June 30, 2009
Death of Tom Lefevre
Thomas V. Lefevre, former tax lawyer and Chair of Morgan, Lewis, has died at the age of 90. From the firm's press release (via Blog of Legal Times):
Tom’s history at Morgan Lewis began in 1955, when he joined the firm as a tax law associate. He made partner a year later.... Tom developed a segment of tax practice focused on leveraged lease transactions – the success of which ultimately spawned the opening of our New York office. ...
Born in Dallas on December 5, 1918, Tom graduated from high school at age 16, and earned his B.A. and law degrees from the University of Florida in 1939 and 1942, respectively. He enlisted in the Marines, survived heavy combat in World War II and rose to the rank of major before retiring from the service in 1945 and obtaining his L.L.M. from Harvard the following year.
Before joining Morgan Lewis, Tom practiced as a litigation associate at Sullivan & Cromwell; as a trial lawyer at the IRS; at a Washington, D.C. firm launched by former Sen. Claude Pepper; at Paul, Weiss, Rifkind Wharton & Garrison; and finally at Chapman, Bryson, Walsh & O’Connell. ...
Tom left Morgan Lewis in 1979 to become VP of corporate development for longtime firm client UGI Corp. A year later, he became UGI’s president, and, ultimately, its chairman and CEO – a position he held until his retirement in 1989.
DOJ Asks Court to Order UBS to Release Names of 52,000 U.S. Offshore Account Holders in Tax Evasion Case
National Taxpayer Advocate Releases Mid-Year Report to Congress
National Taxpayer Advocate Nina E. Olson submitted her Mid-Year Report to Congress that identifies the priority issues the Office of the Taxpayer Advocate will address in the coming fiscal year. From the IRS press release:
Among the key areas of focus will be working with the IRS to improve taxpayer services, enhancing IRS oversight of federal tax return preparers, improving the accessibility of the offer in compromise program, and working with the IRS to improve its ability to administer refundable tax credits effectively.
The report notes that FY 2010 will mark the ten-year anniversary of the Taxpayer Advocate Service, which began operations in March of 2000. “As TAS enters its tenth year, both TAS and the IRS face a difficult environment for achieving what is, in essence, the same mission – ensuring that the IRS treats taxpayers fairly and identifying ways to increase voluntary compliance while addressing noncompliance,” Olson said. She identified the collection of tax revenue at a time when “increasing numbers of taxpayers have difficulty paying their daily living expenses” as a principal challenge.
The Advocate’s report, which is required by law, sets out the objectives of the Office of the Taxpayer Advocate for the upcoming fiscal year and provides substantive analysis of issues and statistical information. Among the areas the report identifies for particular emphasis in FY 2010 are the following:
- Taxpayer Services
- Oversight of Tax Return Preparers
- Offers in Compromise
- Refundable Tax Credits
The Coming Demise of the TaxProf Email Discussion List?
As most of you know, I also manage the 14-year old TaxProf Email Discussion List, which currently has over 300 subscibers. This week's suggests that its days may be numbered: Change or Die: Scholarly E-Mail Lists, Once Vibrant, Fight for Relevance, by Jeffrey R. Young:
Once they were hosts to lively discussions about academic style and substance, but the time of scholarly e-mail lists has passed, meaningful posts slowing to a trickle as professors migrate to blogs, wikis, Twitter, and social networks like Facebook.
That's the argument made by T. Mills Kelly, an associate professor of history and associate director of the Center for History and New Media at George Mason University. Naturally, he first made the argument on his blog, and he has mentioned it on the technology podcast he hosts with two colleagues.
A close look at some of the largest academic listservs, however, shows signs of enduring life and adaptation to the modern world.
Mr. Kelly is not swayed, though. He says he was once an enthusiastic participant in several scholarly e-mail lists, mainly ones run by the H-Net service, which offers e-mail lists on various topics in the humanities. He even moderated one of them. But he says one of those lists shut down for lack of use in 2005, and the activity on the others sputters along with little useful information.
"As more and more people become comfortable with blogs and Twitter, e-mail lists will become increasingly irrelevant," he said. "They're just a much less dynamic form of communication." ...
I pitched the story to my editors, who loved the headline "Death of the E-Mail List."
But then a surprising thing happened. I started to hear passionate defenses of listservs from other people in my digital network, even those who are just as plugged in to the latest trends.
It turns out that the audiences for many academic mailing lists are actually growing — though even some organizers admit that the lists are less likely to contain the spirited debates that once thrived there. Administrators at some of the largest academic listervs say they are beginning to upgrade their services for the Web 2.0 era. ...
Perhaps e-mail lists will occupy a space like radios did in the television age, sticking around but fading to the background. Although people are fond of declaring the death of e-mail in general, it remains a key tool that just about everyone opens every day. As long as that's true, the trusty e-mail list will be valuable to scholars of all stripes.
Brunson: Taxing Investors on a Mark-to-Market Basis
Although the U.S. tax system generally only taxes income on a realization basis (that is, when payment changes hands), mark-to-market accounting better reflects economic income. Although there are practical difficulties that compel the continued use realization accounting, the tax code in certain limited situations allows or requires taxpayers to recognize income or loss on a mark-to-market basis. For example, a trader in securities or commodities can make an election to mark gains or losses to the market. This election is not available, however, to investors who are not “traders” for tax purposes.
The Article demonstrates that there is no compelling tax policy reason to limit the availability of the mark-to-market election; rather, based on the superiority of mark-to-market accounting over the current realization regime, the policy justifications for allowing (and encouraging) taxpayers to determine their tax liability on a mark-to-market basis outweigh any objections to liberalizing the election’s availability.
Alternatively, the Article proposes a safe harbor that approximates the criteria courts look to in order to determine if a taxpayer is a trader, but that, unlike the current trade or business test, can be applied in advance of the taxable year. Although providing a safe harbor solely to traders is a worse solution than making the mark-to-market election available to all taxpayers, it is nonetheless better than the current unworkable criteria because it provides certainty to taxpayers at the time they must make the election.
Altman: We Need to Raise Taxes, Soon
Op-ed in today's Wall Street Journal: We'll Need to Raise Taxes Soon; Expect Congress to Seriously Consider a Value-Added Tax, by Roger Altman:
Today, the U.S. ranks next to last among the 28 OECD nations in total federal revenue as a share of GDP. Our federal revenues represent 18% of national output, down from 20% just 10 years ago. That makes the mismatch between our spending and our revenue very large, producing the huge deficits we face.
We all know the recent and bitter history of tax struggles in Washington, let alone Mr. Obama's pledge to exempt those earning less than $250,000 from higher income taxes. This suggests that, possibly next year, Congress will seriously consider a value-added tax (VAT). A bipartisan deficit reduction commission, structured like the one on Social Security headed by Alan Greenspan in 1982, may be necessary to create sufficient support for a VAT or other new taxes.
This challenge may be the toughest one Mr. Obama faces in his first term. Fortunately, the new president is enormously gifted. That's important, because it is no longer a matter of whether tax revenues must increase, but how.
New Issue of Atax's eJournal of Tax Research
Volume 7, Issue 1 (June 2009) of the eJournal of Tax Research, published by Atax (Australian Taxation Studies Program), University of New South Wales, Sydney, Australia, and edited by Binh Tran-Nam & Michael Walpole, is available on its web site:
- Michael Haug, Luise Hölscher & Tim Vollans, An Examination of the Influence of Inheritance Tax upon Business Succession -- Lessons for Germany (pp. 5-36)
- Grantley Taylor & Greg Tower, Impact of Adoption of IFRS on the Thinly Capitalised Position of Australian Companies (pp. 37-53)
- Monica Bhandari, Tax Advantages for Bungling Trustees (pp. 54-71)
- Nicole Wilson-Rogers & Dale Pinto, Tax Reform: A Matter of Principle? An Integrated Framework for the Review of Australian Taxes (pp. 72-105)
Tax Oppression Index: U.S. Is #12
A new study, Tax Burden and Individual Rights in the OECD: An International Comparison, ranks the U.S. 12th among 30 OECD countries in its "tax oppression index":
The tax oppression index is based on 18 representative criteria measuring fiscal attractiveness, public governance and financial privacy in the 30 member states of the OECD.
- United Kingdon
- United States
(Hat Tip: Cato Institute.)
Joulfaian: Estate Tax Repeal and Charitable Bequests
This note reviews trends in charitable bequests over the past two decades. It provides a time series on bequests and wealth reported by estates, a snapshot of the dispersion in the degree of generosity, as well as a brief introduction to data sampling issues. It also presents a critical review of the recent literature on the effects of the estate tax on giving. Because of differences in estimation and simulation methodologies, it is difficult to make meaningful comparisons of the various estimates.
Buckles: Should Yale Lose its Tax Exemption Because of its Opposition to the Solomon Amendment?
Johnny Rex Buckles (Houston) has published Do Law Schools Forfeit Federal Income Tax Exemption When They Deny Military Recruiters Full Access to Career Services Programs? The Hypothetical Case of Yale University v. Commissioner, 41 Ariz. St. L.J. 1 (2009). Here is the abstract:
Most U.S. law schools prohibit prospective employers who discriminate against students on any of several grounds, including sexual orientation, from utilizing the schools' student recruitment programs conducted by their career services offices. Because homosexuals who disclose their sexual orientation may not serve in the United States armed forces, some law schools at times have limited the channels through which military recruiters may interview students. In response to the application of these anti-discrimination policies to military recruiters, Congress enacted the Solomon Amendment. The Solomon Amendment eliminates certain federal funding otherwise available to an institution of higher education if it denies military recruiters the same access to its students and campus that other recruiting employers receive. Although the Supreme Court has recently upheld the constitutionality of the Solomon Amendment, another legal issue -- one that existing legal scholarship has never considered -- remains outstanding. The issue is whether private law schools that have denied military recruiters full access to student recruitment programs have forfeited their federal income tax exemption under § 501(c)(3) under the public policy doctrine announced in Bob Jones University v. United States. This article rigorously analyzes this provocative issue by positing a hypothetical Supreme Court case, Yale University v. Commissioner, in which four opinions written by fictional Supreme Court Justices determine the tax-exempt status of several private, free-standing law schools or their affiliated universities. This format not only facilitates an analysis of the nuances of the public policy doctrine, but also exposes and illustrates the vagaries of the doctrine. Building on Reforming the Public Policy Doctrine, 53 U. Kan. L. Rev. 397 (2005), this article concludes that the hypothetical case of Yale University v. Commissioner demonstrates that the public policy doctrine should be reformed.
Law Prof Plutocrats
Daniel Gordon (St. Thomas University School of Law) has posted Hiring Law Professors: Breaking the Back of an American Plutocratic Oligarchy, 19 Widener L. Rev. ___ (2010), on SSRN. Here is the abstract:
Law students and the consumers of legal services like to think that professors are hired by law schools on the basis of pure intellectual ability and achievement. No doubt, individual intellectual ability and achievement play significant roles in law school faculty hiring. However, another important dynamic is overlooked, wealth.
June 29, 2009
Zelenak Responds to Raskolnikov's Revealing Choices
I previously blogged the new article by Alex Raskolnikov (Columbia), Revealing Choices: Using Taxpayer Choice to Target Tax Enforcement, 108 Colum. L. Rev. 689 (2009). Lawrence Zelenak (Duke) has published a response, Tax Enforcement for Gamers: High Penalties or Strict Disclosure Rules?, 109 Colum. L. Rev. Sidebar 55 (2009). Here is the Conclusion:
By explaining the advantages of applying different enforcement regimes to taxpayers with different motivations and by offering a detailed description of how such regimes might be designed, Raskolnikov has made an important contribution to the scholarly literature on tax compliance and enforcement strategies. In addition to the attractions of the specific proposal for a [compliance regime] (CR) and a [deterrence regime] (DR). Raskolnikov's article is also valuable for enabling the reader to understand the current system in a new light—as already applying a special enforcement regime to the most important category of gamers through its stringent tax shelter disclosure requirements. Whether the current system's way of dealing with gamers is preferable to Raskolnikov's proposal is a difficult question. All things considered—including the effect of each approach on non-gamers—I am inclined to think the current system is the better choice. But neither Raskolnikov's article nor this Response has attempted a comprehensive evaluation of the relative merits of deterring gamers via Raskolnikov's DR, versus deterring gamers via stringent tax shelter disclosure requirements. On that important question, much work remains to be done.
Federal Income Tax, Brought To You By . . .
In today's Inside Higher Ed: Study on Idea of Letting Donors Sponsor Courses:
Trustees of City College of San Francisco have agreed to consider a formal plan to let donors sponsor classes that would otherwise be eliminated, The San Francisco Chronicle reported. Don Griffin, the chancellor, first raised the idea last week, saying that he would let donors pay $6,000 to rescue one of the 800 courses being called off due to state budget cuts. Trustees hadn't been briefed on the idea and demanded a formal discussion first. The San Francisco newspaper reported that the discussion appeared headed toward killing the idea. Some trustees worried about the concept letting the state feel it could ignore the college's needs. One trustee was worried about the possibility of an alcohol or tobacco company sponsoring a health course. But the trustees were swayed to allow Griffin to develop a plan for their review after faculty members and others spoke, detailing their concerns about how many classes were disappearing. One speaker told the board to "take the money and run."
IRS Updates FAQ For Individuals With Offshore Accounts
The IRS has updated its 30-question FAQ by adding 21 new questions for individuals with unreported income relating to offshore transactions who want to voluntarily disclose the information to the IRS. (Hat Tip: Peter Lagonowicz.)
Henderson: The End of an Era -- The Law School Class of 2008
Bill Henderson (Indiana) today blogs The End of an Era: the Bi-Modal Distribution for the Class of 2008, with this just-released chart from NALP on entry-level starting salaries for the class of 2008 [click on chart to enlarge]:
Of the 22,305 law school graduates, a remarkable 23% (5,130 members of the class of 2008) reported an entry-level salary of $160,000. In contrast, 42% of entry level lawyers reported salaries in the $40,000 to $65,000 range. Once again, the central tendencies are a poor guide to the distribution as a whole: whereas the mean salary is a $92,000, the median salary was $72,000. Further, the two modes ($50,000 and $160,000) are separated by $110,000.
Bill traces the history of the bi-modal salary distribution pattern with salary data from the law school classes of 1991, 2000, 2006, and 2007.
Desai & Dharmapala: Earnings Management, Corporate Tax Shelters, and Book–Tax Alignment
Mihir A. Desai (Harvard Business School) & Dhammika Dharmapala (Illinois) have published Earnings Management, Corporate Tax Shelters, and Book–Tax Alignment, 62 Nat'l Tax J. 169 (2009). Here is the abstract:
This paper reviews recent evidence analyzing the link between earnings management and corporate tax avoidance and considers the implications for how policymakers should evaluate the financial reporting environment facing firms. A real–world tax shelter is dissected to illustrate how tax shelter products enable managers to manipulate reported earnings. A stylized example is developed that generalizes this view of corporate tax avoidance and empirical evidence consistent with this view is discussed. This view of corporate tax avoidance implies that shareholders and policymakers should question the rationale for distinct financial reports and that greater book–tax alignment may have mutually beneficial effects for investors and tax authorities.
Michael Jackson's Looming "Estate Tax Disaster"
In a previous article, Estate Planning Implications of the Right of Publicity, 68 Tax Notes 95 (1995), I warned that celebrities (and their counsel) must carefully plan their estates in light of the inclusion of the value of rights of publicity for estate tax purposes under § 2033. In the Conclusion, reprinted below the fold, I contrasted the different estate planning strategies appropriate for celebrities who zealously guard their privacy (e.g., J.D. Salinger) and for those who shamelessly exploit their celebrity (e.g., Michael Jordan). As Tax Prof Bridget Crawford (Pace) notes, an Estate Tax Disaster Looms for Michael Jackson’s Estate if he and his counsel did not properly plan for the enormous value of his descendible right of publicity under California law.
Paul L. Caron, Estate Planning Implications of the Right of Publicity, 68 Tax Notes 95, 97 (1995):
Practitioners fortunate enough to have clients with potentially valuable descendible rights of publicity should carefully consider the estate planning implications of [Estate of Andrews v. Commissioner, 850 F. Supp. 1279 (E.D. Va. 1994). One response would be to have clients early in their careers make gifts of the right to trusts for their children or grandchildren when the value of the right is negligible . Any subsequent appreciation in the value of the right thus would escape the reach of the transfer tax. A testamentary response would be to place restrictions on the right of publicity, thereby reducing (or perhaps even eliminating) the value of the right subject to tax. A parallel approach would be to waive the decedent's interest in the right . These approaches, of course, also would reduce or eliminate the benefits to be received by the client's heirs. Another response would be to simply treat the right as any other asset to be exploited for financial gain, and to plan for the resulting estate tax burden through the use of income from the exploitation, life insurance proceeds, or otherwise.
In devising the appropriate strategy, the practitioner should, as always, carefully consider the client's wishes. For the celebrity like J.D. Salinger who has carefully protected his privacy and not exploited his name during life, failing to plan in light of Andrews would result in an estate planning disaster when the right is valued by the Service at its full exploitive value. The cash-strapped heirs would be hard pressed in this situation to respect the decedent's privacy wishes that the right of publicity is designed to protect . Proper planning for the publicity-shy celebrity may be to impose restrictions on the right of publicity to accord with his privacy interests without subjecting the heirs to an estate tax burden . In contrast, for the celebrity like Michael Jordan who has aggressively exploited his name during life, it may not make sense to impose any restrictions on the right of publicity. The best approach for such a celebrity may be to maximize the benefits to his heirs through an unfettered right of publicity, at the cost of a 55 percent estate tax bite to be paid for with the fruits of the exploitation.
Update: Don't Mess With Taxes has more here.
Judge Sotomayor's Tax Opinions
The Congressional Research Service has released Judge Sonia Sotomayor: Analysis of Selected Opinions (R40649). Here is the discussion of Judge Sotomayor's tax opinions:
Judge Sotomayor has not written extensively in the area of taxation, and it is not possible to draw conclusions about her judicial philosophy from the tax cases in which she has been involved. One Second Circuit case in which she authored an opinion has received attention, primarily because the Supreme Court, while agreeing with the holding, expressly disagreed with her reasoning.
In that case, William L. Rudkin Testamentary Trust v. Commissioner, [467 F.3d 149 (2d Cir. 2006),] the issue was whether investmentadvice fees incurred by a trust were “costs which are paid or incurred in connection with the administration of the … trust and which would not have been incurred if the property were not held in such trust ….” [§ 67(e).] If so, the fees were fully deductible; if not, they were only partially deductible as miscellaneous itemized deductions. At the time the Second Circuit heard the case, a split had developed among the other circuits. The Sixth Circuit had held the fees were fully deductible, while the Fourth and Federal Circuits reached the opposite conclusion after finding the provision only applied to expenses that were not customarily incurred by individuals.
Writing for the court, Judge Sotomayor agreed with the holding of the Fourth and Federal Circuits, but used a different analysis. Looking at the statute’s plain meaning, she found it only applied to those expenses that could be incurred by an individual. This was an objective inquiry and did not require a subjective determination of whether an individual would have incurred such expenses. The court disagreed with the interpretation by the Fourth and Federal Circuits because it found “nothing in the statute [to] indicate that Congress intended the [provision] to give rise to factual disputes about whether an individual asset owner is insufficiently financially savvy or the assets sufficiently large such that he or she unquestionably would have sought investment advice.”
The Supreme Court, in a unanimous decision written by Chief Justice Roberts, affirmed the Second Circuit’s holding, but rejected its reasoning. [Knight v. Commissioner, 128 S. Ct. 782 (2008).] According to the Court, an analysis focusing on whether such fees could have been incurred by an individual “flies in the face of the statutory language” since “the fact that an individual could not do something is one reason he would not, but not the only possible reason.” Congress would have used “could” had it wanted and “[t]he fact that it did not adopt this readily available and apparent alternative strongly supports rejecting the Court of Appeals’ reading.” The Court also concluded that the Second Circuit’s interpretation made part of the statute superfluous. Instead, the Court adopted the analysis of the other circuits, finding the common meaning of the term “would” required a determination as to whether the fees would customarily be incurred if the property was held by an individual. Finding that it was not uncommon for an individual to seek investment advice, the Court held the fees were not fully deductible.
Thus, while both the Second Circuit and Supreme Court held the fees were partially deductible, the Court expressly disavowed Judge Sotomayor’s reasoning and adopted an interpretation that she had explicitly rejected. The case is interesting because both the Second Circuit and Supreme Court performed a straight-forward statutory interpretation analysis, looking only at the plain language of the statute, yet came to different conclusions about what the term "would" meant in the context of the statute. Judge Sotomayor, in writing for the Second Circuit, developed an interpretation—one apparently not pursued by either party before the court or adopted by the other appellate courts—that seemed intended to avoid complexity in the tax statute. The government, in fact, subsequently adopted her analysis before the Supreme Court, characterizing it as the preferred interpretation “because it makes the statute significantly easier to administer.” On the other hand, while her intent was perhaps laudatory, it could be criticized, and was by the Supreme Court, for being inconsistent with the common meanings of the terms in the statute.
See also National Law Journal: Congressional Research Service on Sotomayor: Hard to Categorize.
Law School 4.0
The American Lawyer: Time for Law School 4.0, by Paul Lippe:
If I need some insight into the future of medicine, I might head over to Stanford Medical School. If I wanted to learn about likely directions in finance and hedge funds, I might visit Penn's Wharton. If I were looking to make investments in computing, I might arrange a tour of a lab at MIT. If I decided to learn something about where legal practice, law firms and legal departments will be in 2014, where would I go? Not to law school.
Relative to other professional schools, law schools are extremely disengaged from professional practice — they seek neither to understand nor to influence it. As I have said previously, law has lagged behind the world of global competition — and technology-driven clients — over the last 15 years. It's now entered a whiplash period where it must catch up. ...
In the simplest terms, we can identify three phases of legal education.
Phase I was the apprenticeship system, where folks "read" law under more senior lawyers. ...
Phase II, pioneered by Dean Christopher Columbus Langdell at Harvard, created the professional school, and centered the curriculum around the case method and classroom discussion, which is the template for every law school in the country. The ABA and later the AALS worked to eradicate the trade school model, ratcheting up admissions standards and driving the emergence of the faculty as a distinct profession.
Phase III reflects the last generation or so, where law schools have grown more distant from the profession, and the legal academy has come to define itself as primarily engaged in a scholarly pursuit (like, say, literature or history), as opposed to a professional pursuit, like, say, medicine or business.
Some obvious problems with the Phase III model include:
- Students graduate from law school with a lot of debt but without client-marketable skills, so their primary option is to serve long apprenticeships in law firms ...
- It's no surprise that law graduates don't acquire client-marketable skills, since so many law faculty don't care much about the practice of law. ...
- Law school is weak on empiricism — unlike, for example, medical school, which is moving in the direction of being ever more evidence-based. ...
Let me suggest some likely elements of change (some of which already are in play at Northwestern and elsewhere):
- An accelerated curriculum, with no more than a year of case method, a year of clinical, and then a year of externship with subject area focus, along the lines of medical school.
- More practice orientation in teaching, with far more adjunct faculty who are active practitioners. ...
- Better use of technology (both connectivity, like video or Web conferencing, and Web 2.0 social networks) to connect schools and practitioners and clients. ...
- A much more empirical approach to practice, forcing much deeper inquiry, rather than just trotting out hypotheticals and issue-spotting. ...
- A move back to mission-centered management. In a recent meeting with law school deans, I asked, "If you decided the purpose of law school was to maximize the comfort and income of the faculty, what would you do differently?" The answer: "Nothing." When my wife's grandfather was a law school dean, it was understood that the law school was there to serve society, the profession and students — not vice versa.
- A lifetime (or at least 10 years) of orientation for skills development for students/alums. ...
Call it law school 4.0.
TaxProf Blog Weekend Roundup
- Tax Court Disallows Deductions for Unsubstantiated Expenses of Thomson-West Sales Rep
- Income Redistribution Under Obama's Budget
- Hanlon & Maydew: Book–Tax Conformity: Implications for Multinational Firms
- 11th Circuit Grants Wesley Snipes Oral Argument in Appeal of His Tax Fraud Conviction
- More on DePaul's Firing of Dean Weissenberger
- Top 5 Tax Paper Downloads
- Cap-and-Trade: The Song
- Shaviro: Internationalization of Income Measures and the U.S. Book–Tax Relationship
June 28, 2009
11th Circuit Grants Wesley Snipes Oral Argument in Appeal of His Tax Fraud Conviction
Ellen Podgor (Stetson) of our sister White Collar Crime Blog reports that the 11th Circuit has granted actor Wesley Snipes oral argument in the appeal of his conviction on three misdemeanor tax fraud counts. Oral argument is scheduled for November 2009, so Mr. Snipes should remain free on bail until well into 2010. Ellen notes that the 11th Circuit last year granted oral argument in only 16% of criminal appeals, so this is a real coup for the Snipes defense team.
More on DePaul's Firing of Dean Weissenberger
Following up on my previous coverage of DePaul's firing of Dean Glen Weissenberger:
- DePaul Fires Dean in Dispute Over Tuition to be Retained by Law School (6/19/09)
- DePaul's Firing of Dean Glen Weissenberger Is Universally Condemned (6/21/09)
- DePaul Names Illinois Judge as Interim Dean Over Unanimous Opposition of Faculty (6/22/09)
- Leiter Condemns DePaul's Firing of Dean Glen Weissenberger (6/24/09)
In Conflict Between DePaul University Officials, Students Over Ousted Law Dean Hits Facebook, The Shark reports on several statements made by Provost Epps at a meeting with DePaul students (a complete account is in this Facebook post):
- University officials gave Dean Weissenberger the opportunity to resign, but he refused.
- Dean Weissenberger consistently spent more than the law school budget allowed, in excess of $1 million.
- Dean Weissenberger filled four positions at the law school without permission from the provost.
- Dean Weissenberger's decision to contact the ABA was "highly irregular" and "making mischief."
A DePaul faculty member shared with me for posting on TaxProf Blog an email from Dean Weissenberger to the faculty addressing the circumstances of his firing:
From: Weissenberger, Glen
Sent: Tue 6/23/2009 7:56 PM
Subject: RE: The MeetingColleagues,I would be happy to clarify with the faculty any facts regarding my termination. I would be pleased to meet with you and set the record straight. The statements attributed to Mary Dempsey, John Simon and and Helmut Epp are misleading if not outright false, and I would happy to clarify what actually occurred in regard to every matter..For now, let me assure you that I did not make unauthorized tenured offers. Early in the process I cleared these appointments with Kelly Johnson, and I have the e-mail to prove it. We also reported early in the process in writing that we would be making lateral, tenured appointments. New hiring protocols were subsequently rolled out this year, but we had already complied with them. Brian Havel is quite familiar with our compliance. Without checking the record, Provost Epp sent me an e-mail while I was at the AALS meeting in San Diego instructing me to rescind or withdraw our four offers within 24 hours and to demonstrate I had done so by sending him tracking receipts. I responded by e-mail and told him I would not do so. I frankly spent several days thinking I would be fired. When I returned to Chicago, I met with the provost, and he backed down. To suggest that this is a basis for my termination is false and disingenuous. Yes, I admit that many deans would have terminated the offers as directed to save their jobs, but in this case, the only thing I am guilty of is standing up to an abuse of authority.I will be happy to discuss both the fiscal matters and the ABA reporting matters with the faculty. Very quickly, the deficit spending in certain accounts was a matter that has continued for several years. Every year for the past several years, we cured those deficits with gift monies and other discretionary money. We were frequently commended by the provost for honorably curing the deficits. We did this even in years when the university failed to transfer funds to the law school pursuant to Margin Agreement. You can't imagine how deeply offended I am that this mutually condoned practice has been cited as a basis for my termination, and that members of the Board of Trustees have been mislead to believe that I have not exercised fiscal responsibility.As to ABA reporting, clearly the Board members have been mislead. I cannot begin here to explain the complexity of the reporting to the ABA regarding the Margin Agreement, but let me assure you that getting this matter right with the ABA will determine our fiscal viability for a long time. That is why when I discovered a problematic aspect of the University's calculation of the margin, I sent a letter to the ABA. I was told by the ABA that I had a duty to do this, and I advised the provost that I would send the letter. I followed a protocol that I had a duty to follow, and as such, this simply cannot be a basis for termination. Just to point out how slippery these issues are, the provost handed out a spread sheet at the meeting on Monday. I took one look at it and realized that it was not relevant to the issue being discussed. The document referred to BUDGETED income and expenses. The Margin Agreement is based on ACTUAL income and expenses. In fact the whole idea behind the Margin Agreement, is to return actual revenue to College of Law when it exceeds the budgeted revenue. Again, I am deeply offended that this type of disingenuousness is used to mislead the faculty and the trustees.I really don't want to debate the provost and the president about my record. I am proud of everything we have accomplished in seven years and the record, even with the fabrications, cannot possibly justify termination. I can absolutely assure you that I have never acted improperly as to hiring, the budget or the ABA. What I am guilty of is mastering these areas in a way that threatens those do not want to adhere to the principles of shared governance. I have also demonstrated a leadership style that is fearless in the face of intimidation and bullying.Again, I am happy to meet with the faculty to discuss any facts it needs to have clarified.As always, I am grateful for your support.GlenP.S. It's been a great run, and I loved every minute of it no matter how it ended. Thanks. I am proud of all of you.
Top 5 Tax Paper Downloads
There is a lot of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with three new papers debuting on the list at #3, #4, and #5:
1. [384 Downloads] Now You See it, Now You Don't: Exiting a Partnership and Making Gain Disappear, by Howard Abrams (Emory)
2. [261 Downloads] Measuring Rates of Return for Lobbying Expenditures: An Empirical Analysis Under the American Jobs Creation Act, by Raquel Meyer Alexander (University of Kansas, School of Business), Stephen W. Mazza (University of Kansas, School of Law) & Susan Scholz (University of Kansas, Accounting and Information Systems Area)
3. [171 Downloads] The Obama International Tax Plan: A Major Step Forward, by Reuven S. Avi-Yonah (Michigan)
Cap-and-Trade: The Song
The House on Friday approved the cap-and-trade bill, 219-212 . Here is the Tax Foundation's perspective on the legislation:
Shaviro: Internationalization of Income Measures and the U.S. Book–Tax Relationship
Daniel N. Shaviro (NYU) has published Internationalization of Income Measures and the U.S. Book–Tax Relationship, 62 Nat'l Tax J. 155 (2009). Here is the abstract:
Taxable income and financial accounting income are measures that use the same name but serve different purposes, leading to some differences in how they might ideally be defined. However, concern about managerial incentive problems may support integrating them, either to increase the accuracy of amounts reported or to reduce the resources that managers expend on reducing taxable income and increasing reported earnings. Political incentive problems, on the other hand, arguably support separating the measures, so that legislative eagerness to control the tax base need not promote politicization of accounting standards. The case for a largely one–book system may grow stronger, however, if pressures for international convergence in defining income on both the tax and accounting fronts lead to reduced politicization of both.
June 27, 2009
Tax Court Disallows Deductions for Unsubstantiated Expenses of Thomson-West Sales Rep
In Kyne v. Commissioner, T.C. Summ. Op. 2009-98 (June 25, 2009), the Tax Court upheld the IRS's disallowance of a Thomson-West sales rep's deductions for medical expenses, charitable contributions, and miscellaneous itemized deductions (including car expenses, parking fees and tolls, home office expenses, meals and entertainment expenses, and cell phone expenses) because he failed to provide substantiation for the expenses beyond those allowed by the IRS.
Income Redistribution Under Obama's Budget
The Tax Foundation has published How Much Does President Obama’s Budget Redistribute Income?:
New analysis of President Obama's Budget finds that he is targeting the nation's highest earners for greater income redistributions. By 2012, the federal government is scheduled to be redistributing an extra $79 billion from the top-earning 5% of American families, and $71 billion of that will be paid by the top-earning 1% of families.
Hanlon & Maydew: Book–Tax Conformity: Implications for Multinational Firms
Michelle Hanlon (University of Michigan, Ross School of Business) & Edward L. Maydew (University of North Carolina, Kenan-Flagler Business School) have published Book–Tax Conformity: Implications for Multinational Firms, 62 Nat'l Tax J. 127 (2009). Here is the abstract:
This paper examines the implications for multinational firms of recent proposals to conform tax and financial reporting (i.e., book–tax conformity). Proponents of book–tax conformity argue that the current dual system in the U.S. allows firms to simultaneously manage their taxable income downward while managing their book income upward. By requiring book–tax conformity, they contend that firms will be forced to trade off reporting high earnings numbers to shareholders and reporting low earnings to the taxing authority, resulting in improved financial reporting and less tax avoidance. Reduced compliance costs and easier auditing have also been cited as potential benefits of book–tax conformity. However, before one can evaluate the costs and benefits of book–tax conformity it is necessary to understand international implications of conformity, particularly regarding the foreign operations of U.S. multinationals. We describe several possible approaches to implementing book–tax conformity for firms that have both domestic and foreign operations. We discuss issues likely to arise with each approach and conjecture at the behavioral responses to each. Using firm–level financial data from Compustat, we simulate the effects of book–tax conformity on publicly traded U.S. firms. Specifically, we simulate the effects of book–tax conformity on the level and variability of tax payments/collections.
June 26, 2009
Settling Michael Jackson's Estate May Be a Thriller for the Lawyers
Business Week: Settling Michael Jackson's Estate May Be a Thriller, by Christopher Palmeri:
The King of Pop will likely leave behind one royal estate battle.
Michael Jackson, the onetime child star whose string of hit songs got people boogying from Boise to Bahrain, died suddenly on June 25 after being rushed to UCLA Medical Center in Los Angeles in a coma. The singer faced a near-constant drumbeat of legal troubles in life. He'll likely cue up plenty of them in death as well.
Although he sold hundreds of millions of records, Jackson's biggest financial hit is a 50% interest in a music publishing catalog that includes the rights to the Beatles' songs.
Jackson, 50, always stayed one beat ahead of a conga line of creditors. At every turn there seemed to be one more wealthy benefactor to bail him out.
Wall Street Journal: Jackson Estate Likely A Tangled Affair, by Arden Dale:
Along with the hit songs and his title as the King of Pop, Michael Jackson will leave a tangled estate. Debt, a byzantine array of business ventures and a non-traditional family promise to be among the legacies of the singer, who died unexpectedly on Thursday at age 50.
Three themes will surely be prominent as the story unfolds, according to Renee Gabbard, a partner and head of the wealth management practice in the Costa Mesa, Calif. office of law firm Paul, Hastings, Janofsky & Walker LLP. They are privacy, royalties and the estate tax.
Administering an estate like Jackson's requires an almost military-style operation, with lawyers poring over reams of contracts. "You have to marshall it, and be extremely organized and logical," says Gabbard. Jackson was famously private and his lawyers are likely to try to preserve that legacy. If a California resident, the singer is likely to have left a revocable trust that can keep many details of the estate secret. Nonetheless, it's difficult to get all of the assets in a huge, complex estate into a revocable trust. Contracts, royalties, partnerships and other elements of the estate invariably get left out.
WSJ Law Blog: On Michael Jackson and the Law:
When the immediate tributes and remembrances and eulogies have run their course on the King of Pop, attention will likely turn to a handful of more mundane questions: what happens to Neverland, to his collection of curios; what, if anything, becomes of the rights to his musical legacy? All of these questions, of course, will involve lawyers. Dozens upon dozens of lawyers.
Bill Introduced to Allow Home Office Standard Deduction
Senators Olympia J. Snowe (R-ME) and Kent Conrad (D-ND) and Rep. Charles A. Gonzalez (D-TX) have introduced the Home Office Tax Deduction Simplification and Improvement Act of 2009. From Web CPA:
The bipartisan bill, introduced in both the House and Senate, would direct the Treasury Secretary to create an optional, easy-to-use standard deduction to encourage greater use of the home office tax incentive. In addition to instituting an optional home office tax deduction, the [bill] would require the IRS to streamline its reporting requirements to clearly identify the portion of the deduction devoted to real estate taxes, mortgage interest and depreciation in order to further reduce the burden on the taxpayer....
Recent research from the U.S. Small Business Administration indicates that roughly 53% of America’s small businesses are home-based, but few home businesses actually take advantage of the tax incentive because of the complex, rigid reporting requirements.
See also Rep. Gonzalez's press release.
Alm & Yunus: Spatiality and Persistence in U.S. Individual Income Tax Compliance
James Alm (Georgia State University, Department of Economics, Andrew Young School of Policy Studies) & Mohammad Yunus have published Spatiality and Persistence in U.S. Individual Income Tax Compliance, 62 Nat'l Tax J. 101 (2009). Here is the abstract:
This paper examines the twin issues of spatiality and persistence in the individual income tax evasion decision. The issue of persistence arises through accumulated learning over time; spatiality arises for several reasons, including the exchange of information between taxpayers, the social norm of tax compliance, and the difficulties faced by individuals with dynamic stochastic decision problems like tax evasion. The paper uses state–level, time–series, cross–section data for the years 1979 to 1997 to estimate the factors that affect per return evasion of the individual income tax. The estimation methods incorporate both spatial dependence and dynamic considerations; they also consider the potential endogeneity of the audit rate. The empirical results provide strong and robust support for both spatiality and persistence in tax evasion. The results also show a large deterrent effect from higher audit rates.
Polito: Trade or Business Within the U.S. as an Interpretive Problem
Anthony P. Polito (Suffolk) has published Trade or Business Within the United States as an Interpretive Problem Under the Internal Revenue Code: Five Propositions, 4 Hastings Bus. L.J. 251 (2008), on SSRN. Here is the abstract:
Whether a particular set of activities constitute the conduct of a trade or business within the United States is an ongoing interpretive question affecting many foreign taxpayers. It controls what form of U.S. taxation, if any, applies to them. In the domestic context a trade or business entails profit-oriented non-investment activity that is regular, continuous and considerable. It is tempting, in the transition to the international context, to conclude that the conduct of a trade or business within the U.S. requires that the taxpayer's U.S. activities must be regular continuous, and considerable, and the standard is often articulated in this quantitative manner.
This Article, however, concludes that, as an interpretive matter, this approach is mistaken. Instead the Article disentangles the original inquiry into two distinct inquiries:
- Is the foreign taxpayer engaged in a trade or business?
- Is the conduct of the trade or business within the United States?
The answer to the former question is quantitative. Once the existence of a trade or business is established, however, no minimum quantum of U.S. activity is necessary to bring a foreign trade or business into the United States. Instead, the necessary condition for an affirmative answer to the second question is qualitative, focusing on the types of U.S. connections not their regularity, continuity, or considerableness. In answering these questions, the Article advances a series of five distinct propositions that creates an interpretive reconciliation of the various authorities addressing this question.
UC-Berkeley & Oxford Host Week-Long Workshop on International Taxation
The UC-Berkeley Robert D. Burch Center for Tax Policy and Public Finance and the Oxford University Centre for Business Taxation are sponsoring a five day Workshop on International Taxation this week "intended to promote the integration of the relevant tools of economic analysis, and the results from the economics literature, into tax law research and instruction in the area of international taxation":
A group of leading tax law professors who have worked in the area of international taxation will meet together in daily seminars aimed at providing a comprehensive review of the state of thinking on this very complex topic. Some of the issues addressed at the conference will be the effects of tax regimes on international investment, location,and financing patterns; international tax avoidance and efforts to prevent it; the meaning and usefulness of different norms typically used to evaluate international tax systems; the impact of tax havens and other low-tax jurisdictions; the theory and evidence on international tax competition; the problems involved in integrating domestic tax reforms with existing international tax treaties and arrangements; the possible uses of apportionment rules for allocating income and deductions among jurisdictions; and the relationship between tax and trade polices.
- Alan J. Auerbach (UC-Berkeley, Burch Center Director) (Conference Co-Host)
- James Hines (Michigan) (Conference Co-Host)
- Michael Devereux (Oxford) (Conference Co-Sponsor)
- Joe Bankman (Stanford)
- Lily Batchelder (NYU)
- Judith Freedman (Oxford)
- David Gamage (UC-Berkeley)
- Mark Gergen (UC-Berkeley)
- Robert Green (Cornell)
- Mitchell Kane (NYU)
- Edward Kleinbard (USC)
- Michael Knoll (Penn)
- John McNulty (UC-Berkeley)
- Ruth Mason (UConn)
- Eric Rakowski (UC-Berkeley)
- Alex Raskolnikov (Columbia)
- Julie Roin (Chicago)
- Daniel Shaviro (NYU)
- David Weisbach (Chicago)
- George Yin (Virginia)
For the schedule and readings, see here.
Illinois Admitted Unqualified Applicants in Exchange for Gov. Blagojevich's Help Getting Jobs for Grads at Bottom of Class, to Boost Law School's Ranking
In today's Chicago Tribune, U. of I. Jobs-for-Entry Scheme; E-mails Reveal Law School Put a Price on Admission of Unqualified Candidate:
What does it cost to get an unqualified student into the University of Illinois law school?
Five jobs for graduating law students, suggest internal e-mails released Thursday.
The documents show for the first time efforts to seek favors -- in this case, jobs -- for admissions, the most troubling evidence yet of how Illinois' entrenched system of patronage crept into the state's most prestigious public university.
They also detail the law school's system for handling "Special Admits," students backed by the politically connected, expanding the scope of a scandal prompted by a Chicago Tribune investigation.
In one e-mail exchange, University of Illinois Chancellor Richard Herman forced the law school to admit an unqualified applicant backed by then- Gov. Rod Blagojevich while seeking a promise from the governor's go-between that five law school graduates would get jobs. The applicant, a relative of deep-pocketed Blagojevich campaign donor Kerry Peck, appears to have been pushed by Trustee Lawrence Eppley, who often carried the governor's admissions requests.
When Law School Dean Heidi Hurd balked on accepting the applicant in April 2006, Herman replied that the request came "Straight from the G. My apologies. Larry has promised to work on jobs (5). What counts?"
Hurd replied: "Only very high-paying jobs in law firms that are absolutely indifferent to whether the five have passed their law school classes or the Bar."
Hurd's e-mail suggests that students getting the jobs are to be those in the "bottom of the class." Law school rankings depend in part on the job placement rate of graduates. ...
The e-mails paint a picture of how law school officials operated a parallel admissions review for clouted students. They withheld denials until the year's end, cleared decisions with top university administrators, and debated whether to accept candidates with stronger credentials -- or stronger connections. Several clouted students received full-ride scholarships.
In private, law school officials showed their disdain for the special admits and even worked behind the scenes to campaign against them. At one point in March 2007, Hurd asked staffers to collect data about how the clouted students performed at law school to provide a weapon against their admittance. ...
But their dislike of the program didn't stop administrators from accepting the students. "I'll do my best to keep the number of Provostian admits to a minimum, and extract payment for them," Hurd wrote to her admissions staff in 2003.
(Hat Tip: Inside Higher Ed.)
- Above the Law: University of Illinois College of Law Scandal: Now With Emails
- The Faculty Lounge: Admissions At Illinois: Corrupt Pols Meet Snarky Law Dean
- Law School Headlines: The Scandalous University of Illinois Emails - With Excerpts
- WSJ Law Blog: Blago’s Back: Illinois Admissions Scandal Widens to the Law School
Walker: Improving the Long-Term Focus of Executive Pay
David I. Walker (Boston University) has posted The Challenge of Improving the Long-Term Focus of Executive Pay on SSRN. Here is the abstract:
A consensus is developing that executive compensation in the U.S. is inadequately linked to long-term company performance, resulting in reckless, short-term decision making. Congress, the Obama administration, and academic commentators have recently embraced dramatic restrictions on the form and holding period of senior executive pay, at least at some companies. A common view, apparently, is that while regulation of the amount of executive pay would do more harm than good, regulation of form and term is desirable.
This essay questions that view. It highlights the challenges of fruitfully regulating the term and form of pay arising from the complexity and diversity of executive pay arrangements, uncertainty as to the underlying reasons (and hence appropriate remedies) for short-termism, and the conflict between deterring reckless short-term behavior and encouraging sufficient risk-taking to maximize share value over the long term. This essay goes on to analyze and critique existing regulatory proposals, and, while not endorsing a regulatory solution, offer two ideas that policy makers should consider if faced with the job of crafting a regulatory response to short-termism: focusing regulation solely on the term of pay, leaving form to individual company discretion, and adopting a comprehensive disclosure-based response.
Taxes as a Cause of Small Business Bankruptcies
Rafael Efrat (California State University-Northridge, College of Business and Economics) has published The Tax Burden and the Propensity of Small-Business Entrepreneurs to File For Bankruptcy, 4 Hastings Bus. L.J. 175 (2008). Here is the Conclusion:
Consistent with the growing tax burden on small-business owners, as well as the growing body of evidence linking higher tax burden with limited entrepreneurial growth and higher closure rates, this study has found that tax problems constitute an important reason for bankruptcy filings for a sizable number of entrepreneurs. Interestingly, those entrepreneurs that attribute their business collapse to tax problems do not come from disadvantageous background. Instead, the average entrepreneur in the bankruptcy sample that has faulted tax problems for his financial woes was typically older male, white, native-born, well-educated and an experienced business owner. Nonetheless, the typical entrepreneur with tax problem in the bankruptcy sample was facing enormously higher debt burden with more than five times as much debts as other entrepreneurs in the bankruptcy sample.
While this study confirmed the prevalence of tax problems as a cause of business failure, it did not ascertain the exact nature of the tax problems faced by many of these entrepreneurs in bankruptcy. Future research might explore the pervasiveness and the nature of tax debts among bankruptcy petitioners; ascertain the amount of tax debt bankruptcy entrepreneurs typically report at the time of bankruptcy filing; identify the tax burden at the time of bankruptcy filing relative to outstanding debt and income of the petitioners; and determine the characteristics of bankruptcy petitioners that tend to report tax obligations.
June 25, 2009
The Washington Metro Subway Crash: "Tax Law Should Raise Revenue, Not Kill People"
Tuesday's post on Sarah Lawsky's observations on How Tax Law Caused the Washington Metro Train Wreck has attracted a lot of attention. Senate Finance Committee Ranking Member Charles Grassley today issued this press release:
Senator Chuck Grassley is urging House Majority Leader Steny Hoyer to include language in any proposal to give the Washington Metropolitan Area Transit Authority necessary additional funds for maintenance and upgrade of subway equipment to make sure the money would be used for safety improvements and not to pay off transit agencies’ obligations to corporations, including foreign corporations, who use the agreements as tax shelters.
Grassley also has written to the American Public Transportation Association to ask how many other public transit systems may be constrained from making equipment upgrades by tax-advantaged leases. ...
In 2006, the Washington Metropolitan Transit Authority rejected recommendations made by the National Transportation Safety Board to retire or do a heavy overhaul on the 1000 Series, Rohr railcars because “WMATA is constrained by tax advantage leases, which require that WMATA keep the 1000 Series cars in service at least until the end of 2014.”
Sarah has more:
- The Metro Crash and Tax: A WMATA Leaseback Agreement
- The Metro Crash and Tax: Known Unknowns
- The Metro Crash and Tax: Leaseback Infrequently Asked Questions
- Bloomberg: Metro to Use Funds for Upgrades, Not Bank Lease Deals
- Dow Jones: DC Metro Delayed Upgrades Due To Tax Shelter Deal
- New York Times: Crash Puts Focus on Aging Rail Fleets
- New York Times: A Tax Shelter and the D.C. Train Crash
- Wall Street Journal: Metro Crash Blamed on Tax-Shelter Deal
- WSJ Law Blog: Did Tax Law Cause the D.C. Train Wreck?
By now, just about everybody knows of the horrible and deadly crash of two subway trains in Washington, D.C., on what is known as the Metro system. Prof. Paul Caron, on his TaxProf Blog, noted that Sarah Lawsky, has written about The Washington Metro Crash and Tax, speculating that sale-leaseback arrangements may have locked the Washington Metropolitan Transit Authority “into using outdated and unsafe equipment and thus made this crash even more deadly than it might otherwise have been.”
I live in the Washington metro area. I travel on the transit system regularly; my family travels on the Metro. I work for Tax Analysts, which sponsors this site; we lost a family member in this accident.
Tax pinheads –- and you can call me one if you like –- like to sit around and talk about what is the stupidest tax law we have. Now maybe we should start talking about which one is the deadliest.
A tax system is supposed to collect revenue. That’s it. No social engineering or favoring one group over another. But if it starts to contribute to killing people, I think we can all agree that it is time to change our tax system.
5th Circuit Upholds Civil Liability of Lawyer Who Wrote Tax Opinion in Jenkens & Gilchrist Tax Shelter
The Fifth Circuit has upheld a district court's finding that a Louisiana lawyer (William E. Bradley ) who wrote a tax opinion (for which he was paid $25,000) supporting a Jenkens & Gilchrist tax shelter was civilly liable to an investor in the tax shelter, but reversed the district court's RICO award of $6.43 million. Ducote Jax Holdings LLC v. Bradley, No. 08-30037 (5th Cir. Jun 19, 2009). For more, see ataxingmatter.
Garrett & Coughlin: Income Elasticity of Demand for Lottery Tickets
Thomas A. Garrett (Federal Reserve Bank of St. Louis) & Cletus C. Coughlin (Federal Reserve Bank of St. Louis) have published Inter–temporal Differences in the Income Elasticity of Demand for Lottery Tickets, 62 Nat'l Tax J. 77 (2009). Here is the abstract:
We estimate annual income elasticities of demand for lottery tickets using county–level panel data for three states and find that the income elasticity of demand (and, thus, the tax burden) for lottery tickets has changed over time. This is due to changes in a state’s lottery game portfolio and the growth in consumer income more so than competition from alternative gambling opportunities. Trends in the income elasticity for instant and online lottery games appear to be different. Our results raise doubts about the long–term growth potential of lottery revenue and have policy implications for state governments and those concerned about regressivity.
First UBS Client Pleads Guilty to Offshore Tax Evasion
The Department of Justice and IRS announced that the first UBS client pleaded guilty today to tax evasion. Steven Michael Rubinstein, a Boca Raton accountant, pleaded guilty to filing a false 2004 tax return by failing to disclose the existence of a Swiss bank account maintained by UBS of which he was the beneficial owner and failed to report any income earned on that account. United States v. Rubinstein, S.D. Fla., No. 09-6116).
Obama Proposes Using IRS Data to Simplify Process for Applying for College Financial Aid
The Obama Adminsistration yesterday proposed simplification of the Free Application for Federal Student Aid (FAFSA) form, including allowing student applicants and their parents to directly retrieve relevant tax information from the IRS to help them complete the online FAFSA. "When you're online filling out the FAFSA, there'll be a button that says, 'Want to go get your IRS data?'" said IRS Commissioner Doug Shulman.
- Associated Press
- Chronicle of Higher Education
- Inside Higher Ed
- New York Times
- Wall Street Journal
- Washington Post
Global Tax Competition and the Crisis of Constitutional Democracy
Ming-Sung Kuo (Max Planck Institute) has posted (Dis)Embodiments of Constitutional Authorship: Global Tax Competition and the Crisis of Constitutional Democracy, 41 Geo. Wash. Int'l L. Rev. ___ (2009), on SSRN. Here is the abstract:
The initial onset of globalization generated optimism regarding the possible creation of a global legal universe capable of transcending the borders of demos-centered constitutional states. This optimism, however, remains unfulfilled. Constitutional democracy, meanwhile, as currently understood, is undergoing an institutional self-transformation. This Article rethinks the constitutional order in the age of globalization. The approach detailed here addresses legal globalization by inspecting the constitutional welfare state in light of contemporary global tax competition. This argument emphasizes that globalization in general and global tax competition in particular expose the limits of the constitutional state’s governing ability. Specifically, the institutional responses to global tax competition from constitutional states reveal the existential challenge to constitutional democracy created by globalization: the undermining of the legitimacy of constitutional order by the dissolution of “constitutional authorship.” A closer inspection shows that intrinsic to those institutional responses is the common feature that the relationship between the governing authority and its citizens in these strategies inevitably dissolves. The resulting disembodiment of “constitutional authorship” has led to the current existential crisis of constitutional democracy.
GAO Recommends Improvements to IRS Internal Controls
The purpose of this report is to discuss issues identified during our audit of IRS’s financial statements as of, and for the fiscal year ending, September 30, 2008, regarding internal controls that could be improved for which we currently do not have a specific recommendation outstanding. Although not all of these issues were discussed in our report on the results of our fiscal year 2008 financial statement audit, they all warrant IRS management’s attention. This report contains 16 recommendations that we are proposing IRS implement to improve its internal controls. We will issue a separate report on the implementation status of recommendations from our prior IRS financial audits and related financial management reports, including this one. We conducted our audit in accordance with U.S. generally accepted government auditing standards.
Dickinson: The Socratic Method After the Carnegie Report
Joseph A. Dickinson (Franklin Pierce) has published Understanding the Socratic Method in Law School Teaching After the Carnegie Foundation's Educating Lawyers: Preparation for the Legal Profession, 31 W. New Eng. L. Rev. 97 (2009). Here is the abstract:
For many committed law school teachers, the traditional Socratic pedagogy they practice is the irreducible core of legal education. For others its continued practice is a scandal and,more damning, an impediment to learning the practice of law. The Carnegie Foundation's Educating Lawyers: chose not to take a position in this debate, while framing it, thus leaving its call for reform ungrounded.
The Organized Tax Lawyer
The Organized Lawyer is designed to address the needs of all types of lawyers - corporate, nonprofit, government, private, academic, and solo practitioners. Whether you're in a cubicle, corner office, or working out of your home, this book will help you develop and maintain a more organized space.
What sets this book apart from other organizational guides is its approach. Many books offer valuable tips and tools, but they fail to address how different people have different ways of looking at their things. I believe we all have a particular organization style that impacts how we view our things, live with them, and keep them organized — or disorganized. What works for some does not work for others.
June 24, 2009
Critical Tax Theory: An Introduction
Tax law is political. This book highlights and explains the major themes and methodologies of a group of scholars who challenge the traditional claim that tax law is neutral and unbiased. The contributors to this volume include pioneers in the field of critical tax theory, as well as key thinkers who have sustained and expanded the investigation into why the tax laws are the way they are and what impacts tax laws have on historically disempowered groups. This volume, assembled by two law professors who work in the field, is an accessible introduction to this new and growing body of scholarship. It is a resource not only for scholars and students in the fields of taxation and economics, but also for those who engage with critical race theory, feminist legal theory, queer theory, class-based analysis, and social justice generally. Tax is the one area of law that affects everyone in our society, and this book is crucial to understanding its impact.
- Foundations of Critical Tax Theory, by Grace Blumberg
- Historical Perspectives on Taxation, by Carolyn C. Jones & Marjorie E. Kornhauser
- The Goals of Tax Policy, by Dorothy A. Brown, Lisa C. Philipps, Nancy C. Staudt, Anthony C. Infanti & Anne L. Alstott
- Critical Tax Theory Meets Practice, by Marjorie E. Kornhauser, Daniel M. Schneider, Anthony C. Infanti & Gwen Thayer Handelman
- Race and Taxation, by Alice G. Abreu, Beverly I. Moran, William Whitford, Dorothy A. Brown, Mylinh Uy & David A. Brennen
- Gender and Taxation, by Karen B. Brown, Nancy C. Staudt, Wendy C. Gerzog & Marjorie E. Kornhauser
- Sexual Orientation and Taxation, by Patricia A. Cain, Anthony C. Infanti & Nancy J. Knauer
- The Family and Taxation, by Marjorie E. Kornhauser, Lily Kahng, Edward J. McCaffery, Bridget J. Crawford, Dorothy A. Brown & Mary Louise Fellows
- Class and Taxation, by Michael A. Livingston, Francine J. Lipman, Dennis J. Ventry, Jr. & Wilton B. Hyman
- Disability and Taxation, by Theodore P. Seto, Sande L. Buhai, Francine J. Lipman & David G. Duff
- Global Critical Perspectives on Taxation, by Taunya Lovell Banks, Francine J. Lipman, Anthony C. Infanti, Karen B. Brown & Miranda Stewart
- Critical Perspectives on Critical Tax Theory, by William J. Turnier, Pamela Johnston Conover, David Lowery, Lawrence A. Zelenak, Joseph M. Dodge & Amy L. Wax.
IRS Releases 2009 Form 1040
IRS Electronic Advisory Committee Presents Annual Report to Congress
The IRS Electronic Advisory Committee (ETAAC) today presented its 2009 Annual Report to Congress:
ETAAC is making ten recommendations in this 2008/2009 report to Congress that we believe are critical to achieving the Congressionally-mandated 80% electronic filing target. These recommendations focus on developing an electronic IRS whose services are strategically supported and trusted and are fast and easy to use.
- Congress should enable the IRS to require preparers to e-file.
- Congress should fund, and the IRS should complete, the “four pillars” of its Modernization Program.
- The Data Strategy project should be comprehensive.
- The IRS should modernize preparer e-services.
- The Electronic Services Strategy should be an enterprise priority.
- The IRS and industry should collaborate on tax software standards.
- The IRS should rebrand e-file.
- The IRS should develop an operational process for e-file rejects.
- The IRS should renew the Free File Alliance agreement.
- The IRS should ease the signature burden for information return sharing.
Minnesota Deans Discuss U.S. News Law School Rankings
(Hat Tip: Law School Headlines.)
Dokko: Does the NEA Crowd Out Private Charitable Contributions to the Arts?
Jane K. Dokko (Federal Reserve Board) has published Does the NEA Crowd Out Private Charitable Contributions to the Arts?, 62 Nat'l Tax J. 57 (2009). Here is the abstract:
This paper investigates the mechanism by which the federal government’s funding of the arts through the National Endowment for the Arts (NEA) displaces private charitable contributions to non–profit arts organizations. I estimate that private charitable contributions to arts organizations increased by 50 to 60 cents due to a major funding cut to the NEA during the mid–1990s. These increases, however, also coincided with, on average, a 25 cent increase in fund–raising expenditures by arts organizations for every dollar decrease in government grants. The estimate of crowding out found in this paper is relatively large, particularly for a study using a micro–data set. I argue that an appropriate interpretation of an estimate of a crowding–out parameter, in general, depends crucially on the context.