TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, December 22, 2004

IRS Issues Regs on Student Exemption from Employment Tax

Irs_logo_18 The Treasury Department and IRS yesterday issued final regulations on the exception from employment taxes for services provided by students when those services are performed for a school, college or university:

Although wages paid to students for working for a school, college or university are subject to income tax, a special exception excludes the wages for such services from FICA and FUTA taxes if certain requirements are met. Questions have arisen regarding whether the exception is available in situations where the employment aspects of the student worker's relationship to the school, college or university predominate, especially in the case of medical residents receiving training in connection with the provision of health care services. These regulations address those questions.

The final regulations provide standards for determining whether an employer qualifies as a school, college, or university, and whether an employee is a student for purposes of exception from employment taxes. The final regulations also provide that full-time employees are not students for purposes of the exception, and outline relevant factors to be taken into account in determining if the exception applies to the services provided by other employees.


December 22, 2004 in IRS News | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 21, 2004

Cincinnati Seeks New Dean

Logo of Univ of Cincinnati College of LawThe University of Cincinnati College of Law is seeking a new dean. For more information, see the College of Law's dean search web page:


Nominations, expressions of interest, and requests for the comprehensive position description should be emailed to the Witt/Kieffer executive search firm here

December 21, 2004 in News | Permalink | Comments (0) | TrackBack (0)

86-Year Old Attorney Denied Business Expense Deduction


In Sax v. Commissioner, T.C. Summary Opinion 2004-171 (12/20/04), the Tax Court denied a $29,000 business expense deduction claimed by an 86-year old Los Angeles attorney for lack of substantiation.


December 21, 2004 in New Cases | Permalink | Comments (0) | TrackBack (1)

IRS Releases Update to 2004-05 Priority Guidance Plan

Irs_logo_17The Treasury Department and IRS today released an update (12/21/04) to the 2004-05 Priority Guidance Plan (7/26/04), which includes 33 new projects to implement the American Jobs Creation Act.   


December 21, 2004 in IRS News | Permalink | Comments (0) | TrackBack (1)

Last-Minute Gifts for that Special Tax Person

Christmaspresent2Here are some suggestions for last-minute gifts for that special tax person in your life (from contributions on the TaxProf Discussion Group, reprinted with permission): 



  • The Internal Revenue Code on an Etch-a-Sketch (with the frequent changes to the Code, often time-limited, one needs no tax research tool more permanent than an Etch-a-Sketch) – Michael Waggoner (Colorado)
  • For female Tax Profs: a set of pins in the shapes of squares, triangles, and arrows to wear when teaching or working on corporate reorganizations, and an Yves St. Laurent scarf to wear when teaching the Pevsner case – Ellen Aprill (Loyola-L.A.)
  • It doesn't make any difference. Just be sure that the donee can exchange the gift or return it for a refund (not a credit). I've been married for 45 years. At the rate of three significant gift opportunities a year (Christmas, wedding anniversary, birthday) that means I've had 135 chances to get it right. On all but five or six occasions, my wife has returned my thoughtfully chosen gift. And, one other thing: don't ever give something that can be plugged in, or used in the kitchen. That's considered a tool, not a gift. – Michael Mulroney (Villanova)
  • Two "gifts" to be given by December 31: marriage (if you're in a "marriage bonus" situation) or a child (to take advantage of the dependent deduction and child care credit) – Robert Nassau (Syracuse), who was born on December 30 and married on December 31.
  • An up-to-date Code (really – have you seen one yet?) – Linda Galler (Hofstra)
  • An abacus (for the Tax Prof needing a reminder of the joys of modern technology) or a copy of the revenue acts of the People's Republic of China (just to remind folks it could be worse) – Jim Maule (Villanova)
  • A "Tax Sheltie," a hanging ornament in the shape of a small dog, with a pencil behind its ear
    and clutching a 1040 in its paws – Roberta Mann (Widener)

December 21, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

Court Refuses to Dismiss Malpractice Claim Against Lawyer for Failure to Include Crummey and GST Clauses

MalpracticeIn Sorkowitz v. Lakritz, 261 Mich. App. 642, 683 N.W.2d 210 (2004), the beneficiaries of an estate filed a malpractice action against the law firm that provided estate planning services to the decedent, alleging that the firm committed malpractice in not including Crummey and generation-skipping tax clauses in the decedent's estate plan.  The lower court granted summary judgment to the law firm, concluding that the beneficiaries had failed to make a case for malpractice based on the "four corners" of the documents. The court of appeals reversed and refused to apply the "four corners" doctrine to preclude the beneficiaries' claim:

In this day and age, clients go to estate planning experts not only to have valid testamentary documents prepared, but also to have an estate plan that will minimize the taxes payable recommended, and thus have the maximum amount transferred to the donor's intended beneficiaries at the intended times and intervals. We would be ignoring reality to dismiss legal malpractice cases such as this one on the basis of the fiction that one cannot know the decedent's intent unless it is apparent within the four corners of the estate planning documents, and without regard to common sense and expert opinion on estate planning matters. We should not ignore as judges what we know as lawyers and as men and women. It is far more likely that the decedents here intended to minimize the taxes payable upon their deaths than that they were indifferent to the amount of taxes payable, and it is virtually certain that they did not intend to pay more taxes than necessary.

It is asserted . . . that the decedents engaged defendants for estate planning, which clearly encompasses tax advice, and defendants either negligently failed to advise of, or negligently failed to include, provisions that would have prevented the tax deficiencies. Such claims will rarely be apparent on the face of the estate planning documents, without resort to extrinsic evidence. There is no reason to exempt estate planning lawyers from liability for malpractice simply because the damages often accrue after their client's death. If safeguards are necessary because of the nature of this specialty, such safeguards can be developed. But applying the Mieras "four corners" limitation to such claims is not required by precedent, goes too far in the direction of protecting the attorney, and is against the best interests of the clients and, ultimately, the profession.

The "four corners" rule is applicable in a dispute between potential beneficiaries concerning the intended distribution of the pot of assets or pie left by the decedent. It is not applicable to a claim such as this one, that seeks recovery for diminution in the pot or pie left by the decedents alleged to have been caused by the negligence of the defendants who provided estate planning. Here the interests of the deceased clients, the estate, and all the beneficiaries are aligned on the same side, and there is no danger that defendant attorneys will be wrongly held accountable to a third-party for properly implementing the desires of their client.

December 21, 2004 in New Cases | Permalink | Comments (0) | TrackBack (0)

Science Fiction is Real Literature (for Tax Purposes)

BaltimoreThe Maryland Court of Appeals has ruled that the Baltimore Science Fiction Society qualifies for tax-exempt status as an educational institution promoting the general welfare of the people of the state.  As a result, the society's headquarters is exempt from property taxes.  According to press reports:

A lower court "had been hostile to the concept of science fiction, viewing the society more as a hobby club where much of the interaction between members and the public was of a social nature."  The chairman of the society's board of directors said the ruling marked a a victory both for the society, and for the genre of science fiction as it struggles to seek a place at the high table of literature. "It does vindicate the validity of science fiction literature as, indeed, literature."

December 21, 2004 in New Cases | Permalink | Comments (0) | TrackBack (0)

IRS Snitch Must Include Reward in Income


In Ellis v. Commissioner, T.C. Summary Opinion 2004-170 (12/20/04), a Colorado disc jockey received a $7,000 reward from the IRS but did not not include it in income. Not surpisingly, the taxpayer was audited, caught, and forced to include the reward in income:

Petitioner does not dispute that during 1998, he received a reward from the IRS of $7,138.20. He testified that this amount was shared with several of his coworkers. The letter the IRS issued to petitioner identifying the reward was addressed solely to petitioner and did not indicate that he had an obligation to share the reward with anyone else. Petitioner did not present any argument that this amount is not includable in income. The Court therefore concludes that petitioner is required to include this amount in gross income.

December 21, 2004 in New Cases | Permalink | Comments (0) | TrackBack (3)

Monday, December 20, 2004

O Canada: Tax Prof Brooks Warns Canada Becoming a "Plutocracy"


From last week's Toronto Star:

The C. D. Howe Institute recently set up a Tax Competitiveness Centre to recommend far-reaching tax reforms. That spells trouble for most Canadians. Unless you're a rich investor, hold onto your wallet. Whenever the business-funded institute starts poking around in the tax system, it finds lots of things to change - mostly for the benefit of the rich. That means the rest of us end up paying more taxes, or face cuts to social programs or benefits.

With the federal government trying to decide what to do with a surplus of $9 billion, the institute has been full of ideas. Its latest - advocated by Jack Mintz, head of its new Tax Competitiveness Centre - is strikingly similar to one favoured by the Bush administration: Lift the tax burden entirely off income from investments and place the full tax burden on income from labour. Not surprisingly, this idea is wildly popular among investors, who make up the bulk of C.D. Howe members. Of course, these investors represent only a tiny proportion of Canada's taxpayers. But they tend to be highly effective at getting their way. They've been particularly effective in the last few decades, as the power of labour has declined and the power of corporations and investors has risen sharply. Rich Canadians have benefited enormously. According to calculations by McMaster University economist Michael Veall, the top-earning 1 per cent of Canadians have almost doubled their share of the national income - from 7.6% in 1980 to 13.6% in 2000.

Osgoode Hall law professor Neil Brooks says the top-earning Canadians haven't enjoyed such a large share of Canada's national income since the 1920s and 1930s, a time when Canada was often regarded as a plutocracy (that is, a society ruled by the wealthy). "Canada is once again at risk of becoming a plutocracy," says Brooks.

Brian Leiter (Texas) notes:

(By the way, when was the last time a major American newspaper described various right-wing think tanks, correctly, as shills for the rich and corporate interests?)  But let's look on the bright side:  if Canada becomes more plutocratic, then Canadians and Americans will have even more in common!

For similar views, see this web site:  Too Much: A Commentary on Capping Excessive Income and Wealth, which describes itself as "America's only newsletter dedicated to the proposition that the United States would be a considerably more democratic, prosperous, and caring nation if we narrowed the vast gap that divides our very wealthy from everybody else."

December 20, 2004 in News | Permalink | Comments (2) | TrackBack (0)

DOJ Abandons Tax Shelter Case Against xélan

XelanDoj_1 After announcing with great fanfare the TRO it obtained in federal district court in San Diego freezing over $500 million in investment accounts maintained by xélan, Inc. on the ground that over 3,500 San Diego area doctors and dentists participated in fraudulent tax avoidance schemes (see here), the Department of Justice has suffered some severe setbacks in the case:

  • As noted on TaxProf Blog earlier, the district court lifted the TRO freezing Xélan's assets. (See here for a copy of the district court's order.)
  • Today's New York Times reports that the Department of Justice has withdrawn its civil lawsuit against xélan:

The Justice Department has withdrawn its lawsuit against a San Diego financial services firm that it said sold questionable tax shelters to thousands of doctors and dentists. The firm, Xelan, is still the subject of a criminal federal grand jury investigation, and the Internal Revenue Service is continuing to seek reimbursement of hundreds of millions of dollars that it says is owed by users of Xelan investment and insurance plans. But last Friday, without making a public announcement, the Justice Department withdrew a civil complaint against Xelan from federal court in the Southern District of California. The complaint had sought to shut down Xelan operations that it had called questionable and had demanded the payment of taxes and penalties.

For a copy of the notice of dismissal, see here.

For blogosphere coverage of this "stunning defeat for the DOJ," which includes copies of all of the court documents in the case, see here.

December 20, 2004 in New Cases | Permalink | Comments (1) | TrackBack (0)

J. of Taxation Revisits Tax Consequences of Oprah's Car Giveaway

Oprah_3 Shop_talkDecember's "Shop Talk" column in the Journal of Taxation revisits the tax consequences of Oprah Winfrey's giveaway of 276 new cars on her TV show (previously blogged here and here). The column focuses on three tax issues:

  • The valuation of the cars for income tax purposes
  • The timing of the income
  • The marginal tax rate of the recipients

Jon_stewartAlthough the Journal of Taxation's analysis is quite good, it does not quite stack up to Jon Stewart's (blogged here). 




December 20, 2004 in Celebrity Tax Lore | Permalink | Comments (0) | TrackBack (0)

Heflin & Kross on Book v. Taxable Income

Ssrn_1Frank Heflin (Northwestern, Kellogg School of Management) & William Kross (Purdue, Krannert School of Management) have posted Book versus Taxable Income on SSRN.  Here is the abstract:

Income reported to shareholders (book income) and income reported to the U.S. Internal Revenue Service (taxable income) are alternative measures of U.S. corporate economic performance discussed in recent research, academic texts, and by U.S. legislators. In this paper, we compare the abilities of book and taxable income to measure economic performance. In measuring economic performance, taxable income contains more "mandated rule" error than book income because legislators generally write tax rules to raise revenue and motivate behavior and not specifically to measure performance. However, recent research suggests taxable income likely contains less "managerial bias" error (i.e. error due to managers' biased application of rules) than book income. We decompose book income and taxable income into operating cash flows, book accruals, and tax accruals. We find that tax accruals have explanatory power for contemporaneous annual stock returns incremental to book accruals and operating cash flows, but that book accruals have relatively more explanatory power. However, the dominance of book accruals over tax accruals declines significantly and from 1997-2001, tax accruals explain returns as well as book accruals. In contrast to the conventional notion that low book relative to taxable income indicates high quality book income and vice versa, we find the opposite: tax accruals explain returns better than book accruals when the ratio of book to taxable income is low. Book losses partially, but do not fully, explain our results. Overall, our results suggest taxable income is a viable performance measurement alternative and is equal to or superior to book income in certain contexts. Our results also have implications for policy debates concerning more transparent disclosures of book-tax differences.

December 20, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Treasury's Top Tax Policy Official "Unexpectedly" Resigns

JennerIrs_logo_14 Gregory F. Jenner, the Treasury Department's top tax policy official, "unexpectedly" resigned as of noon Saturday to return to private practice.  Jenner, Acting Assistant Treasury Secretary for Tax Policy, was nominated in July to be the permanent replacement for Pamela F. Olson, who resigned in April and joined Skadden.  A replacement for Jenner is expected to be named this week.  The Wall Street Journal notes:

Mr. Jenner, who served in the Treasury Department in the first Bush administration as well as on the Senate Finance Committee in the 1980s, is departing at a critical time. President Bush has said an overhaul of the tax code is a major priority for his second term. The departure surprised two top lobbyists and a senior tax official in the Capitol, all of whom work closely with Mr. Jenner on tax issues. His predecessors provided early signals of their departure and there was a lengthy transition period before they eventually left.

For other press coverage, see:

December 20, 2004 in IRS News | Permalink | Comments (0) | TrackBack (1)

Sunday, December 19, 2004

Top 5 Tax Paper Downloads

SSRN LogoThere is a lot of movement in this week's list of the Top 5 Tax Paper Downloads on SSRN, with a new #1 and a new paper debuting at #2:   

1.  Book versus Taxable Income, by Frank Heflin (Northwestern, Kellogg School of Management) & William Kross (Purdue, Krannert School of Management).

2.  Starving the Beast: The Psychology of Budget Deficits, by Jonathan Baron (Pennsylvania, Wharton School) & Edward J. McCaffery (USC)

3.  Comments on Assessing the Bush Administration's Tax Agenda, by Linda Sugin (Fordham)

4.  Tax Planning, Imbalance and Production, by Yoram Margalioth (Tel Aviv University), Eyal Sulganik (Interdisciplinary Center Herzliyah, Arison School of Business), Rafael Eldor (Interdisciplinary Center Herzliyah, Arison School of Business) & Yoseph Edrey (University of Haifa)

5.  The Matthew Effect and Federal Taxation, by Martin McMahon (Florida)

December 19, 2004 in Top 5 Downloads | Permalink | Comments (1) | TrackBack (0)

ABA Tax Section Needs Editors for Annual Report on Important Developments

Tax_lawyer_1Tax Profs are invited to contact Bill Lyons (Nebraska) to volunteer to edit a portion of the Annual Report on Important Developments to be published in the Summer 2005 issue of The Tax Lawyer

If you are interested, contact Bill via email by January 6, 2005. Committee reports will be distributed to the volunteers in early February; the edited reports are due by March 24, 2005.

December 19, 2004 in ABA Tax Section, Tax Profs | Permalink | Comments (0) | TrackBack (0)

Death of Jerry Kasner

Jerry Kasner, a faculty member at Santa Clara for 38 years and a nationally-recognized estate planning authority, died at the age of 71. From the Santa Clara press release:

Jerry Allan Kasner, a renowned law school faculty member, passed away on October 21, 2004 in Grass Valley, California at the age of 71.

He was born in Des Moines Iowa, on March 20, 1933. Professor Kasner received his B.S. in 1955 and his J.D. in 1957, both from Drake University. He was admitted to the Iowa State Bar in 1957 and the California State Bar in 1959. He was a professor of law for 38 years at Santa Clara University’s School of Law, from 1961 – 1998. He was completely dedicated to his students and law professor colleagues. In 1996 he received Santa Clara University’s Award for Sustained Excellence in Scholarship. He also received a distinguished alumnus award from Drake University Law School. Santa Clara University Professor of Law, Father Paul Goda said, “Jerry’s collegiality exceeded his brilliance as a teacher and we will miss him greatly.”

Professor Kasner was an expert in tax law and spoke at professional seminars across the country. He was a CPA as well as a lawyer and a law professor, and taught continuing education classes for the California CPA Society’s Education Foundation for many years. He received the 2004 Lifetime Achievement Award from the California CPA Education Foundation and the California CPA Education Foundation’s Award for Meritorious Service in 1985. Because of his commitment to teaching and his expertise, the Silicon Valley San Jose Chapter of the California Society of CPAs renamed their scholarship award for an outstanding Santa Clara University senior accounting student the Jerry Kasner Scholarship.

Professor Kasner was known for his outstanding contributions to estate planning professionals and served as a mentor to many estate planners in Santa Clara County. He wrote many articles and publications on taxation, community property and estate planning. He authored numerous books on estate planning including The Tools and Techniques of Estate Planning and Guide to Practical Estate Planning. Professor Kasner was a participant in panels and lectures for the California Continuing Education of the Bar, the American Institute of Certified Public Accountants, New York University, the University of Miami and various other professional and educational institutions. According to Dean Donald J. Polden of Santa Clara University School of Law, “Jerry Kasner was the epitome of greatness in legal education. He was a scholar, a wonderful teacher and a distinguished community servant. He will be missed by all of us.”

December 19, 2004 in Obituaries | Permalink | Comments (0) | TrackBack (1)

Saturday, December 18, 2004

Spotlight_1The UCLA School of Law made one of the largest leaps in the latest US News survey of tax programs, moving from #25 in 2002 to #6 in 2004. In large part, this move was fueled by the unprecedented hiring of three tax professors in 2003, joining the four tax professors already on the faculty to form one of the strongest tax faculties in the country. 


Ucla_seal_1The resurgence of UCLA’s tax program is evident in its many activities planned for this year, including its Tax Policy and Public Finance Colloquium this Spring, the UCLA Law Review's Symposium on Rethinking Redistribution: Tax Policy in an Era of Rising Inequality in January, UCLA’s Institute on Tax Aspects of Mergers and Acquisitions in May, and the hosting of a Conference on Historical Perspectives on Tax Law & Policy in July. Moreover, because of the combination of an expanded tax faculty and substantial student interest, the UCLA Program in Business Law and Policy will offer a separate tax track in its business law concentration starting next year.

In a seven-part series, TaxProf Blog will spotlight the tax professors who make up the heart of UCLA’s tax program.


Bill Klein is a senior member of the UCLA tax faculty and has been with the law school since 1971. After receiving his law degree from Harvard in 1957, Bill clerked for Judge David L. Bazelon of the U.S. Court of Appeals for the D.C. Circuit. He then worked at the U.S. Department of Justice, a Boston law firm, and the Chief Counsel’s Office of the Internal Revenue Service, before teaching tax at the University of Wisconsin for ten years. At UCLA Bill has taught tax and business associations and, despite his “retirement” in 1994, continues to teach. Bill currently teaches Elements of Economic Organization, which is a joint class between UCLA School of Law and UCLA Anderson School of Management where both law and business students examine the structure of business transactions. In addition, Bill is a nationally recognized scholar and a prolific writer who continues his work on some of the leading casebooks and treatises in tax and corporate law, such as his Federal Income Taxation (with Joe Bankman and Dan Shaviro), Business Associations, Cases and Materials on Agency, Partnership, and Corporations (with Steve Bainbridge and Mark Ramseyer), Agency, Partnerships, and Limited Liability Entities (with Steve Bainbridge and Mark Ramseyer), and Business Organization and Finance treatise (with Jack Coffee), as well as occasional articles (with Eric Zolt, Kirk Stark, and Mitu Gulati). His principal scholarly interest has to do with organization of economic activity — business deals and how people make them work — with an occasional foray back into tax theory.

“Over the past decade,” he says, “UCLA has built strong faculties in tax and in business associations, as well as in other fields. I have been extremely fortunate to have been able to work with some very smart and very interesting and congenial people, and to exchange ideas with them informally — and to be able to continue to do so. With all the faculty seminars and workshops, as well as the first-rate, friendly colleagues, I now count my time at the law school as stimulating entertainment, though I don’t allow it to interfere with my flyfishing, skiing, general travel, and other activities. As a bonus, I have lunch regularly with some of the old timers from economics — Harold Demsetz, Jack Hirschleifer, Al Harberger, and others, occasionally joined by some of the younger law school people. So it’s an exciting place to be.”

Bill and his wife also like to spend time with their children and grandchildren in Sacramento, Boulder, New York City, and Portland, Maine.

For prior UCLA tax faculty profiles, see:

Each Saturday, TaxProf Blog shines the spotlight on one of the 700+ tax professors in America's law schools. We hope to help bring the many individual stories of scholarly achievements, teaching innovations, public service, and career moves within the tax professorate to the attention of the broader tax community. Please email me suggestions for future Tax Prof Profiles. For prior Tax Prof Profiles, see here.

December 18, 2004 in Tax Prof Spotlight | Permalink | Comments (0) | TrackBack (1)

IRS Issues Optional Sales Tax Tables

Irs_logo_13The IRS has released Publication 600: Optional State Sales Tax Tables:

New for 2004, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). You cannot deduct both. Generally, to figure your state and local general sales tax deduction, you can use either your actual expenses or the Optional State Sales Tax Tables contained in this publication.

The accompanying press release (IR-2004-153) notes:

While this deduction will mainly benefit taxpayers with a state or local sales tax but no income tax – in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – it may give a larger deduction to any taxpayer who paid more in sales taxes than income taxes. For example, a person may have bought a new car, boosting the sales tax total, or claimed tax credits, lowering the state income tax paid.

December 18, 2004 in IRS News | Permalink | Comments (1) | TrackBack (0)

Desai, Dyck & Zingales on Theft and Taxes

Nber_2Mihir A. Desai (Harvard Business School), Alexander Dyck (Harvard Business School) & Luigi Zingales (University of Chicago Business School) have posted Theft and Taxes on the NBER web site. Here is the abstract:

This paper analyzes the interaction between corporate taxes and corporate governance. We show that the characteristics of a taxation system affect the extraction of private benefits by company insiders. A higher tax rate increases the amount of income insiders divert and thus worsens governance outcomes. In contrast, stronger tax enforcement reduces diversion and, in so doing, can raise the stock market value of a company in spite of the increase in the tax burden. We also show that the corporate governance system affects the level of tax revenues and the sensitivity of tax revenues to tax changes. When the corporate governance system is ineffective (i.e., when it is easy to divert income), an increase in the tax rate can reduce tax revenues. We test this prediction in a panel of countries. Consistent with the model, we find that corporate tax rate increases have smaller (in fact, negative) effects on revenues when corporate governance is weaker. Finally, this approach provides a novel justification for the existence of a separate corporate tax based on profits

December 18, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, December 17, 2004

IRS Amends Circular 230

Irs_logo_12The IRS today issued final regulations amending Circular 230:

The revisions to Circular 230 provide standards of practice for written advice that reflect current best practices and are intended to restore and maintain public confidence in tax professionals. These revisions ensure that tax professionals do not provide inadequate advice, and increase transparency by requiring tax professionals to make disclosures if the advice is incomplete. "These new standards send a strong message to tax professionals considering selling a questionable product to clients," said IRS Commissioner Mark W. Everson. "The new provisions give us more tools to battle abusive tax avoidance transactions and to rein in practitioners who disregard their ethical obligations."

The final regulations provide best practices for all tax advisors, mandatory requirements for written advice that presents a greater potential for concern, and minimum standards for other advice. The mandatory requirements for written advice that presents a greater potential for concern prohibit practitioners from providing advice that, for example, relies on incorrect factual assumptions or representations, does not consider all relevant facts, or fails to analyze important legal issues. The minimum standards for other advice will give practitioners flexibility to exercise professional judgment to meet specific client needs. “These revisions to Circular 230 strike an appropriate balance between tightening practitioner standards and minimizing burden on everyday advice,” said Acting Assistant Secretary for Tax Policy Greg Jenner. “These rules target the types of written advice that present a significant cause for concern and avoid undue interference with the practitioner-client relationship.”

The Treasury and IRS also separately issued proposed regulations regarding written advice concerning tax-exempt bonds that are similar to the standards for written advice in the final regulations. The proposed standards take into account the special characteristics of the market for tax-exempt bonds while ensuring that professionals who provide advice concerning tax-exempt bonds adhere to standards of practice that are comparable to the standards applicable to other tax professionals. Until the proposed regulations are finalized, practitioners who provide advice concerning tax-exempt bonds will be subject to certain minimum standards.


(Thanks to Ellen Aprill (Loyola-L.A.) for the tip.)

December 17, 2004 in IRS News | Permalink | Comments (0) | TrackBack (0)

Ligthart on Consumption Taxes in a Digital World

Ssrn_logo_1 Jenny Ligthart (Tilburg University) has posted Consumption Taxation in a Digital World: A Primer on SSRN. Here is the abstract:

The paper reviews the economic and administrative issues that arise in the taxation of electronic commerce; addresses how best to meet the criteria of an ideal tax system; and examines recent policy developments. It is argued that destination-based taxation - as is presently the norm for goods taxation - is technically more complex for digital products and intangible services sold over the Internet, reflecting the difficulty of determining the location of the buyer and seller. Most of the potential solutions to this problem require a great deal of administrative cooperation between national tax authorities. Case studies of several countries show that policy responses to electronic commerce have differed, with the European Union taking the lead on implementing a system of destination-based registration.

December 17, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Hitler Was a Tax Cheat

Hitler From

Adolf Hitler spent years evading taxes and owed German authorities 405,000 Reichsmarks -- equivalent to $8 million today -- by the time his tax debts were forgiven soon after he took power, a researcher says

Klaus-Dieter Dubon, a retired Bavarian notary and tax expert, said Friday he found Hitler's tax records in a Munich archive. They show the Nazi dictator battled tax collectors for eight years before becoming chancellor in 1933.

Hitler's record as a dictator who started World War II and sent millions of people to their deaths in concentration camps is well known. But the unearthed records show a new, previously undocumented side to his life: as an ordinary tax evader.

Dubon found that Hitler earned 1.232 million Reichsmarks in 1933 from sales of "Mein Kampf" -- his book outlining his doctrine of German racial supremacy and ambitions to annex vast areas of the Soviet Union. He should have paid tax on 600,000 Reichsmarks of that income but didn't, the researcher found. Hitler, listed as an "author" in the tax office records, also challenged, delayed or begged permission to pay in installments taxes owed on income he got in preceding years for speeches.

To lower his taxable income, Hitler resorted to many of the perfectly legal tax avoidance strategies that Germans still use extensively today. He tried to write off his new Mercedes in 1925 as a "company car." In one exchange with tax collectors Hitler described the car as "only a means to an end." Hitler also later tried to get costs for a desk, book shelves, travel costs, a chauffeur and private secretary deducted from his income tax along with other "professional expenses."

Hitler's troubles with the Munich tax office suddenly vanished shortly after he took power in 1933.  The infamous 1933 Enabling Act gave Hitler dictatorial powers but also helped him win his battles with the Munich tax office for good. The office first declared Hitler liberated from income tax in 1934 and in 1935 absolved him of his past tax debt of 405,494 Reichsmarks.  "That was the end of his tax problems," Dubon said. "It was all legalized, more or less."

(Thanks to Roth & Company for the tip.)

December 17, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Olson on Tax Reform Options

Irs_logo_11Olson_1 See here for a copy of the November 7, 2002 32-page memorandum by Pamela F. Olson, then-Assistant Treasury for Tax Policy (now at Skadden, Washington, D.C.), to Treasury Secretary Snow. Here is the Introduction:

We have developed a paper stating the case for why the current tax system must be reformed as well as five options for fundamental tax reform:  a flat consumption tax, a flat income tax, an add-on value-added tax (VAT), an income value-added tax (IVAT) with Social Security integration, and reform of the current income tax.

(Thanks to Scott Hodge, President of the Tax Foundation, for the tip.)

December 17, 2004 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

Harvard Law Review Survey

Harvard_2The venerable Harvard Law Review is asking law professors to fill out an on-line Law Review Usage Survey. Eight of the questions concern law reviews generally, while six of the questions specifically concern the Harvard Law Review.

Question 14 asks: "As an author who has submitted to the Harvard Law Review, how satisfied are you with our article submission and selection process?" Unfortunately, the answer I wanted to give ("Not very satisfied -- stop rejecting my articles") was not among the available options.

December 17, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

Clausing on the Accountants and Lawyers Jobs Creation Act

Kimberly Clausing (Reed College) has posted The American Jobs Creation Act of 2004: Creating Jobs for Accountants and Lawyers on the Urban-Brookings Tax Policy Center web site.  Here is the Introduction:

In its last bit of pre-election tax policymaking, Congress passed the American Jobs Creation Act of 2004. The heart of the bill is a repeal of an illegal trade subsidy—the Extraterritorial Income (ETI) exclusion—plus a potpourri of new tax breaks for businesses (box 1). The bill is designed to be revenue-neutral, but it follows recent practice of using artificial sunset provisions to obfuscate the true cost. Many of the new tax breaks, such as small business expensing and the deduction of state and local sales taxes, are ostensibly temporary. It is hard to imagine, however, that the political pressures that produced those provisions will dissipate over the next few years. If the new tax breaks are extended, one estimate suggests that the bill could add over $80 billion to the deficit over the next 10 years (Friedman 2004). Repeal of the ETI exclusion is an important and necessary step. However, the tax reductions proposed in the legislation are not the best way to help businesses, even assuming that tax breaks are warranted

December 17, 2004 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Thursday, December 16, 2004

IRS Settles Hercules Contingent Liability Tax Shelter Case

Irs_logo_10Hercules After losing the Black & Decker (blogged here) and Coltec (blogged here) contingent liability tax shelter cases, the IRS announced today (IR-2004-151) that it has settled a similar case pending in the Tax Court involving Hercules, Inc.:

In 1999, prior to the publication of Notice 2001-17, Hercules engaged in a contingent liability transaction and claimed a $154 million capital loss. Hercules had received an opinion from its outside tax advisor that it was more likely than not to prevail if the issue were challenged on audit. Following an audit of the transaction, the IRS issued a statutory notice of deficiency in which it disallowed the claimed capital loss and determined penalties with respect to the transaction. In December 2003, Hercules filed a petition in the Tax Court challenging the tax deficiencies and related penalties.

Under the terms of the settlement, Hercules has agreed to concede 100% of the capital loss claimed from the stock sale, resulting in a tax liability of approximately $30 million, and to pay a 20% accuracy-related penalty of approximately $6 million. The Service has agreed not to pursue its claim for a 40% penalty for a gross valuation misstatement. Hercules has further agreed to a limited waiver of the taxpayer privacy and anti-disclosure rules in connection with this press release. The resolution of the dispute with Hercules is part of the IRS’s ongoing enforcement efforts and continuing commitment to aggressively resolve tax shelter transactions through responsible settlements, or litigation when necessary.

Notwithstanding recent lower court losses in Black & Decker and Coltec, the Service continues to believe that the contingent liability transaction does not comply with the tax law. It will continue to pursue cases involving these transactions in the courts, where appropriate. "Taxpayers should recognize that recent taxpayer victories at the trial court level have not deterred the IRS from taking a tough stance on listed transactions, both inside and outside of the courthouse," said IRS Chief Counsel Don Korb. "We are pleased that this taxpayer has chosen to put this shelter controversy behind it. The decision to accept Hercules’ settlement offer reflects our commitment to resolving controversies involving listed transactions without litigation — provided the ultimate goal of enforcement is not compromised."

December 16, 2004 in New Cases | Permalink | Comments (0) | TrackBack (0)

Former Students Honor Art Andrews with $500k Endowed Professorship Upon His Retirement

AndrewsCurrent and former students of Arthur Andrews, a tax professor at Arizona who retired this fall after 36 years on the faculty, have raised $500,000 to fund an endowed professorship in his honor:

"As important as he has been to the institution, Art Andrews has been even more critical to the legions of students whose careers he has mentored and launched. He has a very big fan club," Dean Massaro said. Steven W. Phillips, a tax and estate-planning lawyer in Tucson, considers himself a staunch member of that club. He credits Andrews with making it easy to choose an area of law practice. "I had taken an undergraduate tax class and found it pretty dry and boring. The first day that I sat in his class, he made it so interesting. I thought -- this is what I want to do. His passion for this area of law and his skill in teaching it are remarkable." Andrews had a formidable presence in the classroom.

Over the course of his career, Andrews received numerous teaching honors. The Student Bar Association twice selected him for its Outstanding Professor Award. He received the Distinguished Mentor and Teacher Award from the College in 1999 and 2000. The award was later renamed for him. In 2000-2001, he was given the University's Graduate and Professional Education Teaching and Mentoring Award. "This is really stunning," Andrews said, "not everyone has been as lucky as I've been, being able to pursue a profession that I enjoy so thoroughly." Professor Andrews will continue to teach part-time at Arizona.

For the full press release, see here.

December 16, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

Tax Foundation: Lotteries Are Bad Tax Policy


The Tax Foundation has isssued a 36-page background paper, Lotteries and State Fiscal Policy

As states increasingly rely on lotteries as a source of tax revenue, a new Tax Foundation study examines lotteries in the 50 states and finds them contrary to sound tax policy. The study shows state-run lotteries make state tax systems more regressive, less transparent, and less economically neutral—all examples of poor tax policy.

From the press release:

The virtues and defects of lotteries have become more important as states have increased their reliance on lottery revenue. Oklahoma has just approved a lottery referendum and will become the 41st state to sell lottery tickets. Many existing lotteries are expanding into new forms such as video gaming devices....

The average American spent more on lotteries in 2002 than on reading materials or movies. Lotteries are now the most popular form of gambling in the U.S., with more than half of Americans playing the odds in any given year. In Fiscal Year 2003, total spending on lotteries was almost $45 billion, or $155 for every man, woman and child in the United States. Roughly 31% of this, or almost $14 billion, went into state coffers....State legislators looking to boost tax revenue would do well to consider other sources that are more consistent with principles of sound tax policy. State-run lotteries make state tax systems more regressive, less transparent, and less economically neutral. For all these reasons, the lottery is an example of poor tax policy.

December 16, 2004 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Caron & Gely on Affirmative Refraction: The Case for a Jurisprudence of Humility

Cover of Journal
My latest article has hit the newstands: Affirmative Refraction: Grutter v. Bollinger Through the Lens of The Case of the Speluncean Explorers, 21 Constitutional Commentary 63 (2004) (with Rafael Gely). Here is the abstract:

This Article looks at the Supreme Court's recent decision on the use of race in law school admissions through the lens of the famous hypothetical about human cannibalism constructed by Lon Fuller (62 Harv. L. Rev. 616 (1949)). The hypothetical has challenged law students and legal scholars for over half a century, and in recent years scholars have issued dozens of new "opinions" to take into account contemporary legal theories (including symposia in 112 Harv. L. Rev. 1834 (1999) and 61 Geo. Wash. L. Rev. 1731 (1993)). This Article is the first to take the opposite approach and view a real-life legal issue through the eyes of the fictional Justices in The Case of the Speluncean Explorers.

We argue that the various opinions in Grutter find their intellectual forebears in the opinions in The Case of the Speluncean Explorers. For all of the heat and light generated by Grutter, the opinions merely mark another way station in the centuries-old debate among competing jurisprudential philosophies of the role of law and government. By examining the Grutter opinions in the context of this rich jurisprudential tradition, we hope to elevate much of the current debate about the case, in which labels like "liberal" and "conservative" are hurled about like epithets, toward a more sophisticated understanding of how the various approaches of the Justices embody alternative views of the proper judicial function in our democratic system.

The Article introduces a novel jurisprudential approach to judicial decision-making -- what we refer to as a "jurisprudence of humility." Building on the recent work of ideologically diverse scholars, we argue that a jurisprudence of humility recognizes that judges and lawyers hold no monopoly on wisdom and that, in certain situations, institutions other than courts may be better positioned to resolve a particular issue. This jurisprudence of humility construct enables us to draw some rather surprising connections between The Case of the Speluncean Explorers and Grutter and span the gulf in the legal literature between statutory construction and constitutional interpretation.

December 16, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Stone on History of the Unrelated Business Income Tax

Ssrn_logoEthan Stone (Iowa) has posted Adhering to the Old Line: Uncovering The History and Political Function of the Unrelated Business Income Tax on SSRN. Here is the abstract:

The paper examines the history of the building pressure during the 1940s the pass the UBIT and finds that the traditional explanations hide an underlying political function. As the charitable exemption became more important with the expansion of the income tax in the 1940s, it attracted new attention from both policymakers and a growing tax-shelter industry. Charities and sympathetic policymakers tried to justify a suddenly important blanket subsidy to charity on the basis of the charities exclusive dedication to good works. Tax-shelter promoters made the effort more difficult by featuring charities in roles, such as buying and leasing commercial real estate and operating businesses, distinctly incompatible with traditional perceptions of charitable activities. The UBIT prevents this cognitive dissonance. It discourages activities that make charities look uncomfortably uncharitable by taxing them, while simultaneously leaving exempt the "old line" of passive investment and business activities related to an exempt purpose.

December 16, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tax News Roundup

L.A. Times: Tax Deduction Reduction:

Consider three popular deductions: contributions to charity; mortgage interest; and state and local income taxes. Bush has said he won't mess with the first two. It's hard to blame him for wanting to avoid these hornets' nests. But the most popular deductions are also the most expensive. Leaving them untouched means that tax rates can't be reduced as much. It also makes the advocates of other deductions feel like suckers. An ambitious tax reform that goes beyond the 1986 overhaul can happen only in a spirit of "I'll give up my deductions if you'll give up yours." [Thanks to Ellen Aprill (Loyola-L.A.) for the tip.]

New York Times: Treasury's Snow -- Tax Code Overhaul a Priority:

Overhauling an excessively complicated U.S. tax code is a "top priority" of the Bush administration over the next four years, Treasury Secretary John Snow said on Wednesday.  "This administration is committed to that task, and we will get it done," Snow said in prepared remarks at a two-day economic conference sponsored by the White House.

Wall Street Journal: Auditing-Rule Maker Seeks New Limits On Tax Services:

The auditing profession's chief regulator unveiled a broad proposal aimed at preventing accounting firms from auditing the books of public companies to which they have sold tax shelters that the Internal Revenue Service deems abusive tax-avoidance schemes. The proposal by the two-year-old Public Company Accounting Oversight Board also would prohibit accounting firms from selling any tax services at all to senior officers of publicly held audit clients. Until recently, regulators had seen little need to pass significant restrictions on firms' ability to sell tax services to audit clients, believing they created few conflicts of interest. In the past two years, however, several highly publicized controversies have called that premise into question.

Wall Street Journal (Tom Herman): Many Filers Ignore Nanny Tax , Expecting Not to Get Caught:

Bernard Kerik has plenty of company, at least when it comes to not paying the so-called nanny tax . The former New York City police commissioner was President Bush's choice to be the nation's next Homeland Security secretary, succeeding Tom Ridge. Mr. Kerik withdrew last week after acknowledging, among other things, he had failed to pay taxes for an immigrant nanny who may have been in the U.S. illegally. New Internal Revenue Service statistics suggest that many other people don't bother complying with nanny-tax laws, either.

Wall Street Journal: Using IRAs to Buy Mortgages Boosts Benefits:

Wish you could invest in real estate without having to own or manage a property, while earning tax-exempt or tax-deferred income from that real estate? Well, financial planners are increasingly recommending an investment strategy that allows investors to do just that. Buying property using an individual retirement account is a way to earn tax-exempt or tax-deferred income. And buying or creating mortgages or notes is a way an investor can invest in real estate without actually having to own and manage the property itself. Now more investors are combining the two -- using traditional and Roth IRAs to buy or create mortgage notes.

Wall Street Journal: Free Speech vs. Tax Code:

Kweisi Mfume recently announced his departure as NAACP President, and not a moment too soon. His tenure has been a disaster for the storied civil rights organization, driving it deeper into liberal irrelevance. But that doesn't mean it still shouldn't be defended against the current IRS probe of its tax-exempt status. Back in October the NAACP was informed that it may have violated a law that prohibits charities, churches and other nonprofits from engaging in partisan activities. Under Mr. Mfume and chairman Julian Bond, the group has accused President Bush of being at war with black America; compared Republicans to the Taliban; and declared that the GOP's "idea of equal rights is the American flag and the Confederate swastika flying side by side." Charming stuff. But in an address to the NAACP's 95th annual convention in July, Mr. Bond apparently crossed a far more consequential line. According to the IRS, Mr. Bond explicitly "condemned the administration policies of George W. Bush," which is a no-no if your organization is tax-exempt and wants to stay that way.

Wall Street Journal: Rules to Limit Tax Services Given By Accountants to Audit Clients:

The auditing profession's chief regulator today unveiled a proposal that for the first time would significantly restrict the types of tax services that accounting firms can sell to audit clients. Generally speaking, the restrictions are expected to be aimed at reducing conflicts of interest at auditors of publicly held companies and preventing accounting firms from auditing their own work.

Washington Post: New Rules for Auditors Proposed; Shelters, Executives' Tax Returns Addressed:

Regulators yesterday proposed new rules that would bar auditors from peddling questionable tax strategies and preparing tax returns for top executives whose companies' accounting they review, the latest move in a broad debate about ethics in the accounting industry. The Public Company Accounting Oversight Board, created by Congress to help impose a new disciplinary regime on accountants after a series of corporate scandals, voted unanimously to issue the rules for public comment.

Washington Post: Pauper Chase at the IRS:

Before the Internal Revenue Service outsources its debt-collection function, Congress and taxpayers need assurance that it has purged its files of known uncollectable debts. Otherwise, good taxpayer money will chase after bad.

Washington Post: Tax Break Turns into Big Business:

Historic preservation was a sleepy little field until seven years ago, when financial adviser James M. Kearns began inviting property owners into his Dupont Circle home to learn about an obscure federal program. Kearns and a friend, Steven McClain, advised homeowners that they could use the program to claim sizable income tax write-offs -- tax breaks that generally totaled 11 percent of their house's market value. To obtain that windfall, though, homeowners first had to engage in a complicated process ending in a facade easement donation. Kearns and McClain offered a pain-free alternative in fliers for their business partnership: "For a fee, the Capitol Preservation Alliance will prepare and process the easement donations for you." That user-friendly pitch proved a hit. Brass plaques identifying houses in the program began popping up like crocuses, first in Washington, then in New York and other cities.

December 16, 2004 in News | Permalink | Comments (0) | TrackBack (1)

Wednesday, December 15, 2004

Who You Gonna Call...Not Tax Busters

Doj_1Ghostbusters The Department of Justice's Tax Division has obtained a preliminary injunction against Jonathan Luman, who sold the Tax Busters Guide to taxpayers in 41 states.

December 15, 2004 in New Cases | Permalink | Comments (0) | TrackBack (0)

Tax Notes Explores Tax Blogosphere

Tax_analysts_logo_3This week's Tax Notes has a wonderful article on the tax blogosphere by Warren Rojas: Tax Bloggers Use Internet To Widen Tax Policy Appeal, 105 Tax Notes 1498 (Dec. 13, 2004) (© 2004 Tax Analysts. Reprinted with permission.) The article opens with the founders of the tax blogging movement: Victor Fleischer (UCLA) and Jeffrey Kahn (Santa Clara), who wrote A Taxing Blog: The Uneasy Case for Blogging Taxation and then started the first tax professor blog, A Taxing Blog, which has been on hiatus since October 13, 2003. The article then discusses the current tax blogs edited by both professors and practitioners:

Tax Professor Blogs
Academically Taxing (Clarissa Potter - Georgetown)
Jack Bog’s Blog (Jack Bogdanski - Lewis & Clark)
Mauled Again (James Maule - Villanova)
Start Making Sense (Dan Shaviro - NYU)
Tax Prof Blog (Paul Caron - Cincinnati)

Tax Practitioner Blogs
Roth CPA (Joe Kristan - Iowa CPA)
Tax Guru (Kerry Kerstetter - Arkansas CPA)

The article has nice things to say about all of these blogs. We are, of course, thrilled to have Tax Notes call us "the undisputed champion of tax blogging." (p.1498)

December 15, 2004 in About This Blog, News, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Jack Bogdanski's Buck-a-Hit-Day

Check out Jack Bogdanski's (Lewis & Clark) blog (Jack Bog's Blog) today -- he is donating $1 to charity for each visitor to the site. Last year's Buck-a-Hit Day raised over $1,000 for charity.

December 15, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

Rands on The Agony and Ecstasy of Corporate Tax

My colleague Bill Rands has published Corporate Tax:  The Agony and the Ecstasy, 83 Neb. L. Rev. 39 (2004). Here is the abstract:

This article focuses on various corporate tax rules that just do not seem to make sense or, at the very least, are more complex than seems really necessary. These problems are caused by Congress's incremental and piecemeal approach to formulation of corporate tax, sometimes not even dovetailing the increments with the current statutory rules that are left unamended; political considerations, e.g., the recent legislation resulting in a partial exclusion of dividends paid to humans, which was a political compromise and is not a carefully constructed set of rules; the opening and closing of loopholes as the private sector constantly searches for weaknesses in the current tax system, resulting in Byzantine concoctions against which the government responds with complex anti avoidance rules; and the inherent complexity of corporate structures and transactions, which requires a degree of complexity in the tax law. In particular, the article focuses on the multitudinous corporate control tests; the arcane, constructive stock ownership tests; the lack of uniform rules for passthrough entities; and a few of the many erratic rules regarding tax-free organizations. The article makes the following common sense proposals. Congress should dovetail new legislation with the current code. It should synthesize the corporate control tests into a basic 80% test and a basic 50% test. It should synthesize all of the constructive stock ownership rules into one rule. It should settle on one set of eligibility requirements and one set of tax consequences for passthrough entities. And it should settle on a uniform consideration requirement for every type of acquisitive reorganization.

December 15, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Lymer on Taxation in an Electronic World

SSRN LogoAndrew Lymer (University of Birmingham) has posted Taxation in an Electronic World: The International Debate and a Role for Tax Research on SSRN. Here is the abstract:

The electronic world will affect and be affected by tax systems, and these influences need to be understood in order to develop suitable tax systems to operate in this new environment. Our current tax systems were built to operate in a physical environment in which most transactions are documented in writing at the place where taxable transactions occur or taxable income arises. These vital transaction features cannot be presumed in the new environment; the flexibility and adaptability of tax systems to these changed circumstances becomes even more important than usually the case.

December 15, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

ITEP on Tennessee Tax Structure Study

TennesseeThe Institute on Taxation and Economic Policy has posted Impact of the Tennessee Tax Structure Study Commission’s Tax Reform Recommendations on Tax Fairness in Tennessee on its web site. Here is the Introduction:

Tennessee’s tax system is regressive, requiring low- and middle-income families to pay more of their income in tax than wealthier Tennesseans. A tax reform plan recently proposed by the Tennessee Tax Structure Study Commission would reduce the state sales tax, repeal local sales taxes, cut business taxes, and introduce a personal income tax. This analysis looks at the fairness of the current Tennessee tax system and estimates the impact of the Commission’s proposed reforms on the regressivity of the tax system.

December 15, 2004 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 14, 2004

WSJ Op-Ed: Reform Health Care by Deducting All Health Care Expenses

Wsj_1Following up on their paper, The American Health Care System Is Broken; Here’s How to Fix It (blogged here), R. Glenn Hubbard (Columbia Business School), John Cogan (Hoover Institution) & Daniel Kessler (Hoover Institution) have published an op-ed in the Wall Street Journal, Brilliant Deduction:

We propose a simple change to tax law that would cut unproductive health spending, reduce the number of uninsured and promote greater tax fairness. For anyone with at least catastrophic insurance coverage, all health-care expenses -- employee contributions to employer-provided insurance, individually purchased insurance and out-of-pocket spending -- would be tax-deductible. The deduction would be available to those who claim the standard deduction and to those who itemize....

There is good reason that deductibility of health-care spending should figure prominently in the tax-reform debate. It will be a critical step in achieving objectives of both conservatives and liberals in health-care policy -- greater reliance on market forces, increased efficiency, fewer uninsured and greater fairness. It is an idea whose time has come.

For a prior Wall Street Journal editorial support for the idea, see here. For critical coverage in the blogosphere, see here, here, here, here, here, and here.

December 14, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Loyola-L.A. Graduate Tax Program Seeks Distinguished Lecturer in Tax

Loyola_1The Loyola Law School-Los Angeles Graduate Tax Program invites applications for the position of Distinguished Lecturer in Tax beginning on July 1, 2005 or January 1, 2006. The initial appointment will be until June 30, 2007 and may be renewed for successive three-year periods. The position is a non-tenure track position.

The Law School seeks an applicant with a distinguished academic record; significant tax practice experience; a history of participation in professional activities; and a commitment to excellence in teaching. Teaching experience required. The Law School welcomes applications from women and minority applicants, and others whose background may contribute to faculty diversity. Applicants must have a degree from an ABA/AALS accredited law school. A Tax LL.M. degree is a plus, but is not required.

The Distinguished Lecturer’s responsibilities include:

  • Teaching advanced tax courses to J.D. and LL.M. students
  • Supervising and advising on student tax research papers and other student activities
  • Participation in tax-related professional activities
  • Participation in other aspects of the Program, including the Tax LL.M. Committee

Please send resume and the names of two references to Prof. Jennifer Kowal, Director, Tax LL.M. Program, Loyola Law School, 919 Albany St., Los Angeles, CA 90015 or FAX 213-380-3769. The deadline for receipt of applications is February 15, 2005. Applications received prior to the deadline will be considered on a rolling basis.

December 14, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

SOI Releases Tax Return Data by Zip Code

Irs_logo_9 The IRS Statistics of Income Division has released Individual Income Tax Return Data by ZIP Code:

      • Number of Returns (total and by income bracket)
      • Exemptions
      • AGI
      • Salary & Wage Income
      • Investment Income
      • Earned Income Tax Credit
      • Tax Liability
      • Schedule C Income
      • Schedule F Income
      • Schedule A Deductions

So you can check to see, for example, how your town's average AGI stacks up with Beverly Hills 90210 ($297,144).  Other comparisons

  • George Bush (Crawford, Texas): $45,456
  • John Kerry (Beacon Hill, Massachusetts): $282,280

December 14, 2004 in Gov't Reports | Permalink | Comments (0) | TrackBack (2)

Lederman & Shores Quoted in NLJ Story on Ballard & Kanter

National_law_journalTax Profs Leandra Lederman (George Mason) and David Shores (Wake Forest) are quoted in a National Law Journal front page story (Fraud Case To Shed Light on Tax Court) on the companion Ballard (No. 03-184) and Kanter (03-1034) cases pending in the Supreme Court. For prior TaxProf Blog coverage of these cases, see:

December 14, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (1)

Tax Talk Today Web Cast on Getting Ready for Filing Season

Tax_talk_today_logoThe monthly Tax Talk Today program offers a free webcast today from 2:00 - 3:00 pm EST on  Get Ready for Filing Season 2005 (Part 1 - Individuals)

Moderator: Les Witmer, APR Communications Consultant


    • Bob Erickson, Senior Technical Advisor, IRS Tax Forms & Publications
    • Vicki L. Mulak, EA, CFP
    • Estelle R. Tunley, Deputy Director, IRS Submission Processing
    • David Williams, Chief, IRS Earned Income Tax Credit (EITC) Program Office

December 14, 2004 in Conferences | Permalink | Comments (0) | TrackBack (0)

TaxProf Blog Crosses 350,000 Threshold

Ohio_350000After less than 8 months in operation, TaxProf Blog has crossed the 350,000 visitor mark. We are grateful to our growing number of regular readers and hope you will continue to email us suggestions and comments.

December 14, 2004 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Monday, December 13, 2004

TaxProf Blog Adds Resources for Students

We have added to the left column permanent resources on TaxProf Blog the following links for students:

Writing Competitions

Moot Court Competitions
Buffalo (Mugel)

These links complement the existing permanent resources of interest to students:

Graduate Tax Programs
By School
By State

US News Rankings of Tax Programs
Top 25 Overall
Major Changes, 2002-04
Top 10 Graduate Tax Programs

Tax Professors
Recent Moves

Tax Professor Blogs
Academically Taxing (Clarissa Potter)
A Taxing Blog (Victor Fleischer)
Jack Bog’s Blog (Jack Bogdanski)
Mauled Again (James Maule)
Start Making Sense (Dan Shaviro)
Tax Policy Blog (Loyola-L.A.)

Other Tax Blogs
Benefits Blog
Roth CPA
Tax Analysts
Tax & Business Law Commentary
Tax Guru
Taxing Thoughts

December 13, 2004 in About This Blog | Permalink | Comments (1) | TrackBack (2)

WSJ: Profs Take Payments To Support Client's Position

Wsj_1Interesting Wall Street Journal piece:  Some Professors Take Payments To Express Views:   


If a professor takes money from a company and then argues in the media for a position the company favors, is he an independent expert -- or a paid shill? It's not an academic question. Some companies have been paying professors to promote their points of view on TV shows, in newspaper and magazine articles and in letters to the editor. In many cases the arrangement between the professor and the company isn't disclosed....

When a Washington public-relations firm got an assignment to lobby Congress in support of cutting corporate taxes on foreign income, it scanned a Web site of the Heritage Foundation that lists noted conservative thinkers. One expert who seemed to fit the bill was Walter Block, a noted libertarian economist at Loyola University in New Orleans. Professor Block was blunt. He told the PR firm that he'd be willing to assist in arguing for the tax cut -- for a $5,000 consulting fee. The firm declined.

Stephen Bainbridge (UCLA) criticizes these Paid Professorial Flacks

December 13, 2004 in News | Permalink | Comments (1) | TrackBack (0)

Tax News Roundup

New York Times: Bush Says He Won't Raise Taxes for Social Security Overhaul:

President Bush on Thursday flatly rejected the possibility of raising payroll taxes to pay for an overhaul of Social Security, a project that is likely to cost trillions of dollars over the next several decades.

New York Times: Winning With the Tax Code:

To regain the public's trust, we must offer new ideas to build a better future for all Americans, not just a favored few; ideas that contrast with the special-interest policies Republicans promote. The current tax debate provides such an opportunity. Our tax system is broken. We live in a society espousing the principles of work and responsibility, yet our tax code penalizes those who work for a living while benefiting the well connected. Rather than resisting change in the tax code, Democrats should embrace it.

New York Times: Rushing for Tax Breaks on Historic Homes:

Taxpayers who donate easements have incentives to put the highest possible value on them, and appraisers seem to be willing to go along. The appraisers argue that a homeowner is giving up something of value by limiting the future use of the property. But the I.R.S. argues that for homeowners in local historic districts, where their ability to alter the outside is already restricted, the easements have little or no monetary value. Last month, the I.R.S. dispatched its commissioner for tax-exempt and government entities, Steven T. Miller, to the national meeting of the American Society of Appraisers. "Taxpayers are taking improperly large deductions for facade easements," Mr. Miller told the appraisers. Homeowners who already live in historic districts should not get large tax breaks, he said, because "a taxpayer can't give up a right to change the facade of a building if he or she doesn't hold that right in the first place." In June, a similar warning came from Mark W. Everson, the I.R.S. commissioner, who said that "taxpayers who want to game the system and the charities that assist them will be called to account." An I.R.S. spokesman, Bruce Friedland, declined to say if any easement deductions had been overturned.

Wall Street Journal: Bush Rules Out Higher Payroll Tax for Social Security:

President Bush reaffirmed his opposition to raising payroll taxes to buttress Social Security and create private accounts, as he and his administration continued to lay the groundwork with the public for proposing massive borrowing to cover the costs.

Wall Street Journal: Consultant Leads Secret Double Life as Internet Sleuth:

Ms. MacNab's hobby is roiling the controversial tax-shelter business and the federal agency charged with stopping it. She has proved instrumental in shutting down a variety of illegal tax shelters, from high-end estate-planning techniques to low-end tax-protester scams, according to current and former officials of the Treasury and Justice departments.

By exposing tax-scam artists, she also has revealed Internal Revenue Service shortcomings. Critics say the IRS, known primarily for scrutinizing tax returns, initially was slow to stop the explosive growth of tax shelters and tax protesters fueled by the Internet. Ms. MacNab is "an early-warning device about tax scams," says Sen. Charles Grassley, chairman of the Senate Finance Committee. She "often seems to know about them before the IRS does."

Washington Post: Loophole Pays Off On Upscale Buildings:

Easement donors in D.C. usually write off about 11 percent of the value of their homes. That means owners of a $1.5 million mansion can claim tax breaks of $165,000 or more. Such tax deductions are increasingly common although the District already bars unapproved and historically inaccurate changes in the facades of homes in the city's many historic districts. As a result, easement donors largely are agreeing not to change something that they cannot change anyway.

Washington Post: Why Can't the IRS Do It?:

After years of prodding by the Bush administration and a heap of campaign contributions from debt collection companies, Congress has given the Internal Revenue Service clearance to have private debt collectors go after delinquent taxpayers. The temptation is understandable, but it should have been resisted. The IRS -- if it had the resources -- could recover far more money for the Treasury by doing this work itself. And privatizing tax collection, a quintessentially governmental function, could subject taxpayers to abuse and invasion of privacy, no matter how carefully the IRS oversees the program.

December 13, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Law Profs Criticize Legal Affairs Poll to Determine "Top 20 Legal Thinkers"

Legal_affairs_1Several law profs and others have criticized the Legal Affairs poll to determine the Top 20 Legal Thinkers (blogged here):

      • Brian Leiter: "The list of candidates is--to put the matter gently--absurd, not because there aren't substantial 'legal thinkers' on the list (there are some), but because there are far too many on the list who aren't leading legal thinkers by anyone's lights, and some who aren't even capable of thinking based on any evidence I've seen."
      • Orin Kerr: "The list of nominees is a list of well-known academics, judges, and journalists - not a list of top legal thinkers."
      • Todd Zywicki: Notes "puzzling inclusions and exclusions" on the list.
      • Stuart Buck: "Conclusion: The description of the list's criteria is misleading. Some people may have been chosen by publications and citation rankings, but those can't possibly have been the only criteria. Otherwise, there is no explanation for some of the inclusions or omissions. If you doubt that the list was created by an inexplicable process, consider that among the writers/commentators listed as candidates for 'Top 20 Legal Thinkers in America' are John Grisham and Scott Turow. Mildly entertaining novelists? Yes. Top legal thinkers? Come on. Quod erat demonstrandum."

December 13, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

Sunday, December 12, 2004

Top 5 Tax Paper Downloads

SSRN LogoThe Top 5 Tax Paper Downloads on SSRN are the same as last week's:   


1.  The Coming Accounting Revolution: Offshore Outsourcing of Tax Return Preparation, by Jesse Robertson (Alabama, School of Accountancy), Dan Stone (Kentucky, School of Accountancy), Liza Niederwanger (Deloitte & Touche LLP), Matthew Grocki (Kentucky, School of Accountancy), Erica Martin (Crowe Chizek & Co.) & Ed Smith (Kentucky, School of Accountancy)

2.  Book versus Taxable Income, by Frank Heflin (Northwestern, Kellogg School of Management) & William Kross (Purdue, Krannert School of Management). 

3.  Tax Planning, Imbalance and Production, by Yoram Margalioth (Tel Aviv University), Eyal Sulganik (Interdisciplinary Center Herzliyah, Arison School of Business), Rafael Eldor (Interdisciplinary Center Herzliyah, Arison School of Business) & Yoseph Edrey (University of Haifa)

4.  Comments on Assessing the Bush Administration's Tax Agenda, by Linda Sugin (Fordham)

5.  The Matthew Effect and Federal Taxation, by Martin McMahon (Florida)

December 12, 2004 in Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)