TaxProf Blog

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

Friday, November 25, 2005

Tax Hall of Shame

Wisconsin_1 Effective January 1, 2006, 2005 Wisconsin Act 25 requires the Wisconsin Department of Revenue to post information about delinquent taxpayers on the Internet if they owe:

      • more than $25,000, including tax, interest, penalty, fees, and costs,
      • and the amount is unpaid more than 90 days after all appeal rights have expired.

The Department mailed warning letters on November 7, 2005 to accounts that qualify for Internet posting. The Department will not post the accounts of taxpayers who have: entered into a valid installment agreement, submitted a complete Petition for Compromise, or filed for bankruptcy.

November 25, 2005 in News | Permalink | Comments (0) | TrackBack (0)

IRS Office of Chief Counsel Seeks Director of Legal Processing Division

Irs_logo_148 The IRS's Office of Chief Counsel is seeking to fill the position of Director of its Legal Processing Division.

Major Duties: The Director of the Legal Processing Division is responsible for the management of the division and responsible for formulating policies and procedures that are necessary to the smooth running of the division. The Director oversees the work performed in the Division and is directly responsible for the legal, administrative and technical expertise, guidance and processes relative to the Office of Chief Counsel?s legal programs. These program areas includes, but are not limited to, support for the guidance priority program, Freedom of Information Act, coordination and processing of documents to be released in connection with litigation, and having frequent communication with other Federal agencies, such as the U.S. Tax Court, Clerk of the Tax Court, IRS, Treasury, etc.

Salary: $103,947 - $135,136.

Application Deadline:  November 25, 2005.

For more information and to apply, see here.

November 25, 2005 in IRS News | Permalink | Comments (0) | TrackBack (0)

CRS Releases Report on Income and Poverty Among Older Americans in 2004

Crs_logo_2 The Congressional Research Service has released Income and Poverty Among Older Americans in 2004 (RL32697) (Nov. 2005) (23 pages).  Here is the Summary:

Older Americans are an economically diverse group. In 2004, the median income of individuals age 65 and over was $15,199, but incomes varied widely around this average. Twenty-eight percent of Americans 65 or older had incomes of less than $10,000 in 2004, while 10% had incomes of $50,000 or more. As Congress considers reforms to Social Security and the laws governing pensions and retirement savings plans, it may be helpful to consider how changes to one income source would affect each of the others, and thus the total income of older Americans.

Continue reading

November 25, 2005 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

McLure on The Nuttiness of State Tax Policy

Mclure_1 Ntj_logo_1Charles E. McLure Jr. (Hoover Institution, Stanford) has published Understanding the Nuttiness of State Tax Policy: When States Have Both Too Much Sovereignty and Not Enough, 58 National Tax Journal 565-73 (Sept. 2005). Here is the abstract:

Much of this nuttiness, the part related to lack of uniformity and consistency across states, the legal inability to implement policies that would make good sense, and the part that involves state beggar–thy–neighbor tax policies, such as sales–only apportionment and the failure to require combination of unitary businesses, is rooted in our system of government. As my title says, the individual states have both too much sovereignty over tax policy and not enough. I will use the lack of coordination of corporate income taxes and of sales and use taxes to illustrate the problem. For this purpose I will use the term "coordination" to refer to uniformity of tax bases and administrative procedures and cooperation in administration, but not to harmonization of tax rates, which should be under state control and not necessarily uniform.

November 25, 2005 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Pressure Mounts on Tax Court in Kanter, Ballard, and Lisle Cases

Stratton Tax_analysts_logo_33 Sheryl Stratton has published an interesting news report, Pressure Mounts on Tax Court in Kanter, Ballard, and Lisle Cases, also available on the Tax Analysts web site as Doc 2005-23891, 2005 TNT 226-1.  Here is the opening:

On November 22, another circuit court of appeals ordered the Tax Court to reinstate the trial judge's original report finding no fraud in the cases against tax attorney Burton Kanter and two insurance executives, Claude Ballard and Robert Lisle.

The pressure is now on the Tax Court to consolidate the cases of the estates of Kanter and Lisle, both now deceased, with Ballard's case, and to address the merits of the original report submitted by Tax Court Special Trial Judge D. Irvin Couvillion, who presided over the five-week trial in 1994, which cleared Kanter, Ballard, and Lisle of fraud charges and income tax liability on an alleged kickback scheme.

And the pressure is mounting on the IRS to stop trying to collect amounts assessed against Kanter based on an opinion that has now been vacated by two circuit courts of appeal.

In the Tax Court's published opinion in Investment Research Associates Ltd. v. Commissioner, T.C. Memo. 1999-407, Tax Court Senior Judge Howard A. Dawson Jr., "adopting the opinion of Special Trial Judge D. Irvin Couvillion," held that three men and a corporation had committed fraud in failing to report more than $13 million in income. The Tax Court also upheld substantially all of the IRS's liability determinations and found that the three individuals had intended to evade taxes.

The Tax Court released the original report in June 2005 after the Supreme Court issued its March 2005 decision in the Ballard and Kanter cases, holding that the Tax Court's own Rule 183 required the special trial judge's original report to be included in the record.

November 25, 2005 in News, Tax Analysts | Permalink | Comments (1) | TrackBack (0)

Tax Foundation Questions Desirability of Charitable Deduction

Tax_foundation_11 The Tax Foundation on Wednesday released a new study, Charities and Public Goods: The Case for Reforming the Federal Income Tax Deduction for Charitable Gifts, by Andrew Chamberlain & Mark Sussman.  Here's the description from Tax Policy Blog:

From the perspective of economic efficiency, it turns out it's hard to justify the current size and scope of the federal charitable deduction. Most 501(c)(3) public charities now benefiting from the deduction are neither charitable, in the sense of relying mostly on altruistic gifts, nor are providers of what economists call "public goods."

Here are two charts that tell much of the story. First, the charitable deduction's benefits are highly regressive:

Charity1 [click to enlarge] 



Second, most 501(c)(3)s actually rely mostly on program revenues—e.g., tuition from college students or admission fees at art galleries—and government grants for funding, casting doubt on the notion that they wouldn't be privately provided in the absence of a federal tax subsidy for them:


[click to enlarge] 


For further details, see:

November 25, 2005 in Think Tank Reports | Permalink | Comments (6) | TrackBack (1)

Joint Economic Committee Releases Report on Individuals and the Compliance Costs of Taxation

Us_capitol_9 The Joint Economic Committee has released Individuals and the Compliance Costs of Taxation.  Here is the abstract:

The federal tax code imposes a compliance burden of approximately $83 billion on individuals because of the time requirements of filing. This paper examines how people respond to these costs, given certain constraints. It is commonly believed that complexity: (1) reduces levels of voluntary compliance, either through avoidanceor evasion; (2) increases the difficulty in administering the tax law; and (3) may reduce the perceived level of fairness in the federal tax system.

November 25, 2005 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

Tax History Project: Déjà Vu All Over Again: The Selling of Tax Legislation

Thp_logo_1 The Tax History Project, a public service initiative of Tax Analysts, has posted seven papers on its web site.  We will blog one of these papers each day this week.

Déjà Vu All Over Again: The Selling of Tax Legislation, by Marjorie E. Kornhauser (Tulane):

The specter of tyranny by the majority looms over American democracy, and nowhere more so than in the area of taxation. Since the inception of the income tax, critics have warned of class warfare and of the masses "soaking the rich," thereby shifting most of the burden of paying for government onto a small group of wealthy taxpayers. That tyranny, however, has failed to materialize. Sometimes, however, the reverse occurs: The minority convinces the majority to support tax policies that favor the wealthy and even contradict their own interests, as occurred recently with the temporary repeal of the estate tax.

November 25, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Thursday, November 24, 2005

Texas Supreme Court Holds Property Tax Unconstitutional

The Texas Supreme Court, in Neeley v. West Orange-Grove Consolidated Independent School District, No. 04-1144 (Nov. 22, 2005), held that Texas school districts illegally use property taxes to pay for public education.  The court ordered that the state must find a new way to finance schools by June 1 or classrooms will not open for the fall term.

(Thanks to Dan Marsh for the tip.)

November 24, 2005 in New Cases, Political News | Permalink | Comments (6) | TrackBack (0)

Grossman on When Would the President's Tax Cuts Expire?

Andrew M. Grossman (Heritage Foundation) has published When Would the President's Tax Cuts Expire? on The Heritage Foundation web site.  Here is the opening:

In 2001 and 2003, President George W. Bush proposed and Congress passed a series of tax cuts to reinvigorate the economy and reduce the government’s burden on workers’ paychecks. Because of opposition to these measures from some in Congress, the 2001 and 2003 tax cuts were implemented as temporary measures, all of which will expire by January 1, 2011. In 2004, Congress passed short-term extensions of several cuts, and in 2005, Congress allowed one cut to expire. The uncertainty of the future of the tax cuts has an effect on present-day spending by businesses and individuals, who know that they may have to pay higher taxes in the future.

November 24, 2005 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Savino on Changing the Calculus: Making Tax Shelters Unprofitable

Ntj_logo_1Savino Katarina Olivia Savino (Miller & Chevalier, Washington, D.C.) has published Changing the Calculus: Making Tax Shelters Unprofitable, 58 National Tax Journal 471-82 (Sept. 2005). Here is the abstract:

Tax shelters in the late 1990s gave rise to large tax savings for taxpayers, considerable fees for professionals, and large revenue losses for the government. Discouraging participation in tax shelters requires decreasing the profitability of such participation. This article describes how recent measures deter tax shelters by either decreasing the expected benefits or increasing the expected costs of tax shelters to the various participants. The article also suggests additional measures to further deter tax shelters.

November 24, 2005 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Pinochet Indicted on Tax, Not Murder and Torture, Charges

Add former Chilean dictator Augustus Pinochet to the long line of miscreants arrested on tax charges when authorities have been unable to make a case on more important substantive allegations:

Two days short of his 90th birthday, Gen. Augusto Pinochet was placed under house arrest Wednesday at his Santiago mansion for alleged tax evasion -- not the thousands of deaths and disappearances for which opponents have long tried to have him imprisoned.

November 24, 2005 in Political News | Permalink | Comments (2) | TrackBack (0)

WSJ: IRS to Increase Audits Next Year

Interesting Wall Street Journal article, IRS to Increase Audits Next Year; Stepping Up Crackdown on Tax Shelters, Agency Is Likely to Focus on Trusts, Overseas Accounts, by Tom Herman & Rachel Emma Silverman:

The IRS, intensifying its crackdown on tax dodgers, plans to increase the number of tax audits it conducts next year. The agency will focus more of its resources investigating taxpayers with incomes of $100,000 and above. Agents will also examine more returns of high-income taxpayers in search of what they call abusive shelters, or transactions with no real economic purpose other than dodging taxes. The agency will devote particular attention to abusive transactions involving parking money in offshore accounts.

While IRS officials won't discuss specifics of audit targets, they are expected to focus more on self-employed workers who deal largely in cash. Congress recently raised the IRS budget to $10.68 billion, which includes an increase in money earmarked for enforcement activities.

November 24, 2005 in IRS News | Permalink | Comments (0) | TrackBack (0)

Aprill Corrects NY Times Op-Ed on IRS's Challenge to All Saints Church's Tax Exemption

The New York Times has published several letters to the editor in response to its Tuesday op-ed (Taxing an Unfriendly Church, blogged here) on the IRS's challenge to All Saints Church's tax exemption because of an anti-war sermon delivered the Sunday before the 2004 Presidential election.  One of the letters is by Tax Prof Ellen Aprill (Loyola-L.A.):

You suggest that churches violate the tax law when they express support for federal judicial nominations. That is not the case.

Rightly or wrongly, the Internal Revenue Code provisions applicable to churches and other tax-exempt charities prohibit any intervention in a candidate's campaign for elective office at the risk of losing tax exemption, but they permit attempts to influence the legislature to a certain degree.

While the line between permissible and impermissible political activities of such organizations is often a difficult one to discern, such is not the case for taking a stand on federal judicial nominations. Efforts to influence the Senate in confirming judges fall into this second category and thus do not violate the prohibition regarding participation in election campaigns.

November 24, 2005 in Political News | Permalink | Comments (0) | TrackBack (0)

Government Abandons Prosecution of Arthur Andersen

Arthur_andersen_1 The Department of Justice has abandoned its prosecution of Arthur Andersen, six months after the Supreme Court overturned the firm's conviction on obstruction-of-justice charges related to its work for Enron:

(Thanks to Scott A. Schumacher (Univ. of Washington) for the tip.)

November 24, 2005 in News | Permalink | Comments (0) | TrackBack (0)

Nguyen on Tax Avoidance Through Intellectual Property Holding Companies

Tax_analysts_203 Tnguyen_2 Xuan-Thao N. Nguyen (SMU) has published Holding Intellectual Property, 39 Ga. L. Rev. 1155 (2005), reprinted in 38 State Tax Notes 699 (Nov. 21, 2005), also available on the Tax Analysts web site as Doc 2005-21457, 2005 STT 223-3 (and previously blogged here).  Here is the Introduction:

The collapse of WorldCom, Inc., exposed a complex web of accounting irregularities. Within that web, recent filings by Dick Thornburgh, WorldCom's Bankruptcy Court Examiner, reveal a different type of scheme that involves the holding of intellectual property. Further scrutinizing the scheme reveals that WorldCom and its tax advisors, KPMG Peat Marwick LLP (KPMG), devised a tax avoidance scheme through the creation of an intellectual property holding company (IP holding company). This type of scheme has been widely and quietly utilized in the last twenty years by many corporations with substantial intellectual property.

Continue reading

November 24, 2005 in Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Citizens for Tax Justice Releases Several Tax Reports

Tax History Project: Ideas in Context

ThorndikeThp_logo_1 The Tax History Project, a public service initiative of Tax Analysts, has posted seven papers on its web site.  We will blog one of these papers each day this week.

Ideas in Context, by Joseph J. Thorndike (Director of Tax History Project and Contributing Editor, Tax Analysts):

When it comes to politics, do ideas really matter? Not according to Jonathan Chait, a senior editor for The New Republic. In a July article for the magazine, Chait takes issue with the current Democratic obsession with "new ideas" and says pouring money into think tanks is a waste of time, offering false hope to a dispirited liberal establishment. Worse yet, it distracts Democrats from the hard work of winning elections. In good contrarian fashion, Chait makes a provocative case, insisting that ideas lack the transformative power that Democrats crave. Of course, Chait's argument is its own sort of new idea: When liberals disagree on everything except the need for new ideas, what could be fresher than the case for moribund thinking?

November 24, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Wednesday, November 23, 2005

National Research Council to Rank Doctoral Programs Using Quantitative Data Rather Than Reputation Surveys

Inside Higher Ed reports today that the National Research Council has launched its latest study to assess U.S. research doctorate programs.  Like previous efforts in 1983 and 1995, the new study is designed to:

  • Help universities improve their doctoral programs through benchmarking
  • Benefit the nation’s research capacity by improving the quality of doctoral programs and their students
  • Help students applying to graduate programs to choose programs that will best meet their needs

According to Inside Higher Ed, the new study "has had a makeover since the heavily used and widely respected review was last conducted in 1995. Among the major changes in the ratings system and methodology:

  • Programs will be measured (and probably grouped in bands, rather than listed from No. 1 on down) based on a set of quantitative data rather than scholars’ ratings of their peers.
  • A significant expansion in the number of disciplines to be reviewed, as well as a decision to gather information on (but not rate) a set of “emerging” fields, including such diverse topics as nanoscience, feminist and sexuality studies, and science and technology studies.
  • Universities will have to pay to participate."

There is a lot of discussion of the shift from "soft" reputation surveys to "hard" quantiitative data:

[T]he [1995] study rated doctoral programs primarily based on the views of scholars about which were the best programs in their fields, rather than on more objective and quantifiable data. The NRC’s new methodology (which is still a work in progress, to be refined between now and next spring by a panel of administrators and scholars) aims to resolve both problems. First, the NRC will no longer base its ratings of programs on what Charlotte V. Kuh, who oversees the council’s ratings, calls the “soft” measure of scholars’ opinions. Instead, the NRC will base the ratings on a slew of statistics on such traditional subjects as research funding and faculty publications, and on a new set of data it is collecting about how students are treated and how they perform, including attrition rates and the time it takes students to complete their degrees. ( The questionnaire for institutions also seek statistics that take into account how well programs prepare graduates to teach, among other measures.) One major task awaiting the NRC panel, Kuh said, is to decide how to meld the various statistics into a cohesive rating.

November 23, 2005 in Law School | Permalink | Comments (0) | TrackBack (0)

Peroni Wins Texas Teaching Award

Peroni Robert J. Peroni (Texas) has won the 2006 Texas Exes’ Faculty Teaching Award.  From the Texas Exes' press release:

The Texas Exes Teaching Awards recognize one professor and one TA in each college who have had a positive influence on the educational experience of university students. The purpose of these awards is to promote quality teaching at The University of Texas by publicly recognizing professors who have had a positive influence on the educational experience of university students. These awards are student nominated and student selected. Professors will be presented with a $1000 check...

From the UT press release:

“The SBA Texas Exes Teaching Awards Committee selected Professor Peroni based on the overwhelming number of nominations he received from students,” said Student Bar Association President Ann Hsu. “Having been a student in his Federal Income Tax class, I wholeheartedly agree with the Committee’s decision. Professor Peroni is an engaging speaker who is not only incredibly well-versed in tax law, but is also genuinely interested in the progress of his students by being available as a resource, mentor, and friend,” she said.

“I absolutely love teaching and writing and am very touched to have received this award from the students,” said Professor Peroni. “I am honored to be on a faculty with so many talented teachers and scholars. Of course, nothing that I have achieved in life would have been possible without the dedicated and loving support provided by my wonderful parents—my Dad, Emil Peroni, who sadly passed away earlier this year, and my Mom, Betty Peroni,” he said.

Bob continues the Texas tradition of strong tax teaching:  John Dzienkowski won the 2005 Texas Exes Teaching Awards.

November 23, 2005 in Law School, Tax Profs | Permalink | Comments (0) | TrackBack (0)

New Book: Multilingual Texts and Interpretation of Tax Treaties and EC Tax Law

Treaty_bookIBFD has published the inaugural book in its EC and International Tax Law Series: Multilingual Texts and Interpretation of Tax Treaties and EC Tax Law.  Here is the publisher's summary:

An examination of linguistic issues arising in bilateral income tax conventions. The examination covers tax treaty policies of each country on multilingualism and administrative practice and case law on the issues raised by translation of treaties in more than one official language. Use of legal concepts is also covered in the country surveys, including the use of legal concepts that do not exist in the legal system of one of the two contracting states and the way such concepts should be interpreted in such state (e.g. trust). The subject also includes the use of concepts in one state that are similar but not identical to a treaty concept in the other state (e.g. droit d’auteur vs copyright).

Continue reading

November 23, 2005 in Book Club | Permalink | TrackBack (0)

Beerman on The Permanent Campaign Against Tax Shelters

Ntj_logo_1E. Ray Beerman has published Keeping the Faith:  The Permanent Campaign Against Tax Shelters, 58 National Tax Journal 449-70 (Sept. 2005). Here is the abstract:

This paper provides a narrative of recent government efforts to regain control over tax shelters, while occasionally pointing out how all of the approaches to dealing with tax shelters reflect efforts to answer the same basic, yet fundamental, question––what is a tax shelter? The compulsion to construct the definitive definition of a tax shelter has persisted for decades, and this paper offers some reasons for this persistence, concluding with a bit of speculation on whether the search for that definition ultimately will come to fruition or, rather, result in a permanent campaign against tax shelters.

November 23, 2005 in Scholarship | Permalink | TrackBack (0)

TaxProf Blog Passes 1,000,000 Visitor Mark

Dr_evilAfter a little over 19 months in operation, TaxProf Blog has crossed the 1,000,000 visitor mark. The 1,000,000th visitor came to the site from Southfield, Michigan at 12:21 am EST this morning and visited this page.  We are grateful to our growing number of regular readers and hope you are finding the blog helpful in your tax research, teaching, practice, and policymaking roles.

November 23, 2005 in About This Blog | Permalink | Comments (0) | TrackBack (1)

"Generosity Index" Mirrors Red State-Blue State Divide

As we approach Thanksgiving, the Catalogue for Philanthropy has ranked the fifty states on their relative generosity, comparing each state's average itemized charitable deductions with its average adjusted gross income (based on 2003 IRS data).

The 50-state ranking has a decided Red State-Blue State flavor: 28 of the 29 "most generous" states are Red States that voted for President Bush (including all 25 of the "most generous" states), while 17 of the 21 "least generous" states are Blue States that voted for Senator Kerry (including all 7 of the "least generous" states):

Red State Blue State Map of Generosity

Note the eerie similarity with the 2004 presidential election map:

Blue and Red States by Electorial College

Here are the 12 "most generous" and 12 "least generous" states:

Generosity Rank - State

Having Rank

Giving Rank

Rank Relation

1. Mississippi




2. Arkansas




3. South Dakota




4. Oklahoma




5. Tennessee




6. Alabama




7. Louisiana




8. Utah




9. South Carolina




10. West Virginia




11. Idaho




12. Texas




39. Delaware



- 16

40. Illinois



- 17

41. Michigan



- 19

42. Hawaii



- 19

43. Colorado



- 22

44, Minnesota



- 24

45. Connecticut



- 26

46. Wisconsin



- 26

47. Rhode Island



- 35

48. New Jersey



- 36

49. Massachusetts



- 36

50. New Hampshire



- 40

For media reports on the "Generosity Index," see:

For prior Red State-Blue State tax posts, see:

November 23, 2005 in Think Tank Reports | Permalink | Comments (18) | TrackBack (4)

Raby & Raby on Unexpected Consequences of Stock Options and Restricted Stock

Tax_analysts_72 Burgess J.W. Raby & William L. Raby have published Unexpected Consequences of Stock Options and Restricted Stock, also available on the Tax Analysts web site as Doc 2005-23737, 2005 TNT 224-41.  Here is the Introduction:

Four recent cases illustrate some of the tax traps awaiting employees (and independent contractors) who become instant millionaires when the companies for which they have worked go public and their options or restricted stock are suddenly in the money. After discussing those four, we will offer a few suggestions on the use of stock-related incentives in businesses that are not publicly traded.

November 23, 2005 in Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Tax History Project: What Goes Around, Comes Around

ThorndikeThp_logo_1 The Tax History Project, a public service initiative of Tax Analysts, has posted seven papers on its web site.  We will blog one of these papers each day this week.

What Goes Around, Comes Around, by Joseph J. Thorndike (Director of Tax History Project and Contributing Editor, Tax Analysts):

Eighty-seven years ago, economist Joseph Schumpeter issued a call for the study of tax history. Fiscal systems, he declared, are central to the political and cultural life of a nation: "The spirit of a people, its cultural level, its social structure, the deeds its policy may prepare -- all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else. (Crisis of the Tax State, 1918) Purple prose notwithstanding, fiscal history spent most of the 20th century on the periphery of mainstream historiography. More recently, however, scholars have taken a new interest in the subject, producing a steady stream of articles and monographs on the revenue structures of the modern state. The new tax history has been generally national in scope, reflecting Schumpeter's conviction that taxes can tell us a lot about nations and their political development. While comparative studies are not unknown -- Sven Steinmo published a noteworthy effort more than 10 years ago -- scholars have generally respected the national boundaries that traditionally delineate political history.

November 23, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

National Online Statement of Support of All Saints Church

Declaration of Interdependence is gathering signatures online to support All Saints Church as it faces the the IRS's challenge to tis tax exemption:

The recently disclosed IRS investigation of All Saints Church in Pasadena sounds an alarm for everyone who values religious freedom and respects the importance of a free pulpit.

Rev. Dr. George Regas did not cross the line into impermissible electioneering when he preached at All Saints Church in October of 2004 on the moral issues facing the nation and then illustrated his points by means of an imagined dialogue among Jesus, Sen. John F. Kerry, and President George W. Bush. Dr. Regas said several times during his sermon that he was not urging his hearers to vote for any particular candidate, and he added that people of good faith could vote for either candidate.

We believe that the IRS challenge to All Saints offends settled notions about proper relations between church and state in American society. It also raises important questions about how much latitude IRS field offices have been given to initiate challenges based on second-hand press reports and using murky criteria as to what constitutes electioneering. We respectfully ask the IRS to stop its proceedings against All Saints with no requirement that All Saints make any admission of wrongdoing.

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

November 23, 2005 in Political News | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 22, 2005

NY Times on IRS's Threatened Revocation of All Saints Church's Tax-Exemption

Interesting op-ed in this morning's New York Times:  Taxing an Unfriendly Church:

Shortly before the last election, a former rector at All Saints Episcopal Church in Pasadena, Calif., gave a fiery antipoverty and antiwar sermon. He did not endorse a presidential candidate, but he criticized President Bush's policies in Iraq and at home. Now the IRS has challenged the church's tax-exempt status. It's important to know just how the tax police have chosen this church - and other congregations - to pursue after an election that energized churchgoers of most denominations.

I.R.S. officials have said about 20 churches are being investigated for activities across the political spectrum that could jeopardize their tax status. The agency is barred by law from revealing which churches, but officials have said these targets were chosen by a team of civil servants, not political appointees, at the Treasury Department. The I.R.S. argues that freedom of religion does not grant freedom from taxes if churches engage in politics....

Church leaders have hired lawyers and refused to agree to a settlement that requires them to admit that the sermon was over the line drawn by the IRS. The Rev. J. Edwin Bacon, the rector of All Saints, told parishioners that the church would continue to resist the government's efforts. That sounds right. With the feverish courting of religious voters these days, the IRS does have the daunting task of separating politics from church policy. Still, it would seem to be hard to justify picking on a church that has a long record of opposition to wars waged by leaders from both parties.

For prior TaxProf Blog coverage, see here, here, here, here, here, here, and here.

November 22, 2005 in Political News | Permalink | Comments (2) | TrackBack (0)

Senate Finance Committee Staff Releases Summary of S. 2020

Senate_7The Staff of the Senate Finance Committee has released a 20-page Summary of The Tax Relief Act of 2005 (S. 2020).  (For other legislative documents relating to S. 2020, see here.) 


November 22, 2005 in Congressional News | Permalink | Comments (0) | TrackBack (0)

Center on Budget and Policy Priorities Releases Several Tax Reports

TaxProf Blog: The Next Generation

I am pleased to announce that we have now opened the comment feature on TaxProf Blog and invite readers to submit comments on future posts.  We hope that adding this interactive feature will help make TaxProf Blog more useful in your tax scholarship, teaching, and practice.  When we launched TaxProf Blog, we allowed public comments but were soon overwhelmed by spam and other inappropriate comments.  Our host, TypePad, has solved this problem by developing a system of moderated comments; comments will be published only with my approval.

We hope you find this new feature useful.  As always, please email me suggestions on how we can make TaxProf Blog better serve your needs.

November 22, 2005 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Guyton, Korobow, Lee & Toder on The Effects of Tax Software and Paid Preparers on Compliance Costs

Ntj_logo_1John L. Guyton (IBM Business Consulting Services), Adam K. Korobow (IBM Business Consulting Services), Peter S. Lee (IRS) & Eric J. Toder (Urban Institute) have published The Effects of Tax Software and Paid Preparers on Compliance Costs, 58 National Tax Journal 439-48 (Sept. 2005). Here is the abstract:

In recent years, the percentage of individual taxpayers using paid preparers and software has increased, while the share of taxpayers who self–prepare without software has dropped sharply. Using the Individual Taxpayer Burden Model developed by IBM Business Consulting Services for the IRS, we simulate the effects of preparation method on time and money costs of preparing tax returns. When we correct for self–selection bias, we find that each group on average selects the preparation method that costs the least for them. For example, software costs more than self–preparation for current self–preparers, but costs less than self–preparation for current software users.

November 22, 2005 in Scholarship | Permalink | TrackBack (0)

Tax_news_roundup_20 New York Times:

The tax bill passed by the Senate last week includes several provisions to encourage giving to charities and could lead to a significant increase in donations. The bill would add tax breaks for people who make small charitable contributions and for those who want to donate directly from their individual retirement accounts. The Senate measure would have to be reconciled with the House's tax bill, which is now under consideration and lacks any substantial provisions on charitable giving.

Living writers, musicians, artists and scholars who donate their work to a museum or other charitable cause would earn a tax deduction based on full fair market value under a bill just passed by the Senate. Currently such work receives only a deduction based on the cost of materials unless it is donated posthumously by the estates.

Wall Street Journal:

The Senate passed a series of measures designed to encourage charitable giving and curb abuses by tax-exempt organizations. Charitable groups largely supported the provisions. The package was part of a wide-ranging tax bill approved last week. It would allow certain individuals to make tax-free gifts from their individual retirement accounts. It would also carve out a new tax deduction for millions of people who can't deduct anything under current law.

Washington Times:

The tax-cut bill approved by the Senate and the bill that House leaders pledge to approve after Thanksgiving each extend different tax cuts, and will have to be melded together in what could be a challenging road to final approval.

November 22, 2005 in News | Permalink | TrackBack (0)

Sheppard on Tax Reform Panel's International Recommendations

Sheppard Tax_analysts_75Lee A. Sheppard (Contributing Editor, Tax Analysts) has published Looking at the Tax Reform Plan's International Provisions, 109 Tax Notes 1002 (Nov. 21, 2005), also available on the Tax Analysts web site as Doc 2005-23402, 2005 TNT 224-4.  The article examines the international tax recommendations of the President's Advisory Panel on Federal Tax Reform. 


November 22, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Senate Takes Aim at Corporate Jet Perk

Last month, in Golf, Private Jets, and Executive Perks: Where Are the IRS and SEC?, we blogged the wonderful research by Wall Street Journal reporter Mark Maremon, who compared USGA golf handicap records available on the Internet (which list rounds played by golfers at particular courses and their scores) with flight records from commercial aviation services to track how often CEOs used corporate jets to ferry them on golf excursions.  The post noted that golfing execs "pay only the income tax assessed on the value of personal flights. The tax usually amounts to just a few hundred dollars per flight, and is determined by a complex IRS formula [Reg. §1.61-21(g)] that takes into account the distance traveled and the employee's position in the company."

The Wall Street Journal reports (Senate Aims Tax At Executive Use Of Corporate Jets) that the Senate tax bill would eliminate this perk:

The U.S. Senate, in a measure aimed at curbing a controversial corporate perk, approved a provision that would require executives to pay significantly higher income taxes when they take personal trips on company jets. The amendment was added just before midnight Thursday to a broader tax bill approved by the Senate. The jet-tax provision isn't part of a tax bill pending in the House of Representatives. After the House passes its version, the two bills will go to a conference committee to be reconciled before becoming law.

The provision would require executives and other employees to pay tax on the company's actual cost of providing them personal travel on corporate jets. Under current law, such personal jet travel is valued with a formula that is loosely related to the price of first-class airfare. The measure would raise an estimated $95 million in extra taxes over the next decade, according to Congress's joint tax committee.

November 22, 2005 in Congressional News | Permalink | TrackBack (0)

Potter Named Senior Counsel to the Chief Counsel (Legislation)

Irs_logo_155 The IRS announced on Monday (IR-2005-135) that Clarissa C. Potter has been named Senior Counsel to the Chief Counsel (Legislation), effective November 13, 2005:

"Clarissa Potter is a true asset to the Office of Chief Counsel,” said Donald L. Korb, IRS Chief Counsel. “Ms. Potter’s extensive experience with the different branches of government involved in the tax law and her deep knowledge of tax policy and administration make her an excellent candidate to act in this position."

The Senior Counsel to the Chief Counsel (Legislation) serves as program manager and senior advisor to the Chief Counsel on a broad array of activities designed to fulfill Counsel’s responsibilities to develop, review, and assist in shaping proposed legislation, and to provide legal support to the IRS in fulfilling its legislative responsibilities.

Since July 2005 [as blogged here], Potter has served as Special Counsel to the Chief Counsel, advising the Chief Counsel, the Deputy Chief Counsels and IRS executives on tax administration and policy issues, including legislation, tax shelter and tax shelter promoter initiatives, media relations, and coordinating with the Treasury Department and Congress.

Before joining the Office of Chief Counsel, Potter was an associate professor at Georgetown University Law Center, teaching tax law and policy. While there she served as director of the Georgetown University Law Center Tax Policy Workshop, and was Director of Projects at the American Tax Policy Institute. She came to Georgetown from the Office of Tax Policy at the U.S. Department of Treasury, where she held a series of increasingly responsible positions, including Acting Tax Legislative Counsel. She also previously served as Legislation Counsel for the Joint Committee on Taxation of the United States Congress....

Potter received a J.D. from Yale Law School in 1989 where she was the Managing Editor of the Yale Law and Policy Review, and a B.A. degree from Miami University of Ohio in 1983.

November 22, 2005 in IRS News | Permalink | TrackBack (0)

IRS Unveils Redesigned Web Site

Irs_logo_154The IRS has redesigned its web site to provide "a fresh look, enhanced search capabilities and easy access to tools that help taxpayers and tax professionals."  According to the press release:

The IRS Web site is one of the most heavily used sites on the Internet during the tax filing season. In fiscal year 2005, there were more than 176 million visits to and 1.2 billion page views. Since first launched in 1996, several updates have occurred to help taxpayers access information more efficiently and quickly....

The most noticeable change is a revamped homepage with a fresh color scheme and a new banner logo. There also is a new row of navigation buttons — Individuals, Businesses, Nonprofits and Charities, Tax Professionals and other areas of interest — to take taxpayers directly to key pages. An improved search function will allow for searches by Keyword or search term. The “Search” feature is more intuitive than formerly. It also provides easy access to the advanced search options and search tips.

Continue reading

November 22, 2005 in IRS News | Permalink | TrackBack (0)

House Releases H.R. 109-304

House_of_rep_5The House Ways & Means Committee has released H.R. 109-304, which contains the text of H.R. 4297, the Tax Relief Extension Reconciliation Act of 2005, including the text of the bill, an explanation of the bill, Congressional Budget Office estimates, and dissenting views. 


November 22, 2005 in Congressional News, Gov't Reports | Permalink | TrackBack (0)

Tax History Project: What's Old Is New Again: Historical Perspectives on Tax Law & Policy

Thp_logo_1 The Tax History Project, a public service initiative of Tax Analysts, has posted seven papers on its web site.  We will blog one of these papers each day this week.

What's Old Is New Again: Historical Perspectives on Tax Law & Policy, by Steven A. Bank (UCLA), Kirk J. Stark (UCLA) & Joseph J. Thorndike (Director of Tax History Project and Contributing Editor, Tax Analysts):

In 1886 the British historian Edward Augustus Freeman famously declared that "history is past politics, and politics is present history." Freeman's claim hasn't fared well over the years; few historians today would accept such a narrow definition of their field. But the bond between history and politics remains palpable, not least when it comes to tax policy. At a conference held July 18-19 in Los Angeles, tax scholars gathered to debate a host of familiar topics, including: the nature and direction of fundamental tax reform; the fate of the estate tax; the abuse of the charitable tax exemption and the problem of tax shelters more broadly; the effect of globalization on tax policy; and the difficulty of developing a sustainable tax program for countries struggling to recover from military defeat.

November 22, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Monday, November 21, 2005

Kaplow Presents Taxation of Families Today at Columbia

KaplowColumbialawreviewlogomenuLouis Kaplow (Harvard) presents Taxation of Families at Columbia today at 4:10 pm (Jerme Greene Hall, Room 107) as part of its Center for Law and Economic Studies Workshop Series. Here is the abstract:

Tax schedules and transfer programs can and often do depend on family structure, notably, on whether there are one or two adults and on the number of children. How taxes and transfers should depend on family characteristics has proved controversial, and treatment of different family types exhibits substantial variation among programs, across countries, and over time. This chapter (from a book manuscript, ATaxation and Redistribution@) analyzes taxation of families as an extension of the optimal income taxation framework. This chapter begins by considering a simplified setting in which only distribution across families is at issue. The latter portion of this chapter takes up incentive concerns, first, involving labor effort, the focus of most optimal income tax analysis, and, second, involving family structure.

November 21, 2005 in Colloquia | Permalink | TrackBack (0)

Ventry Presents How Tax Policymakers Have Protected and Punished American Families Today at UCLA

Ucla_1Dennis J. Ventry, Jr. (Visiting Scholar in Taxation, UCLA) presents For Richer, For Poorer: How Tax Policymakers Have Protected and Punished American Families, 1913‐2005 at UCLA today at 12:20 pm - 1:20 pm as part of UCLA's Monday Colloquium Series.

November 21, 2005 in Colloquia | Permalink | TrackBack (0)

Law Teaching in Pajamas

Steve Bainbridge (UCLA) has an interesting post on webcasting law school classes:  This Could Give Pajamas Media a Whole New Meaning:

From the Daily Bruin:

Fourth-year history student Daniel Benji never used to miss lectures if he could help it. Only an emergency could have kept him away. But that was before BruinCast, a new service being tested in four classes this quarter, which videotapes lectures and puts them online for later viewing. Now Benji is a little more ambivalent. "Instead of going to class, I watch the lecture (online)," he said. "It's just as good."

My thinking is that what's sauce to the goose is sauce to the gander. Instead of showing up at my assigned time, I could just record the webcast at a time and place of my own choosing.

November 21, 2005 in Law School | Permalink | TrackBack (1)

Avi-Yonah & Infanti Speak Today at Conference on Treaties and Domestic Law in Italy

Eu_tax_groupReuven S. Avi-Yonah (Michigan) & Anthony C. Infanti (Pittsburgh) are presenting papers today at a conference on Tax Treaties and Domestic Law in Milan, Italy:

The conference is sponsored by the OECD, Italian Council of Ministers, and EU Tax Group.  The papers for the conference are to be published in a book by IBFD.

November 21, 2005 in Conferences | Permalink | TrackBack (0)

Germain on Income Tax Claims in the Year of Bankruptcy


Germain Gregory L. Germain (Syracuse) has posted Income Tax Claims in the Year of Bankruptcy: A Congressionally Created Quagmire on SSRN.  Here is the abstract:

The article considers the proper treatment of the government's claim for income taxes incurred in the year of bankruptcy, both before and after the 2005 bankruptcy amendments go into effect on October 17, 2005. The article examines the inconsistent theories adopted by the courts in dealing with year-of-bankruptcy tax claims, and considers how those theories will work after the 2005 BAPCPA amendments go into effect. The author concludes that the pre-petition portion of year-of-bankruptcy tax claims should be treated as a dischargeable general unsecured claim - a result that Congress likely did not intend when amending the statute.

November 21, 2005 in Scholarship | Permalink | TrackBack (0)

Laury & Wallace on Confidentiality and Taxpayer Compliance

Ntj_logo_1Susan Laury (Georgia State University, Department of Economics) & Sally Wallace (Georgia State University, Andrew Young School of Policy Studies) have published Confidentiality and Taxpayer Compliance, 58 National Tax Journal 427-38 (Sept. 2005). Here is the abstract:

Internal Revenue Code guarantees privacy of taxpayer information in the administration of the U.S. income tax. Many state and local governments also support the confidentiality of taxpayer data. However, given the growth in on–line tax filing and reports of breaches in confidentiality of credit and banking data, individuals are likely to be increasingly wary of the privacy of their tax return data. Might we expect, as taxpayers question the confidentiality of their information, that their tax compliance would be affected? In this paper, we use experimental methods to analyze the relationship between the perception of confidentiality and taxpayer compliance. We find some evidence suggesting that when individuals perceive a breach in confidentiality, they actually increase their level of compliance.

November 21, 2005 in Scholarship | Permalink | TrackBack (1)

Long Overdue Recognition for Ron Jones

You may have noticed a new addition to the left sidebar:  I am delighted to formally recognize the valuable contributions of Ron Jones, Reference & Electronic Services Librarian at the University of Cincinnati College of Law, to the success of TaxProf Blog by naming him "Research Associate."  Ron is responsible for unearthing many of the far-ranging tax items you see on this blog on a daily basis.

November 21, 2005 in About This Blog | Permalink | TrackBack (0)

House-Senate Differences in Tax-Cut Bill

Interesting article in the Weekend Wall Street Journal:  House Republicans Delay Action on Tax-Cut Bill:

House Republicans postponed action on tax-cut legislation until December after barely winning late-night approval of a $49.9 billion, five-year deficit-reduction bill that has roiled the party for weeks. Moderates in the House were skittish at the prospect of proceeding with tax cuts, just hours after eking out a 217-215 vote to squeeze spending on health-care and nutrition benefits for the working poor. After recent setbacks, Rep. Roy Blunt (R., Mo.), the acting majority leader, appeared sympathetic with this complaint. And despite pressure from tax writers, the House will wait until after it returns Dec. 5 to take up the $56-billion tax-cut package, most of which extends existing tax cuts that would otherwise expire. The Senate passed its tax-cut bill shortly after midnight Thursday night....

The article also contains this helpful chart summarizing some of the difference between the House and Senate bills:

Tax-Cut Bill Element



5-Year Cost

Extend 15% Capital Gain & Dividend Rate to 2010



- $21 billion

Limit Reach of AMT through 2006



- $29 billion

Increase Oil Company Taxes



+ $4 billion

Extend & Expand R&D Credit



- $9 billion

Extend Deduction for Sales Taxes



- $2 billion

Tax Breaks to Hurricane-Damaged Areas



- $7 billion

Tighten Economic Substance Tax Shelter Rule



+ $5 billion

Expand Small Business Investment Deduction



- $7 billion

November 21, 2005 in News, Political News | Permalink | TrackBack (1)

Sheppard on The Repatriation Endgame

Sheppard Tax_analysts_75Lee A. Sheppard (Contributing Editor, Tax Analysts) has published The Repatriation Endgame, also available on the Tax Analysts web site as Doc 2005-23646, 2005 TNT 223-4. The article notes that International Tax Counsel Hal Hicks told participants at the November 17 International Fiscal Association local chapter meeting in New York that there would probably be no more section 965 guidance, but he would not rule out a fourth notice, since there are still a few unanswered questions.   

November 21, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Scholars Accused of "Conceptual Plagiarism"

Interesting article in the Sunday newspapers from Knight Ridder Newspapers: Who Owns An Idea? Scholars Take Sides; Sociology Book Spurs "Conceptual Plagiarism" Charge:

Last winter, when a University of Pennsylvania sociologist, Elijah Anderson, first heard a colleague's summary of her forthcoming book, he thought he was hearing an echo of his own work. Today that echo has turned into an uproar, a dispute that has set scholar against scholar and led researchers at some of the nation's most prestigious colleges to choose sides. The charge? ''Conceptual plagiarism."...

The controversy, first reported in the Daily Pennsylvanian, raises issues that reach beyond the halls of academia. In an age of file-sharing and open-source programming, when everything from movies to music can be captured at the touch of a button and when the Internet serves as a worldwide echo chamber, who truly owns an idea? The stakes are enormous, as countries move further from an industrial economy toward one where intellectual property is a thing of real value. And unlike the verbatim theft of written words -- a precise, quantifiable sort of plagiarism -- determining the provenance of an idea can be a mushy affair. More than a dozen professors at schools including Princeton and Harvard universities have come to the defense of Edin and Kefalas, calling the charge of conceptual plagiarism ''absurd." In response, Anderson compiled a list of 22 similarities between the books -- both examine motherhood and marriage in the inner city -- posting the comparison on the Penn Almanac, a university website. Anderson also released a statement saying the two authors ''misled readers" by ''repeating the distinctive ideas, findings, explanations, and terms of Code without citing the source."...

Further complicating matters: Plagiarism is an ethical concept, not a legal term. The police don't arrest people for plagiarism. Nobody goes to jail. Punishment is meted out in the form of damaged reputations and lost jobs. Copyright law offers limited protection for a writer's words and none at all for the ideas expressed by those words. ''You can't copyright an idea," said a Philadelphia licensing lawyer, Peter T. Wakiyama. ''That's Intellectual Property 101."

For further details, see Professor Anderson's response; also see the University of Pennsylvania Almanac:

November 21, 2005 in Law School, News | Permalink | TrackBack (0)

FBA Hosts Program Today on Tax Reform: Are We Ready?

Federal_bar_assnThe Tax Section of the Federal Bar Association is hosting a program today on Tax Reform:  Are We Ready?:

The panel will discuss the new tax reform proposals of the President's Advisory Panel. The discussion will highlight the issues to be addressed, the tradeoffs to be balanced, and the potential gains to be reaped.  Panelists are:

    • Steve Rosenthal,Moderator
    • Jon Ackerman, Tax Reform Panel
    • Bob Carroll, Treasury Department
    • John Navratil, Joint Committee on Taxation

The program will be held from 12:15 p.m – 1:45 p.m. at the Federal Bar Association, 2215 M Street, N.W., Washington, D.C.

November 21, 2005 in Conferences | Permalink | TrackBack (0)