Friday, July 22, 2005
Thomas A. Kelley (North Carolina) has published Rediscovering Vulgar Charity: A Historical Analysis of America's Tangled Nonprofit Law, 73 Fordham L. Rev. 2437 (2005). Here is the abstract:
Charitable organizations in the United States find themselves in a double bind these days. On one hand, our free-market American culture expects them to be entrepreneurial and bottom-line oriented, adopting many of the methods and practices of commercial enterprises. On the other hand, courts and governmental agencies, the IRS in particular, threaten and punish charities when they become too commercial. Charities live in fear of being ensnared by confusing and contradictory legal doctrines such as the operational test, the commerciality doctrine, the unrelated business income tax, and the commensurate in scope doctrine. This paper takes a historical approach to explaining why we find ourselves in this vexing bind, then proposes in broad outline a possible legislative fix.
For the first time in its 68-year history, the Tax Foundation has filed an amicus brief with the U.S. Supreme Court, requesting that the Court grant certiorari in Cuno v. DaimlerChrysler, 386 F.3d 738 (6th Cir. 2004) (previously blogged here, here, here, here, and here). Here is the Executive Summary:
The Supreme Court’s guidance is needed to prevent immediate and permanent harm to commerce, particularly in Sixth Circuit states. The Court should grant certiorari because the Sixth Circuit’s ruling imperils the ability of the states—especially those in the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee)—to compete for investment. This case involves an important issue of federalism: It affects the balance of authority between the federal and state governments. The Sixth Circuit has severely limited states’ autonomy in adopting their own competitive tax policies. Accordingly, this is exactly the kind of case the Supreme Court needs to decide.
The Supreme Court should also grant certiorari to provide needed clarity to its own decisions on the limitations imposed by the Commerce Clause on state tax authority. The Supreme Court’s own sweeping language in several of its past opinions serves, in part, as the basis for the lawsuit in this case. In fact, certain statements made by the Supreme Court in the past, if taken literally, could serve as the basis for even more lawsuits in the future against other state tax and spending programs. The Supreme Court’s review of this case is needed to clarify the standards for discrimination under the Commerce Clause.
Finally, the Supreme Court should grant certiorari to emphasize an important point: the Commerce Clause does not require a state to be more generous to out-of-state taxpayers than in-state taxpayers. The Sixth Circuit’s focus on pre-existing tax liability and coercion would turn the Commerce Clause on its head and require Ohio to give investment tax credits only when an investor first comes to Ohio from another state, a ruling that cannot be squared with the Supreme Court’s rulings that the Commerce Clause requires fair, not special, treatment of interstate commerce.
Sagit Leviner (SJD Candidate, Michigan) has posted The Vision of a Good Society and the Tax System (or Tax Justice Revisited) on SSRN. The paper won first prize in the 2003 Tannenwald Writing Competition sponsored by the Theodore Tannenwald, Jr. Foundation for Excellence in Tax Scholarship and the American College of Tax Counsel. Here is the abstract:
This paper presents two rationales, one deontological and the other consequential, which, jointly and separately, justify redistributive taxation and the resulting imposition of a greater tax burden on the wealthy. Both rationales are based on a community-oriented rather than an individual-focused view of modern society and are drawn from an analysis of the roles that individual and collective rights and responsibilities ought to play in contemporary tax policy-making.
Kathleen Pakenham, Danielle M. Smith & Tricia Marlar (all of White & Case, New York) have published IRS Releases Tax Shelter Audit Technique Guide, 108 Tax Notes 337 (July 18, 2005), also available on the Tax Analysts web site as Doc 2005-14209, 2005 TNT 138-32. Here is the abstract:
In May 2005, the IRS released an audit technique guide (ATG) developed to help field personnel identify abusive tax shelters and transactions that it has been using internally for some time. The guide's goal is to cover all types of transactions and serve as a reference for IRS agents. Based on previous IRS papers, documents, and guides, the authors believe the ATG provides a useful and comprehensive overview of tax shelters, their history, and efforts to combat them. The guide also analyzes the characteristics of listed transactions (transactions that the IRS has determined to be abusive tax shelters) and abusive arrangements that are not listed. The guide discusses relevant judicial doctrines and describes resources that are available to field personnel and investigatory tools that are at their disposal. The guide also sets out what factors should guide IRS agents in developing tax shelter abuse cases and provides a brief overview of various appeals procedures taxpayers may use to resolve disputes.
ABA Tax Section Submits Comments to IRS on Notice 2005-14 and § 199, Income Attributable to Domestic Production Activities
The ABA Tax Section has submitted comments to the IRS on Notice 2005-14 and § 199, Income Attributable to Domestic Production Activities
The Government Accountability Office has released Tax Administration: IRS Can Improve Its Productivity Measures by Using Alternative Methods (GAO-05-671) (28 pages). From the 1-page highlights:
GAO recommends that the Commissioner of Internal Revenue put in place a plan for introducing wider use of alternative methods of measuring productivity, such as those illustrated in this report, taking account of the costs of implementing the new methods. The Commissioner of Internal Revenue agreed with our recommendation and assigned responsibility for considering alternative methods of measuring productivity.
Thursday, July 21, 2005
Unlike the income of privately owned for-profit companies, income earned by nonprofit organizations, cooperatives, and business enterprises run by state or local governments is generally not subject to federal income taxes—either at the corporate or at the individual level. Critics argue that such differential tax treatment gives those untaxed entities, which frequently resemble private businesses, an unfair advantage over their for-profit competitors. This Congressional Budget Office (CBO) paper describes the entities that make up the untaxed business sector and examines the potential effects on federal revenue and the U.S. economy from taxing their income. It expands on the analysis that CBO presented in testimony before the House Ways and Means Committee on April 20, 2005.
Michael J. Brunetti (ERS Group, San Francisco) has published The Estate Tax and Charitable Bequests: Elasticity Estimates Using Probate Records, 58 National Tax Journal 165-88 (June 2005). Here is the abstract:
This paper uses data from San Francisco probate records and cross–year variation in tax rates to estimate the effect of the estate tax on charitable bequests. Identification of the tax price does not require strong assumptions about the marital deduction or functional form, both of which can bias the price elasticity estimate. Estate and inheritance taxes are found to be significantly related to charitable bequests for both filers and non–filers of the federal estate tax return. These results hold whether the tax price is based on the date–of–will tax schedule, the date–of–death tax schedule, or expectations about future tax rates.
- Circular 230 and Other Recent Tax Shelter Developments, by Jeffrey H. Paravano (Baker & Hostetler, Washington, D.C.)
- Proposed Net Value Regulations, by Michael J. Kliegman (PricewaterhouseCoopers, New York)
- Recent Proposed Regulations on Partnership Equity for Services, by Eric Sloan (Deloitte, New York)
Gene Steuerle (Urban Institute) has published Estate Tax Reform -- A Third Option, 108 Tax Notes 343 (July 18, 2005), also available on the Tax Analysts web site as Doc 2005-14878, 2005 TNT 138-33. Here is the opening:
Several pressures are combining to force lawmakers to seek a more permanent resolution to the estate tax issue. This article suggests a possible compromise that would enhance the ability of wealthy individuals to avoid paying tax to government and still pass on significant assets to their heirs -- but only if they make substantial contributions to charity. The compromise is not perfect, but it gives some heed to arguments on both sides of this debate -- limiting the government's access to the assets of those who die with a great deal of wealth while still recognizing their simultaneous obligation to the society that made those accruals possible.
The Subcommittee on Long-Term Growth and Debt Reduction of the Senate Finance Committee holds a public hearing today on Updating Depreciable Lives: Is There Salvage Value in the Current System? Here are the witnesses scheduled to appear:
- Joseph M. Mikrut (Capitol Tax Partners, Washington, D.C.)
- Thomas S. Neubig (National Director, Quantitative Economics and Statistics, Ernst & Young LLP, Washington, D.C.)
- Jane Gravelle (Senior Specialist in Economic Policy, Congressional Research Service, Library of Congress, Washington, D.C.)
- Kenneth D. Simonson (Chief Economist, Associated General Contractors of America, Alexandria, VA)
- Christopher R. Anderson (President, Massachusetts High Technology Council, Inc., Waltham, MA)
The hearing will be held beginning at 2:30 pm in 215 Dirksen Senate Office Building.
In connection with the hearing, the Joint Committee on Taxation has issued Present Law And Legislative Background Relating To Depreciation And Section 179 Expensing (JCX-54-05):
This document, prepared by the staff of the Joint Committee on Taxation, provides a description of present law and legislative background relating to depreciation and section 179 expensing of tangible property used in a trade or business. This pamphlet does not address other cost-recovery concepts, such as amortization of intangible assets.
Eric D. Chason (William & Mary) presents The Future of Tax Subsidies for Retirement Savings (Mentor: Thomas Metzloff (Duke)) at Session #9 of the Young Scholars Workshop at 4:00 pm today at the Southeastern Association of Law Schools (SEALS) Annual Meeting on Hilton Head, South Carolina.
Wednesday, July 20, 2005
The U.S. District Court for the Northern District of California on Tuesday refused to dismiss Reece Jones' civil RICO claims against the promoters of the CARDS tax shelter. Jones v. Deutsche Bank AG., No. C-04-05357-JW (N.D. Cal. 7/19/05). (Hat Tip: The Tax Prophet)
McDaniel, Repetti & Caron Publish Family Limited Partnership Supplement to Wealth Transfer Taxation Casebook
Paul McDaniel, Jim Repetti, and I have prepared a 2005 Special Supplement on Family Limited Partnerships to accompany our Casebook and companion Study Problems Book on Federal Wealth Transfer Taxation (Foundation Press, 2003). (The 200-page Teacher's Manual provides detailed answers to the 288 problems in the Study Problems Book as well as commentary on the material in the Casebook.)
Here is the Preface from the 2005 Special Supplement:
Given recent developments in the important area of family limited partnerships, we are making this material available for teachers of federal wealth transfer taxation. We will provide additional updates after Congressional action makes the future direction of wealth transfer taxation more certain.
The hearing will focus on evidence of negligent and fraudulent return preparation practices by tax professionals and the statutory and regulatory structure that sets the boundaries for Federal tax practice.
The hearing will take place in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 3:00 pm.
|Form 990 - Balance Sheet and Income Statement Items|
|Classified by:||Size of Total Assets|
|Reporting Years:||2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1989 1988|
|Form 990 - Functional Expenses|
|Classified by:||Size of Contributions Received|
|Reporting Years:||1996 1989 1988|
|Form 990-EZ - Balance Sheet and Income Statement Items|
|Classified by:||Size of Total Assets|
501(c)(3) through 501(c)(9) Organizations:
|Form 990 - Balance Sheet and Income Statement Items|
|Classified by:||Internal Revenue Code Section|
|Reporting Years:||2002 2001 2000 1999 1998 1997 1995 1994 1993 1992 1991 1990 1989 1988|
|Form 990 - Functional Expenses|
|Classified by:||Internal Revenue Code Section|
|Reporting Years:||2002 2001 2000 1999 1998 1997 1995 1994 1993 1992 1991 1989 1988|
|Form 990-EZ - Balance Sheet and Income Statement Items|
|Classified by:||Internal Revenue Code Section|
|Reporting Years:||2002 2001 2000 1999 1998 1997 1995 1994 1993 1992 1991 1990 1989|
- PowerPoint Presentation by Chairman Mack
- Staff PowerPoint Presentation on Complexity and Stability
- Staff PowerPoint Presentation on Distribution Tables
- Staff PowerPoint Presentation on Revenue Neutrality
- Staff PowerPoint Presentation on Alternative Minimum Tax
- Staff PowerPoint Presentation on Understanding Tax Bases
- Staff Fact Sheet on the Benefits of Tax Reform
Bryan T. Camp (Texas Tech) has published Between a Rock and a Hard Place, 108 Tax Notes 359 (July 18, 2005) also available on the Tax Analysts web site as Doc 2005-14239, 2005 TNT 138-30. Here is the Introduction:
Today's column discusses the Tax Court's jurisdiction to hear stand-alone petitions from taxpayers who have been denied equitable relief under § 6015(f), one of the three spousal relief provisions contained in § 6015. Congress enacted § 6015 in the IRS Restructuring and Reform Act of 1998 (RRA 98) to replace the old "innocent spouse" provisions in § 6013(e). My prior columns have focused on how RRA 98 inserted inappropriate adversarial process checks on the traditional inquisitorial process of tax collection (using the collection "delay" process provisions in §§ 6320 and 6330 as a prime example). The jurisdictional controversy over § 6015(f) reveals a different problem: how Congress pinned the Tax Court between the rock of sovereign immunity and the hard place of doing equity. Thus caught between the commands of the head and the demands of the heart -- to use historian Perry Miller's famous dichotomy -- the Tax Court has made the wrong choice. This column explains why.
The Panel has held nine meetings where witnesses testified about problems with the current tax system and various options for reform. At this meeting, Panel members will discuss issues associated with reform.
Although there is no web cast available for this meeting, interested observers can participate via conference call at 866-341-2255 or 202-927-2255; the participant pin number is #65560.
Leandra Lederman (Indiana) serves as a panelist on Roundtable Discussion on the Hows and Whys of Empirical Legal Scholarship at 3:15 pm today at the Southeastern Association of Law Schools (SEALS) Annual Meeting on Hilton Head, South Carolina.
Tuesday, July 19, 2005
SSRN has updated its new monthly rankings of 200 American and international law school faculties and 1,000 American law professors by (among other things) the number of downloads of their papers from the SSRN data base. Here is the new list (through July 1, 2005) of the Top 25 Tax Faculty in two of the SSRN categories: all-time downloads and new downloads (within the past 12 months):
Top 25 Tax Faculty SSRN Rankings
Tax Faculty (School)
Louis Kaplow (Harvard)
Edward McCaffery (USC)
David Schizer (Columbia)
David Walker (BU)
David Weisbach (Chicago)
Steven Bank (UCLA)
Victor Fleischer (UCLA)
Paul Caron (Cincinnati)
Reuven Avi-Yonah (Michigan)
Terrence Chorvat (George Mason)
Daniel Shaviro (NYU)
Sam Thompson (UCLA)
Elizabeth Garrett (USC)
Richard Kaplan (Illinois)
Barbara Fried (Stanford)
William Bradford (Princeton-NYU)
Jeff Strnad (Stanford)
Calvin Johnson (Texas)
Kyle Logue (Michigan)
Michael Asimow (UCLA)
Theodore Seto (Loyola-L.A.)
Joseph Bankman (Stanford)
Leandra Lederman (Indiana)
Kirk Stark (UCLA)
Herwig Schlunk (Vanderbilt)
Anthony Infanti (Pittsburgh)
Jim Repetti (Boston College)
Michael Knoll (Pennsylvania)
Linda Sugin (Fordham)
Note that this ranking includes tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.
The other SSRN ranking categories are:
These rankings, of course, are imperfect measures of faculty scholarly performance -- as are the existing ranking methodologies of reputation surveys, productivity counts, and citation counts. Our modest claim in our piece for the Indiana Symposium on The Next Generation of Law School Rankings is that the SSRN data can play a role in faculty rankings along with these other measures.
The American Family Business Institute has released a study, Learning from History: JCT’s Static Score Can Not Determine the Real Revenue Effect of Repealing the Estate Tax. Here is the summary:
The Joint Committee on Taxation (JCT) scores on repeal of the federal Estate Tax have wildly overestimated the cost of repeal in the past just as they have overestimated the cost of other tax cuts. JCT’s new score of estate tax repeats their past mistakes and inflates the cost of repeal by at least $140 billion.
Lee A. Sheppard (Contributing Editor, Tax Analysts) has published The ECJ's Common Sense in the D Case, 108 Tax Notes 282 (July 18, 2005), also available on the Tax Analysts web site as Doc 2005-14935, 2005 TNT 137-4. The article discusses questions of individual cross-border taxation in the European Union.
The two-day 2005 Tax History Conference, Historical Perspectives on Tax Law and Policy, concludes today at UCLA. The conference is sponsored by UCLA School of Law, University of Cambridge Centre for Tax Law, and Tax Analysts' Tax History Project. Here is today's Schedule of Speakers and Commentators:
9:00 am - 10:30 am
- Eric Zolt (UCLA), Inequality and Taxation: Evidence from the Americas On How Inequality May Influence Tax Institutions
- Commentary: Florian Schui (St. Edmund's College, Cambridge)
- Neil Rollings (University of Glasgow), Purchase Tax or Value-added Tax: British Industry, Indirect Taxation and European Integration in the 1960s
- Commentary: Janette Rutterford (Open University Business School)
10:45 am - 12:15 pm
- Ethan Stone (Iowa), Adhering to the Old Line: Uncovering the History and Political Function of the Unrelated Business Income Tax
- Commentary: Reuven Avi-Yonah (Michigan)
- Marjorie Kornhauser (Tulane), The Rise and Fall of Publicity of Income Tax Information in the 1930s
- Commentary: Birger Nerré (University of Hamburg)
1:30 pm - 3:45 pm
- Ajay Mehrotra (Indiana-Bloomington), Taxes, Mergers and Historical Materialism: The Great Transformation in the Corporate Reorganization Provisions
- Commentary: Dennis Ventry (O'Melveny & Myers)
- Susan Murnane (Case Western), The Dead Hand of the Past: Reflections on Andrew Mellon’s Unsuccessful Attempt to Repeal Estate Taxes in the 1920s
- Commentary: W. Elliot Brownlee (UC-Santa Barbara)
- Rebecca Rix (Yale), The Taxing Power, My Dear, the Taxing Power: Progressive-Era Democracy, Citizenship, and State Formation
- Commentary: Robin Einhorn (UC-Berkeley)
In the last twenty years, the number of nonprofit organizations has exploded; there are more than 1.2 million organizations registered with the IRS. Donations and government grants have decreased, while at the same time, nonprofits are facing increasing demands on their services. As a result, nonprofit organizations have been forced to devise new strategies for acquiring funds. Some nonprofit organizations have resorted to renting their mailing lists to businesses and other nonprofit organizations and have licensed their names and logos to be displayed on affinity credit cards offered by banks to consumers. Nonprofit organizations have argued that these funds are not subject to the unrelated business income tax and consider them to be exempt as royalties. The IRS, and initially the courts, disagreed.
The Richard Musgrave Prize is presented each year to the author or authors of the most outstanding paper published in the National Tax Journal. The work of Richard Musgrave was characterized throughout his luminous career by a powerful blend of analytic clarity, insight drawn from the historical record across the globe, and respect for the importance of administration. With this award, the National Tax Association recognizes his contributions to public policy theory, research, and practice.
Winners are selected on the basis of the degree to which their research exemplifies the attributes of Professor Musgrave's work -- strong analytic underpinnings, rigorous argument buttressed by empirical evidence, respect for the historical and institutional factors, and policy relevance. Each refereed article published in the National Tax Journal is automatically nominated, with the winning selection determined by the Editor and the Editorial Advisory board. The Musgrave Prize winner for each year is announced in the June issue of the National Tax Journal in the subsequent year.
Monday, July 18, 2005
The Fifth Circuit on Friday affirmed the Tax Court's decision in Strangi II, holding that the taxpayer retained enjoyment of property transferred to a family limited partnership within the meaning of § 2036(a) and did not qualify for the "bona fide sale" exception.
- Strangi I, 115 T.C. 478 (2000)
- Strangi I, 293 F.3d 279 (5th Cir. 2002)
- Strangi II, T.C. Memo 2003-145
- Strangi II, No. 03-60992 (5th Cir. 7/15/05)
The ABA Commission on Women in the Profession has announced that long-time tax lawyer Loretta Collins Argrett is the winner of a 2005 Margaret Brent Women Lawyers of Achievement Award. The award will be presented at the Women’s Commission’s 15th Annual Margaret Brent Award Luncheon in Chicago on Sunday, August 7, 2005, in conjunction with the ABA annual meeting. The luncheon’s Special Award Honoree is Hillary Rodham Clinton (D-NY), the first chair of the Commission (1988).
The ABA Tax Section notes that "Ms. Argrett’s life story is an inspiration, and she is a role model for lawyers, particularly women lawyers and tax lawyers, everywhere." Here is part of her life story:
Loretta Collins Argrett grew up in a segregated Mississippi of the 1940s and early 1950s, where racism was rampant. Nevertheless, her family taught her that an African American woman from the south could succeed if she worked hard, obtained an education, and believed in herself. In 1954, the year that the U.S. Supreme Court issued the Brown vs. Board of Education decision, Ms. Argrett left home at the age of 16 to enter Howard University, from which she graduated with a B.S. degree in chemistry, with honors. After completing a chemistry fellowship in Switzerland, she worked as a research chemist for several years. Because of her extensive involvement in community activities, she decided that the best way to improve the economic status of minority and disadvantaged communities was to become a lawyer.
At the age of thirty-five with a husband and two young children, the family moved to New England so that Ms. Argrett could enroll at the Harvard Law School. She chose to focus on tax law at a time when few women and almost no African Americans specialized in that area. She believed she could help increase opportunities for minority-owned businesses by providing advice on tax planning.
The Tax Foundation has published a new Fiscal Fact, Tax Reform and Revenue Neutrality: President's Panel Should Avoid the Redistribution of 1986, warning panel members not to repeat several mistakes made during the last major tax reform effort:
The Tax Reform Act of 1986 substantially reduced income tax rates and broadened tax bases. However, it also increased the tax burden on corporate taxpayers in an effort to fund reductions in the tax burden on individual taxpayers. As the President and Congress consider options for reforming the tax code, they should avoid the temptation to use revenue neutrality as an excuse to redistribute the tax burden among Americans as was done during the 1986 reform.
The two-day 2005 Tax History Conference, Historical Perspectives on Tax Law and Policy, kicks off today at UCLA. The conference is sponsored by UCLA School of Law, University of Cambridge Centre for Tax Law, and Tax Analysts' Tax History Project. Here is today's Schedule of Speakers and Commentators:
9:15 am - 10:45 am
- Charlotte Crane (Northwestern), Why Don’t We Know What “Direct Taxes” Are?: Hylton v. United States and the Federalist Vision of the Federal Taxing Power
- Commentary: Susan Murnane (Case Western)
- Robin Einhorn (UC-Berkeley), Democracy, Slavery and Taxation: American Tax Systems in the Colonial and Revolutionary Eras
- Commentary: Rebecca Rix (Yale)
11:00 am - 12:30 pm
- Reuven Avi -Yonah (Michigan), Four Stages of United States International Taxation
- Commentary: Neil Rollings (University of Glasgow)
- Janette Rutterford (Open University Business School), Gross or Net? The Role of Taxation in the History of Equity Valuation
- Commentary: Ethan Stone (Iowa)
1:45 pm - 3:15 pm
- Dennis Ventry (O'Melveny & Myers), Tax Shelters: Career of a Concept
- Commentary: Ajay Mehrotra (Indiana-Bloomington)
- Assaf Likhovski (Tel Aviv University), Tax Compliance and Modernity or Is Michel Foucault Relevant to the History of Taxation?
- Commentary: Eric Zolt (UCLA)
3:30 pm - 5:45 pm
- Florian Schui (St. Edmund's College, Cambridge), International Exchanges of Ideas About Taxation: French Advisors, Experts, and Ideas in the Prussian "Régie" Tax Administration, 1766-1786
- Commentary: Charlotte Crane
- Birger Nerré (University of Hamburg), The Japanese Post-War Tax Culture Shock Reconsidered
- Commentary: Assaf Likhovski (Tel Aviv University)
- W. Elliot Brownlee (UC-Santa Barbara), The Shoup Mission: Globalization, Tax Experts, and the Shaping of Taxation in Japan Since 1940
- Commentary: Marjorie Kornhauser (Tulane)
Brant J. Hellwig (South Carolina) & Gregg D. Polsky (Minnesota) have published Litigation Expenses and the Alternative Minimum Tax, 6 Fla. Tax Rev. 811 (2004), also available on the Tax Analysts web site as Doc 2005-14863, 2005 TNT 135-4. Here is the abstract:
In this article, Professors Hellwig and Polsky take a comprehensive look at the wide range of both tax and non-tax issues regarding the tax treatment of litigation expenses under the alternative minimum tax (AMT). The article first discusses the pronounced circuit court split that led to the Supreme Court granting the government’s petition for certiorari in Commissioner v. Banks and Commmissioner v. Banaitis. Written before the Supreme Court issued its decision in these cases, the article next previews the Court’s opinion and, in the process, addresses some of the alternative arguments raised by the taxpayers and their amici that were ultimately not considered by the Court on procedural grounds. The article then analyzes some of the non-tax issues that have resulted from the harsh treatment of certain plaintiffs’ litigation expenses under the AMT, including the ethical implications for attorneys and the potential shifting of the tax burden to the defendant via a grossed up award. Finally, the article examines the series of proposed legislative amendments designed to correct the AMT problem, culminating in the Appendix with a discussion of the corrective legislation enacted as part of the American Jobs Creation Act of 2004.
Guest blogger Darryll Jones reports that Charlene Davis Luke (Florida State) presented 2005 Ullman Annual Year in Review at the Florida Bar Association Tax Section's Annual Organization Meeting on Amelia Island Plantation. Other items of interest on the Tax Section's web site include:
- Circular 230: Its Impact on Tax Practitioners and How They May Increase Compliance with its Terms, PowerPoint presentation by Jonathan G. Blattmachr (Milbank, Tweed, Hadley & McCloy, New York)
- Lawsuit Awards and Settlements, 72-page IRS Report
- Long Range Planning Report
Sunday, July 17, 2005
- Top 5 Tax Paper Downloads
- Tax Presentations at SEALS Annual Meeting
- The Tax Code: "A Model of Clarity and Simplicity"
- Tax Foundation Weighs in Against "Fat Tax"
- Tax Analysts: Sheppard on Tax Treatment of Hedge Fund Investments
- IRS Releases Exempt Organizations Update
1. Travails in Tax: KPMG and the Tax-Shelter Controversy, by Tanina Rostain (New York Law School)
Today's presentations of interest to tax folks at the Southeastern Association of Law Schools (SEALS) Annual Meeting on Hilton Head, South Carolina:
- Barak D. Richman (Duke), A Bridge, a Tax Revolt, and the Struggle to Industrialize: The Story and Legacy of Rockingham County v. Luten Bridge Co., at the Call for Papers, 2:15 pm
- Christopher Pietruszkiewicz (LSU) moderates Session #1 of the Young Scholars Workshop, 4:15 pm
- Eleanor Brown (Regent), Seeing Green: In Support of the Sale of Conservation Easement Tax Credits (Mentor: Anthony Baldwin (Mercer) at Session #2 of the Young Scholars Workshop, 4:15 pm
Something you do not hear every day, from the self-proclaimed "People's Tax Lawyer":
It seems to be a generally accepted belief that our Internal Revenue Code (the Code) is too complex. But this belief has no foundation in reality. The Code is a model of clarity and simplicity for all it is to accomplish....Having spent countless hours poring through the Code and the Regulations, I can tell you that our Code is not too complex. Our Code is clear, simple, and well organized given what it was designed to do. We should not complain about the Code.
The Tax Foundation has weighed in against a "fat tax" (previously blogged here, here, and here), with a post entitled Swatting the Obesity Fly with the Tax Sledgehammer:
One problem with obesity taxes: they're an extraordinarily blunt tool for social policy. A fast food tax, for example, would penalize fit people who enjoy an occasional burger as well as the obese. If the true goal were weight reduction, why not take more direct steps toward that—for example, by putting taxpayers on a scale upon driver's license renewal and assessing a "weight penalty"? As we've written before, the more we ask of the tax system, the more it asks of us. Implementing social policy through the tax code—rather than direct spending programs—leaves the rent-seeking barn door wide open for tax-preferences-seekers of all persuasions.
Lee A. Sheppard (Contributing Editor, Tax Analysts) has published Offshore Investments: Don't Ask, Don't Tell, 108 Tax Notes 171 (July 11, 2005), also available on the Tax Analysts web site as Doc 2005-14577, 2005 TNT 132-4. The article discusses a congressional initiative to investigate the tax treatment of hedge fund investments.
Saturday, July 16, 2005
Edward A. Zelinsky (Cardozo)
- B.A. 1972, Yale
- M.A. 1975, Yale
- J.D. 1975, Yale
- M. Phil. 1978, Yale
Unquestionably, the most interesting part of my current professional life is my ongoing fifteen minutes of second-hand fame from being the father of Jacoba Zelinsky Urist. Jacoba (herself an NYU-educated tax lawyer) is the author of a forthcoming novel about practicing tax law in Manhattan, Six Minutes in the City [Editor's note: blogged here last month.].
Much of the pre-publication speculation has focused on who provided the model for Earl Lewis, the senior partner of the fictional firm at which Jacoba’s protagonist practiced tax law. Of far greater interest, I think, is the protagonist’s father: an irascible, outspoken professor of tax law. This opinionated father is an obviously fictitious character whom Jacoba fashioned wholly out of her imagination.
Robert W. Wood (Robert W. Wood, P.C., San Francisco) has published Will the IRS Pursue Attorney Fees Post-Banks?, also available on the Tax Analysts web site as Doc 2005-14789, 2005 TNT 133-36. Here is the Conclusion:
Although the Supreme Court in Banks resolved the split in the circuits, it didn't answer all extant questions. There will be plenty of plaintiffs going forward who will seek to distinguish Banks. I believe that is true despite the Tax Court's recent Vincent decision. And there will be plenty of plaintiffs who will be watching carefully to see whether the IRS audits pre-Banks settlements and judgments. Perhaps the most egregious cases will be those from Texas, Michigan, and Alabama, where taxpayers relied on good circuit court authority and even on the IRS's own statements that it wasn't examining attorney fees issues in those jurisdictions. There has been no official statement from the IRS whether it will now examine those returns in light of Banks. I suspect some will be examined. For those and other taxpayers, the attorney fee debate is far from over.
From tax-news.com: Israeli Finance Minister Benjamin Netanyahu's tax reforms, which include tax cuts on both corporate and individual income, have cleared their first legislative hurdle in the Knesset. The top rate of income tax will be cut to 42% from 49% by 2010, and the corporate tax will be reduced to 25% from 34%. The value added tax will also be cut by 0.5% to 16.5% in September 2005, and purchase tax on apartments up to NIS550,000 (US$121,500) in value will be withdrawn. Other measures included in the NIS12 billion (US$2.65 billion) package included a 20% flat capital income tax and a new tax on foreign-registered trusts. (Thanks to reader Ben Cunningham for the tip.)
The Statistics of Income Division has released the Individual Income Tax Return Data by State and Size of Income, for Tax Year 2003. These data are from the Spring 2005 issue of the SOI Bulletin, Historical Table 2. See, for example:
Friday, July 15, 2005
The Democratic Staff of the Senate Budget Committee has released Analysis of the FY 2006 OMB Mid-Session Review. Here is the opening:
The Bush administration’s FY 2006 Mid-Session Review shows a short-term fiscal improvement that masks the long-term deterioration in the nation’s budget outlook. It is good news that this year’s deficit is lower than last year’s record. But this is hardly a time for celebration.
After exactly 15 months in operation, TaxProf Blog has crossed the 750,000 visitor mark (which means we average 50,000 visitors per month). The 750,000th visitor came to the site from a home computer in the Netherlands at 11:13 am EST this morning and visited the tax teaching page.
We are grateful to our growing number of regular readers and are thrilled that Brian Leiter will be joining our stable of law professor blogs on August 1:
- AntitrustProf Blog (Shubha Ghosh (SUNY Buffalo))
- Business Law Prof Blog (Dale Oesterle (Ohio State))
- Chinese Law Prof Blog (Donald C. Clarke (George Washington))
- Clinical Law Prof Blog (Pamela R. Metzger (Tulane) & Katherine Maris Mattes (Tulane))
- ContractsProf Blog (Carol Chomsky (Minnesota) & Frank Snyder (Texas-Wesleyan))
- Corporate Compliance Prof Blog (Paul E. McGreal (South Texas))
- CrimProf Blog (Jack Chin (Arizona) & Mark Godsey (Cincinnati))
- Elder Law Prof (Anne Kimberly Dayton (William Mitchell))
- Environmental Law Prof Blog (Susan L. Smith (Willamette)
- Health Law Prof Blog (Betsy Malloy (Cincinnati) & Tom Mayo (SMU))
- LaborProf Blog (Rafael Gely (Cincinnati))
- Law Librarian Blog (Joe Hodnicki (Cincinnati))
- Law School Academic Support Blog (Dennis Tonsing (Roger WIlliams) & Ellen Swain (Vermont))
- Media Law Prof Blog (Cristina Corcos (LSU))
- Sentencing Law & Policy Blog (Douglas Berman (Ohio State))
- TaxProf Blog (Paul Caron (Cincinnati))
- Tech Law Prof Blog (Jonathan Ezor (Touro) & Michelle Zakarin (Touro))
- White Collar Crime Prof Blog (Peter Henning (Wayne State) & Ellen Podgor (Georgia State))
- Wills, Trusts & Estates Prof Blog (Gerry Beyer (Texas Tech))
LexisNexis is supporting our effort to expand the network into other areas of law. Please email us if you would be interested in finding out more about starting a blog as part of our network.
Individuals who filed Form 4868 by April 15 to extend the time for filing their Form 1040s [blogged here] are not required to file their returns today; the extensions are good for four months, meaning that the returns are due August 15 (unless an additional two-month extension is obtained through October 15 by filing Form 2688).
However, other extended tax returns are due today because those extensions obtained by filing Form 8736 are good for only three months (unless an additional three-month extension is obtained through October 15 by filing Form 8800):
- Partnerships (Form 1065)
- Trusts (Form 1041)
- Mayor Pleads Guilty to Tax Charges, White Collar Crime Blog [Ellen Podgor]
- 3rd Circuit Upholds Injunction Against "Professional Tax Protester" [discussing U.S. v. Bell, blogged here on Wednesday], law.com [Shannon Duffy]
- Elmo Would Be Tickled [discussing E.J. Harrison & Sons, Inc. v. Commissioner, No. 03-73806 (9th Cir. 7/13/05)], Tax & Business Law Commentary [Stuart Levine]
- A Tax Dirt Book. Really. [discussing History of IRS Criminal Investigations, blogged here on Tuesday], Mauled Again [Jim Maule]
- Thank Goodness for Honest Men [Douglas Holtz-Eakin (head of Congressional Budget Office) and George Yin (head of Joint Committee on Taxation)], Start Making Sense [Dan Shaviro]
- Tax Wiki [blogged here last month], Death and Taxes Blog [Joel Schoenmeyer]
- The Structure of Tax Revolutions [applying Thomas Kuhn’s The Structure of Scientific Revolutions to tax law and predicting "a tax revolution that will result in a new consumption-based tax regime"], Everything Tax Law [Kreig Mitchell]
Ethan Yale (Georgetown) has published Reexamining Black & Decker's Contingent Liability Tax Shelter, 108 Tax Notes 223 (July 11, 2005), also available on the Tax Analysts web site as Doc 2005-13102, 2005 TNT 132-29. Here is the abstract:
In this article, Prof. Yale reviews the contingent liability tax shelter employed by Black & Decker, and critiques the arguments the government has made in its appeal to the Fourth Circuit. He concludes that the government's technical arguments are unpersuasive and demonstrates that if the Fourth Circuit accepts them, it might result in unintended consequences in run-of-the-mill transactions. Yale suggests a different strategy the government should pursue when challenging contingent liability tax shelters, a strategy that would prevent taxpayers from enjoying an undeserved tax windfall in abusive cases without distorting the language of the code.
The Americans for Prosperity Foundation has issued a report, Grading the States’ Tax and Expenditure Limits, which grades states on how well their tax-and-expenditure limits restrain the growth of state government spending and provide relief for their taxpayers. 20 states received "F" grades (including Illinois, New York, Ohio, and Pennsylvania) and 16 states received "D" grades (jncluding New Jersey and Texas). The 10 states with the highest grades are:
Grading the States’ Tax and Expenditure Limits
In January 1969, Treasury Secretary Joseph W. Barr informed Congress that 155 individual taxpayers with incomes exceeding $200,000 had paid no federal income tax in 1966. The news created a political firestorm. In 1969, members of Congress received more constituent letters about the 155 taxpayers than about the Vietnam war. Later that year, Congress created a minimum tax to prevent wealthy individuals from taking advantage of tax laws to eliminate their federal income tax liability.
Both the original minimum tax and its successor, the individual AMT, have applied in the past to a small minority of high-income households. But barring a change in law, this "class tax" will soon be a "mass tax." Current projections show the number of AMT taxpayers skyrocketing from one million in 1999 to almost 31 million in 2010. Without reform, virtually all upper-middle-class families with two or more children will be paying the AMT by decade's end. The AMT is notoriously complex, and its record on fairness and efficiency is mixed at best. But because of its widening reach, fixing the AMT will be expensive. By the end of the decade, repealing the AMT will cost more than repealing the regular income tax. This paper explains how a tax originally designed to target 155 taxpayers could grow to cover 31 million, discusses economic issues related to the alternative minimum tax, and examines options for reform.