: Pepperdine University Law Professor Paul Caron’s TaxProf blog marked the 1000th day of the scandal involving the IRS’s deliberate political targeting of conservative “Tea Party” groups. There are some lessons in this, and they’re mostly bad news.

The first sad lesson is that the notion of an impartial, professional civil service is a fiction. The big government designs of Democrats and the federal bureaucracy are aligned, and the bureaucracy often deploys its powers in ways calculated to frustrate Republican presidents and to protect Democratic ones. ...

[W]hat happened in the IRS scandal wasn’t a case of bureaucrats slow-walking ideas they think are dumb. It was, instead, a case of bureaucrats targeting people because of their political views. ...

weaponized in an effort to neutralize Obama’s Tea Party opposition. It’s that ordinary Americans can look at this and conclude that there’s no reason to follow the law if they can get away with breaking it since the people in charge of enforcing the law clearly regard it with contempt.

In an influential essay several years back, Gonzalo Lira warned of the coming middle-class anarchy, when ordinary Americans decide to be no more lawful than they have to be.

There are plenty of nations that work that way — where both the ruling class and the ruled view the law with contempt and obey it only when forced to. Such places are, generally, not as nice as places where the rule of law pertains. But avoiding that kind of outcome requires principles and self-discipline on the part of the ruling class, something that contemporary America conspicuously lacks. Welcome to the era of hope and change.

Continue reading

February 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, February 8, 2016

Chodorow Presents Bitcoin, Foreign Currency, And The Case For Basis Pooling Today At Pepperdine

Chodorow (2014)Adam Chodorow (Arizona State) presents Bitcoin, Foreign Currency, and the Case for Basis Pooling at Pepperdine today as part of our Tax Policy Workshop Series.  The Pepperdine Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

The IRS recently dealt a blow to bitcoin enthusiasts by ruling that Bitcoin and other similar currencies should be treated as property – and not foreign currency – for income tax purposes. As a result, those who use bitcoin to purchase goods or services must report gain or loss on each transaction if the bitcoin has changed value between the time it was acquired and spent. The IRS’s decision seems correct as a matter of positive law, but laws can always be changed.

In this Article I consider whether bitcoin should be treated as a foreign currency for income tax purposes, which would permit bitcoin users to take advantage of the personal use exemption that applies to such currency. I conclude that it should not because the rationale for extending the personal use exemption to bitcoin is weak, at least from the government’s perspective. Moreover, expanding the definition of foreign currency could create significant line-drawing problems.

Continue reading

February 8, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Satterthwaite:  Random Tax Audits Cause Participants To Cheat More In The Future

Audit (2016)Emily Ann Satterthwaite (Toronto), The Dynamic Effects of Audits: An Experimental Assessment:

Governments and tax administrators around the world rely on the premise that random audits can be used to reduce tax evasion through two channels of deterrence: first, the ex ante indirect threat of audit will induce taxpayers to truthfully report their income and, second, that the lived experience of audit will deter audited taxpayers from cheating in the future (“direct deterrence,” Alm et al. 2009). This paper provides original experimental evidence of the failure of the direct deterrence channel. Contrary to the predictions of the standard economic model of tax compliance, I find that random audits are ineffective in fostering higher post-audit levels of compliance. Surprisingly, they induce experiment participants to cheat more in the tax periods after the audit (the “bomb crater” effect).

Continue reading

February 8, 2016 in IRS News, Scholarship, Tax | Permalink | Comments (0)

Allison Christians Named One Of The 50 Most Influential People In International Taxation

Global 50International Tax Review, The Global Tax 50 2015: The Leaders Creating An Impact Around the World:

Now in its fifth year, International Tax Review’s Global Tax 50 provides a rundown of the who’s who of the tax world. One way or another, these individuals and organisations have had an impact or influence on taxation that will be felt beyond the 12 month period covered by this list. ...

Global Tax 50 2015: Allison Christians:

Associate professor, H Heward Stikeman chairwoman in the law of taxation at the McGill University faculty of law; ICRICT expert; blogger

Continue reading

February 8, 2016 in Legal Education, Tax | Permalink | Comments (1)

NY Times:  Revaluing Family Treasures For The Taxman

1957New York Times: Revaluing Family Treasures for the Taxman, by Robert Frank:

On Friday, a bright red 1957 Ferrari rolled onto a stage in Paris and sold for 32 million euros, or about $35.8 million, making it, by some measures, the most expensive car ever sold at auction.

The celebrated racing car captured the attention of wealthy car collectors around the world — as well as the interest of the French tax authorities.

Continue reading

February 8, 2016 in Tax | Permalink | Comments (0)

Symposium:  The Role Of Incubator And Residency Programs In Legal Education

TouroSymposium, The Role of Incubator and Residency Programs in Legal Education, 1 J. Experiential Learning 185-318 (2015) 

Continue reading

February 8, 2016 in Conferences, Legal Education, Scholarship | Permalink | Comments (0)

Wisconsin Law Review Debate:  Does Experiential Learning Improve J.D. Employment Outcomes?

Wisconsin LogoJason W. Yackee (Associate Professor of Law, Wisconsin), Does Experiential Learning Improve JD Employment Outcomes?, 2015 Wis. L. Rev. 601 (blogged here):

[T]here is no statistical relationship between law school opportunities for skills training and JD employment outcomes. In contrast, employment outcomes do seem to be strongly related to law school prestige.

Keith Findley (Assistant Professor of Law, Wisconsin), Assessing Experiential Legal Education: A Response to Professor Yackee, 2015 Wis. L. Rev. 627 (blogged here):

[T]he rationale for clinical education is much more about effective pedagogy for adult learners (both about substance and skills) and the need to create effective lawyers, not just as beginning attorneys, but as life-long learners and reflective practitioners. ... [A]ssuming that Yackee is correct about the hiring disconnect, the real question is why aren't employers influenced by clinical education when (a) they vocally demand practice-ready lawyers and (b) it is so pedagogically valuable? I suggest that the problem does not reflect a lack of interest by employers in experientially trained and practice-ready graduates (and hence in clinics), but rather inadequacy in the hiring metrics and heuristics that are currently available to employers, and indeed a desire by private law firms for a broader range of clinical offerings (not fewer clinics).

Robert R. Kuehn (Associate Dean, Clinical Education, Washington University; Former President, Clinical Legal Education Association), Measuring Clinical Legal Education's Employment Outcomes, 2015 Wis. L. Rev. 645 (blogged here):

Continue reading

February 8, 2016 in Legal Education, Scholarship | Permalink | Comments (8)

Call for Contributions — Feminist Judgments: Rewritten Tax Opinions

FeministThe U.S. Feminist Judgments Project seeks contributors of rewritten judicial opinions and commentary on those opinions for an edited collection entitled Feminist Judgments: Rewritten Tax Opinions. This edited volume, to be published by Cambridge University Press, is part of a collaborative project among law professors and others to rewrite, from a feminist perspective, key judicial decisions. The initial volume, Feminist Judgments: Rewritten Opinions of the United States Supreme Court, edited by Kathryn M. Stanchi, Linda L. Berger, and Bridget J. Crawford, will be published in 2016 by Cambridge University Press. (That book’s Introduction and Table of Contents are available here.) Subsequent volumes in the series will focus on different courts or different subject matters. This call is for contributions to a volume of tax decisions rewritten from a feminist perspective. 

Continue reading

February 8, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (1)

Unsuccessful Faculty Applicant's Lawsuit Against Iowa Law School Set For Trial On March 8

Iowa LogoFollowing up on my previous posts (links below):  Donald S. Dobkin, 62, a partner in a Troy, Michigan immigration law boutique law firm who describes himself as "the most prolific academic scholar ever to come out of the ranks of the practicing immigration bar," has sued the University of Iowa College of Law for age discrimination and retaliation for refusing to interview him after he responded to an ad in the AALS placement bulletin seeking a tenured or tenure-track faculty member to teach administrative law and immigration law.  Trial is set for March 8, 2016, and the Iowa District Court on Thursday denied the University of Iowa College of Law's motion to dismiss:

Continue reading

February 8, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1005

IRS Logo 2The Hill, GOP Seeks to Block IRS From Rehiring Fired Workers:

A group of Republican senators on Tuesday introduced a bill that would bar the Internal Revenue Service commissioner from rehiring employees fired for misconduct [Ensuring Integrity in the IRS Workforce Act of 2016].

The legislation — rolled out by GOP Sens. Richard Burr (N.C.), Johnny Isakson (Ga.), Dean Heller (Nev.) and Mike Enzi (Wyo.) — comes after the Treasury Inspector General for Tax Administration found in late 2014 that the IRS had rehired hundreds of former employees with conduct or performance issues. ...

The senators' bill is a counterpart to a bill introduced in the House in October by GOP Reps. Kristi Noem (S.D.) and Peter Roskam (Ill.).

Continue reading

February 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, February 7, 2016

The Big Winner In Today's Super Bowl: The California Tax Man

SuperBowlForbes, California Taxes Will Eat Up All Of Cam Newton's Super Bowl Earnings:

Remember when Peyton Manning paid New Jersey nearly $47,000 in taxes two years ago on his Super Bowl earnings of $46,000? Manning has nothing on the state taxes facing Carolina Panthers quarterback Cam Newton for Super Bowl 50 in Santa Clara, Calif. Newton is looking at a tax bill more than twice as much, which will swallow up his entire Super Bowl paycheck, win or lose, thanks to California’s tops-in-the-nation tax rate of 13.3%. ...

If the Panthers win the Super Bowl, Newton will earn another $102,000 in playoff bonuses, but if they lose he will only net another $51,000. ... Win on Sunday, and Newton will pay California a total of $159,560 in taxes in 2016. Lose, and he will pay $159,200, based on an income reduction of $51,000.

Continue reading

February 7, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

The Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's, with some minor reshuffling within the Top 5:

  1. [346 Downloads]  Conservation Easements and the Valuation Conundrum, by Nancy McLaughlin (Utah)
  2. [268 Downloads]  Uncle Sam Wants … Who? A Global Perspective on Citizenship Taxation, by Allison Christians (McGill)
  3. [194 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)
  4. [190 Downloads]  Profit Shifting Of U.S. Multinationals, by Tim Dowd (Joint Committee on Taxation), Paul Landefeld (Joint Committee on Taxation) & Anne Moore (Joint Committee on Taxation)
  5. [158 Downloads]  Crummey Delivers Another Knockout Punch To The IRS, by Phyllis C. Taite (Florida A&M)

February 7, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Chronicle Of Higher Education:  Do Evangelical Christian Colleges Have A Diversity Problem?

Following up on my January 27 post, Does Diversity Look Different At A Christian University?:  Chronicle of Higher Education, Evangelical Colleges’ Diversity Problem:

Wheaton College’s move last month to fire one of its tenured professors, after questioning her beliefs on Islam and Christianity, raised new concerns about academic freedom at evangelical colleges. The incident on the Illinois campus also poses another, less publicly discussed, question: Do evangelical Christian colleges have a diversity problem?

Continue reading

February 7, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1004

Segment on IRS Commissioner John Koskinen begins at 3:30

Continue reading

February 7, 2016 in IRS News, IRS Scandal | Permalink | Comments (2)

Saturday, February 6, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Hurt:  Could The GRE Replace The LSAT?

GREFollowing up on last Saturday's post, Is Wake Forest Law School's Offer To Pay Students To Take The GRE A U.S. News Rankings Ploy?:  Christine Hurt (BYU), Could the GRE Compete with the LSAT? Or Replace the LSAT?:

I haven't talked to anyone at WF about this, but my intuition as a faculty member is that proving to the ABA that the GRE is as predictive as the LSAT has a lot of benefits (and not mere instrumental USNWR gaming).  What we have seen in admissions is that a lot of stellar undergraduates are choosing not to apply to law school (and not to take the LSAT).  These people must be doing something else instead, and chances are many of them are taking the GRE and going to a different graduate program.  If you could get that cohort to apply to law school easily, then you might be able to persuade them that law is still a great career path.  If they've already taken the GRE, then they can use that score and not worry about studying for the LSAT or plunking down $1k for a prep course.  In addition, recruiting folks already in graduate programs or who have completed graduate school to apply may be easier if they don't have to take a different test.  Even trying to recruit someone who has taken neither test to apply to law school would be easier if they could take the GRE.  The GRE is given on a rolling, year-wide basis around the world and even on your own computer.  I just looked online, and I could take the GRE as early as Monday (less than a week from now) a few miles from here or even sooner if I drove 30-45 minutes.  I would have my scores in 10-15 days.  The LSAT, however, is given four times a year (with alternate dates for Saturday Sabbath observers and Spanish speakers).  Test-takers must register a month in advance and wait a month following the test for their scores.  I find it strange that the LSAT schedule has not changed since I took it in 1989.

Continue reading

February 6, 2016 in Legal Education | Permalink | Comments (2)

Walmart Sues Puerto Rico Over 91.5% Tax Rate Applicable Only To Walmart

Walmart Logo (2013)New York Times, Walmart Sues Puerto Rico, Claiming an Unfair and Onerous Tax Burden:

The last thing Puerto Rico would seem to need is another fight about money.

But the island’s government, already facing multiple battles over billions of dollars in debt, was in yet another courtroom on Wednesday, locked in a legal dispute with its biggest sales-tax collector and its biggest private employer — the mighty retailer Walmart.

This time the dispute is not about bond payments, but taxes: the taxes that Puerto Rico is charging Walmart for the goods it brings from its distributors off the island — including in the United States — to sell in its stores in Puerto Rico.

Continue reading

February 6, 2016 in Tax | Permalink | Comments (13)

The IRS Scandal, Day 1003

IRS Logo 2Joe  Kristan (Tax Update Blog), 1000 Days of TaxProf Scandal Coverage:

Thanks to Paul Caron for his persistence in paying attention to the past and continuing IRS abuse of power. 

Peter J. Reilly (Forbes), IRS And The Tea Party — Scandal Enters A New Millennium:

Big milestone over at the Tax Prof yesterday.  The IRS Scandal, a day by day chronicle, has hit 1,000.  The event is marked by a an article in The College Fix titled — “The IRS Scandal, Day 1000: Every single day for nearly three years prof chronicles IRS scandal”-. ...

My objections to the day by day scandal narrative is that the string has often been maintained by stories that barely have a tenuous relationship to what I call the “core scandal” – delays and excessive questioning in the handling of tax-exempt applications of Tea Party and similar groups.  ...

What the scandal true believers really yearn for is absolute proof of President Obama ordering his IRS hit squad to go after conservatives. ... Instead they are left with a tone at the top argument in which the President’s statements about Citizens United and untraced money flooding into politics was a kind of dog whistle signal to go after conservatives. ...

Two lines of litigation that keep churning out new material for the day by day IRS scandal are NorCal Tea Party Patriots v IRS, which seeks damages for the delays and abusive inquiries, and FOIA requests by Judicial Watch.  The NorCal litigation is being funded by Citizens for Self Governance, which appears to have Koch connections.  If you look at the 2014 Form 990 of the Sarah Scaife Foundation, to which Richard Scaife gave $364 million in 2014, you will find $225,000 being given to Judicial Watch for general operating support. ...

Much of the coverage of the Tea Party scandal is taking snippets from the vast document dumps and making a big deal out of them – things like Lois Lerner wondering if somebody should investigate Bristol Palin.  If you really dig into the stuff, you can understand how there is material there to construct a variety of narratives.

In one of the narratives. you could write Lois Lerner as a tragic flawed hero, who saw great wrong being done, but was unable to get anyone to act.  She tried to get Justice interested in prosecuting people for lying on their exempt applications and got nowhere.  The gift tax initiative went nowhere (although I’m not sure she was that involved in that one).  And then there is this batch of exempt applications.  She knows they are up to no good and here she has leverage.  She can slow them down by not doing something, which is a lot easier than doing something. Instead of accomplishing something in stemming the flow of dark money, Lois Lerner ends up crippling the IRS, which is fine with libertarian billionaires.  They don’t want the IRS to do its job at all.

The narrative that seems most plausible to me is Lois Lerner as the Agent From Hell.  AFH is my term for a certain type of IRS agent that I have thankfully only encountered a couple of times in my career.  AFH is not that technically astute, but AFH is dogged.  And AFH is certain that your client is up to no good.  AFH just hasn’t quite figured out what that no good is.  That was Lois Lerner and the Tea Party applications, only she had to do her work through minions.  Lois Lerner was passionate about the dark money issue and nobody else seemed to care. So she tortured her line agents to get them to torture bewildered applicants who were already pumped up on conspiracy theories. A perfect storm of bureaucratic bumbling coming across as brilliantly subtle conspiracy.

On To The Next Millenium

And of course the brilliantly subtle conspiracy is the narrative that works best for those still interested in the scandal, so that is what will tend to predominate in the day by day as we move along.

Continue reading

February 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, February 5, 2016

Number Of Americans Renouncing Their U.S. Citizenship Hits All-Time High: Up 25% From 2014, 560% From Bush Administration High

International Tax Blog, New Expatriate Record for 2015 – Nearly 4,300 Expatriations:

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2015.

The number of published expatriates for the quarter was 1,058, bringing the total number of published expatriates in 2015 to 4,279.  The total for the year breaks last year’s record number of 3,415 published expatriates. The number of expatriates for 2015 is a 25% increase over 2014 and a 42% increase over 2013 (2,999).

Expat 2

Continue reading

February 5, 2016 in Tax | Permalink | Comments (10)

Law Schools With Highest Percentage Of Graduates Who Do Not Use Their J.D. Degrees

Nick Selbe (SmartClass), Law Schools Whose Grads Don't Use Their Degrees:

Plenty of recent law school grads are learning an unwelcome truth — finding a job that puts their degrees to use is easier said than done. In August 2015, the New York Times reported that just 60 percent of 2014 law school graduates had landed "full-time long-term jobs that required them to pass the bar exam." This is not exactly good news to people who are spending tens of thousands of dollars a year in law school tuition.

With this in mind, StartClass found the 25 law schools whose graduates aren't using their degrees. Using the most recent data from the American Bar Association Employment Summary Report — which has data on students that graduated between Sept. 1, 2013 and Aug. 31, 2014 — we found the percentage of students from each school who were employed and did not have positions in which passing the bar is required or having a JD has a demonstrable advantage.

The ten U.S. law schools with the highest number of graduates who are not using their J.D. degrees are:

  1. Florida A&M (29%)
  2. Duncan (Lincoln Memorial) (27.9%)
  3. Appalachian (23.9%)
  4. Western Michigan - Cooley (23.3%)
  5. Widener (Wilmington) (22.2%)
  6. Thomas Jefferson (21.7%)
  7. Widener (Harrisburg) (21.2%)
  8. Western New England (20.5%)
  9. District of Columbia (19.7%)
  10. North Carolina Central (18.8%)

Continue reading

February 5, 2016 in Legal Education | Permalink | Comments (2)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Continue reading

February 5, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Is It Time To Set An LSAT Minimum For Law School Admission?

American Lawyer LogoAmerican Lawyer:  Is It Time To Set an LSAT Minimum for Law School Admission?, by Vivia Chen:

I detest standardized tests, so I'm usually skeptical about how much they truly measure. That said, I'm alarmed by the big rise in the number of law students with dreadful LSAT scores.

In The Legal Whiteboard, Jerry Organ, a professor at the University of St. Thomas Law School, presents all sorts of charts and graphs that track the recent history of LSAT scores—and the picture is troubling. The bottom line is that the LSAT scores of admitted students are dropping on both the highest and lowest ends of the spectrum. ...

Continue reading

February 5, 2016 in Legal Education | Permalink | Comments (20)

The Taxation Of Crowdfunding

CrowdfundingPaul Battista (Law Office of Paul Battista, Manhattan Beach, CA), The Taxation of Crowdfunding: Income Tax Uncertainties and a Safe Harbor Test to Claim Gift Tax Exclusion, 64 U. Kan. L. Rev. ___ (2016):

Crowdfunding is the process of asking a large number of separate third parties for relatively small amounts of money to fund an endeavor. Although the concept of asking for financial “contributions” is not new, seeking funds from others via websites on the internet is relatively new. As with any distinctly new financing vehicle, there are many legal issues raised by crowdfunding that have not been explored or answered. One such issue is the income tax consequences associated with crowdfunding. The academy has not yet widely addressed the issues and the Internal Revenue Service (IRS) has yet to provide any formal guidance which has created a lack of clarity that needs to be addressed.

This article provides an overview of the most popular types of crowdfunding models and addresses the tax aspects of crowdfunding models that raise funds through a tax-exempt entity and that provide loans or equity investments through crowdfunding. The article also explores the tax uncertainties that arise under current income and gift tax laws and shows that the current tax laws do not provide bright-line answers to whether or not a crowdfunding transaction is taxable income or excluded from tax as a “gift.

Continue reading

February 5, 2016 in Scholarship, Tax | Permalink | Comments (0)

Job Opportunity For Estate Planning Attorney With 1-2 Years Experience: Pepperdine University

Pepperdine Law School (2016)Pepperdine University has a wonderful opportunity for an estate planning attorney with 1-2 years experience in its planned giving office:

The Planned Giving Officer and Legal Counsel works with internal and external constituents to strengthen the fundraising work of the University, specifically the planned giving efforts of CEGP. By raising funds for, and increasing awareness of, the University's programs, schools, initiatives, needs and opportunities (as identified in the strategic plan and mission statement).

Duties:

Continue reading

February 5, 2016 in Tax, Tax Prof Jobs | Permalink | Comments (0)

Trajectory Of A Law Professor

Meera E. Deo (Thomas Jefferson), Trajectory of a Law Professor, 20 Mich. J. Race & L. 441 (2015):

Women of color are already severely underrepresented in legal academia; as enrollment drops and legal institutions constrict further, race and gender disparities will likely continue to grow. Yet, as many deans and associate deans, most of whom are white, step down from leadership positions during these tumultuous times in legal education, opportunities have arisen for women of color to fill those roles in record numbers. However, there are individual and structural barriers preventing access to the leadership level. Significant hurdles have long prevented women of color from entering law teaching. Thus, this Article provides evidence to support the thesis that ongoing changes in legal education will likely continue to create barriers both to entry and advancement for women of color law faculty members and those who aspire to join legal academia.

Continue reading

February 5, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

The IRS Scandal, Day 1002

IRS Logo 2Letter From John Koskinen to Orrin Hatch (Feb. 3, 2016)

Politico, The IRS’s No Good Day:

A once lost hard drive was suddenly found — sort of. In fact, the agency did junk former official Samuel Maruca’s hard drive, which it was supposed to preserve for the IRS’s court battle with Microsoft over an audit of the computer giant. But Koskinen told Senate Finance leaders on Wednesday that the agency actually copied the hard drive before it was wiped clean. "This event reflected a shortcoming in our document controls,” Koskinen wrote, adding that he’s ordered the agency to stop recycling employee devices while the IRS examines its preservation standards.

On those points at least, Senate Finance Chairman Orrin Hatch seemed to agree with Koskinen. Both Hatch and the committee’s top Democrat, Sen. Ron Wyden, had expressed concern about the IRS’s document retention efforts in the wake of the latest hard drive issue. "Through sheer coincidence, the IRS's mishandling of critical information caused less damage than initially stated by the Justice Department,” Hatch said, while insisting “these seemingly routine disappearing acts make clear that the agency's recordkeeping practices have fallen woefully short.”

Washington Times, IRS Admits to Mistake For Court Case, Promises to Stop Erasing Hard Drives:

The IRS has put an emergency stay on deleting its computer hard drives and devices such as BlackBerrys, with the commissioner saying in a letter to Congress on Wednesday that the agency goofed in deleting a key hard drive last year that was supposed to be preserved as part of a court case.

Commissioner John Koskinen also said the agency has discovered a backup for that hard drive and may be able to find records critical to the court case. But he said that was a “fortunate” occurrence and vowed to try to reform the tax agency’s practices.

“I have ordered a halt to the erasure and recycling of all employee devices, including hard drives and mobile devices, for all current and departing employees,” he said in a letter to Senate Finance Committee Chairman Orrin G. Hatch, Utah Republican.

He also said the IRS is changing its procedures for when it is required to hold documents for court cases: It will preserve the records not only of the person in question, but his or her supervisor’s records as well.

In the longer term, the IRS is trying to ditch computer hard drives for storage altogether and to require that records be saved on the agency’s main network.

“It has long been our view — validated, unfortunately, by the events of recent years — that the service’s reliance on employee hard drives as an archival records store is suboptimal, not least because they are vulnerable to equipment failure resulting in data loss,” he wrote.

Continue reading

February 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, February 4, 2016

Hines Presents High Tax Heresy Today At Colorado

Hines (2016)James Hines, Jr. (Michigan) presents High Tax Heresy at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

An efficient and equitable income tax offers exclusions, deductions and credits that narrow the tax base and thereby require higher tax rates than would be necessary with a broad based income tax. Base narrowing features can make the tax system more efficient by focusing collection on revenue sources that are little affected by taxation, and they can promote equity by tailoring tax obligations to individual circumstances and supporting tax rate progressivity. Economic theory does not say that an efficient and equitable income tax system has a broad base and a low rate, and in fact the theory has never said that. Experience with efforts to reduce tax rates and broaden tax bases is that reforms can easily become focused on low statutory tax rates, to the detriment of efficiency and equity.

February 4, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Gould Presents Tax Reform, Congress, And Politics Today At UCLA

GouldJames C. Gould (Ogilvy Government Relations, Washington, D.C.) presents Tax Reform, Congress, and Politics, 146 Tax Notes 983 (Feb. 23, 2015), at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh and Eric Zolt:

If anything is clear from both 1986 and the last quarter-century, it is that tax reform is little different from entitlement reform, military base closing, or any other legislation that would take federal benefits away from average voters or Main Street businesses. The country’s political system is not designed to curtail popular benefits, whether spending or tax benefits. The successful tax reform effort will be one designed to overcome the demosclerosis identified by Rauch two decades ago.

Continue reading

February 4, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Mayer Presents Taxing Politics Today At Indiana

MayerLloyd Hitoshi Mayer (Notre Dame) presents Taxing Politics at Indiana today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

This draft Article addresses two key questions relating to the interaction between federal tax law and political activity. First, is it advisable as a policy matter for Congress to use the tax law to regulate the flows of money in politics in furtherance of non-tax goals such as combatting corruption, promoting equality, and encouraging democratic participation? I answer this first question generally no, in significant part because the tax law and the IRS are poorly suited for this role and suffer significant collateral damage when their poor fit becomes evident, as the ongoing controversy over the IRS’ handling of exemption applications filed by Tea Party and other conservative groups reveals. Second, does tax law in its current form treat political activity properly based on longstanding tax policies relating to what constitutes income, what expenses should be deductible, what constitutes a taxable gift, and what characteristics organizations should have in order to qualify for tax exemption?

I answer this second question generally yes, but identify several areas where the tax law needs to be changed to achieve greater consistency with such policies, including with respect to reducing the amount of political activity that is deemed permissible for most types of tax-exempt organizations.

February 4, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Viard Presents Fundamental Tax Reform: A Comparison Of Three Options Today At Duke

Viard (2016)Alan Viard (American Enterprise Institute) presents Fundamental Tax Reform: A Comparison of Three Options at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Three prominent tax reform options can significantly reduce the tax penalty on saving and investment while maintaining a progressive federal tax system: partially replacing the income tax system with a value added tax, fully replacing the income tax system with a Bradford X tax, or fully replacing it with a personal expenditure tax. This paper compares the options’ implications for economic growth, progressivity, transitional wealth effects, business taxation, public and private transfer payments, international transactions, and the non-business sector and the options’ political viability. The paper also outlines a hybrid option.

February 4, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NYU Hosts Program Today On Using The Administrative Procedure Act To Challenge IRS Guidance

NYU (2015)The NYU Graduate Tax Program hosts a program today on Using the Administrative Procedure Act to Challenge IRS Guidance: Why Today’s Tax Lawyers Must Also Be Administrative Law Expert:

  • Joshua Blank (NYU)
  • Donald Korb (Sullivan & Cromwell, New York; former IRS Chief Counsel)
  • Kristin Hickman (Minnesota)
  • James Gadwood (Sullivan & Cromwell, New York)

February 4, 2016 in Conferences | Permalink | Comments (0)

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 69, No. 1 (Fall 2015):

Continue reading

February 4, 2016 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Johnston:  Was Involvement Of Private Foundation In Trump Event Illegal?

TrumpDavid Cay Johnston (Syracuse), Was Involvement of Private Foundation in Trump Event Illegal?:

Did Donald Trump violate the law January 28 by involving his private foundation in his campaign for the Republican presidential nomination?

Maybe -- and maybe not, according to three practitioners specializing in the nexus of tax and nonprofit law. But all agreed that Trump's actions put front and center why Congress needs to take a serious look at the growing connections between the charitable world and partisan politics, with a focus on what will make for sound policy.

Trump clearly used the charitable foundation under his control to further his campaign for the White House. But that may not be illegal.

Continue reading

February 4, 2016 in Political News, Tax | Permalink | Comments (3)

If You Major in STEM, It Doesn’t Matter Where You Go To College

Wall Street Journal, Do Elite Colleges Lead to Higher Salaries? Only for Some Professions:

WSJFor all the thought that families put into choosing a college, very often the decision is dominated by a simple line of reasoning: The more prestigious the school you attend, the higher your salary will be after you graduate.

So, they focus their efforts on getting their children into the best possible college they can afford, figuring that even if they’re paying more tuition now, they’re maximizing earnings down the road.

But that formula doesn’t always hold true. And following it blindly can leave graduates burdened with much more debt than necessary when they get out of school.

We reached that conclusion after analyzing a survey of thousands of college graduates and looking at what they were making a decade after they got out of school. What we found: Diplomas from prestigious schools boost future earnings only in certain fields, while in other fields they simply don’t make a difference.

Specifically, for business and other liberal-arts majors, the prestige of the school has a major impact on future earnings expectations. But for fields like science, technology, engineering and math, it largely doesn’t matter whether students go to a prestigious, expensive school or a low-priced one—expected earnings turn out the same. So, families may be wasting money by chasing an expensive diploma in those fields.

Continue reading

February 4, 2016 in Legal Education | Permalink | Comments (3)

Christians:  A Global Perspective On Citizenship Taxation

Allison Christians (McGill), Uncle Sam Wants … Who? A Global Perspective on Citizenship Taxation:

Across the globe, banks are flagging accounts with indicia indicating their owners may be "US Persons", making it possible for the United States to enforce its taxation of nonresident citizens extraterritorially for the first time in history. The indicia method constitutes a mining expedition for US citizens carried out by foreign banks and governments. Establishing a tax jurisdiction in this manner is unprecedented and has significant practical and normative consequences.

Continue reading

February 4, 2016 in Scholarship, Tax | Permalink | Comments (0)