Wednesday, June 30, 2010
(Hat Tip: Kirk Stark.)
Working for a company as rich as Google comes with an incredible number of fringe benefits: the free food, the free laundry, the doctor on duty at company headquarters and the impressive five months of maternity leave with full pay and benefits, to mention a few.
So it is not entirely surprising that the company is about to introduce another set of benefits that pushes the envelope — this time, geared toward its gay and lesbian workers.
On Thursday, Google is going to begin covering a cost that gay and lesbian employees must pay when their partners receive domestic partner health benefits, largely to compensate them for an extra tax that heterosexual married couples do not pay. The increase will be retroactive to the beginning of the year. ...
Under federal law, employer-provided health benefits for domestic partners are counted as taxable income, if the partner is not considered a dependent. The tax owed is based on the value of the partner’s coverage paid by the employer.
On average, employees with domestic partners will pay about $1,069 more a year in taxes than a married employee with the same coverage, according to a 2007 report by M. V. Lee Badgett, director of the Williams Institute, a research group that studies sexual orientation policy issues.
So Google is essentially going to cover those costs, putting same-sex couples on an even footing with heterosexual employees whose spouses and families receive health benefits. ...
The extra compensation to cover the domestic partner tax will apply only to same-sex domestic partners, Mr. Bock said, because heterosexual couples can avoid the added tax by marrying. (Same-sex couples can make their unions official in several states, but their relationship will not be federally recognized.) ...
Google isn’t the first company to “gross up” their employees’ pay, as raises to cover taxes are known. According to the Human Rights Campaign, a handful of other organizations, including Cisco, Kimpton Hotels and the Gates Foundation, do so as well. Benefits experts said a few other companies provided the extra compensation, though it still amounted to a relatively small number.
But given the competitive nature of the benefits culture in Silicon Valley, where companies often offer extra perks to attract top employees, Google’s decision could lead to policy reviews, experts said.
IRS has made progress in improving its internal controls and financial management since its first financial statement audit in 1992, as evidenced by 10 consecutive years of clean audit opinions on its financial statements, the resolution of several material internal control weaknesses, and actions resulting in the closure of over 250 financial management recommendations. This progress has been the result of hard work throughout IRS and sustained commitment at the top levels of the agency. However, IRS still faces significant financial management challenges in (1) resolving its remaining material weaknesses in internal control, (2) developing outcome-oriented performance metrics, and (3) correcting numerous other internal control issues, especially those relating to safeguarding tax receipts and taxpayer information. At the beginning of GAO’s audit of IRS’s fiscal year 2009 financial statements, 62 financial management–related recommendations from prior audits remained open because IRS had not fully addressed the issues that gave rise to them. During the fiscal year 2009 financial audit, IRS took actions that GAO considered sufficient to close 18 recommendations. At the same time, GAO identified additional internal control issues resulting in 41 new recommendations. In total, 85 recommendations remain open.
Prof. Seto discusses serious problems raised by Citizens United that affect the integrity of the tax system and proposes a possible solution.
All Tax Analysts content is available through the LexisNexis® services.
This work contains the full text of the papers presented at the fourth Tax Law History Conference in July 2008. The Conference was organised by the Cambridge Law Faculty's Centre for Tax Law.
The matters discussed are broad and include the extent to which charges levied by the Court of Wards were seen as taxes, the seventeenth century poll tax, traders, the excise and the in early nineteenth century England and the right of the Crown's right to elect between different heads of charge to income tax. There are also chapters on taxation in the reign of King John and Stamp Duties in the 18th Century.
International tax matters include a history of company residence and a paper on the first UK-Australia Double Tax Agreement. Papers concentrating on other countries include papers on the history of income tax in Malta (1641-1949), the history of land tax in Australia, the history of the legal definition of charity and its application to tax law and a paper on the psychology of taxation as shown by the 1936 US Election.
Paula Monopoli (Maryland) reviews the piece on Jotwell.
Inheritance is an extremely significant personal, familial, social, and legal phenomenon. Due to the significance of inheritance in wealth distribution and family relations, it is essential to uncover and discuss its gendered dimensions, which have benefited from surprisingly little empirical or legal attention. This article provides an updated state-of-the-art review of the limited available empirical data on women as legators and on women as heirs in different parts of the world. The review is based on 23 studies, including the original results from a study the author conducted on inheritance in Israel, which illuminates the reach of insights that can be drawn from an inheritance study that focuses on gender. The review shows a sharp dichotomy between the ongoing discrimination women experience in non-Western societies in relation to inheritance and the social reality in the West, in which inheritance is a rare economic space in which women enjoy privilege, power, and control. Although egalitarian inheritance laws have had a dramatic impact on women's representation in intestacy and their participation in will writing in the West, the data demonstrate that even in this part of the world, cultural patriarchal practices persist and limit women's inheritance rights and, accordingly, point to the importance of creating legal mechanisms that can counterbalance these practices. Moreover, the available data indicate the value of freedom of testation for women and the importance of ceasing to regard care as cause for suspicion in inheritance law, and instead viewing it as a practice deserving of reward. Finally, the article identifies the areas in which further research on gender and inheritance is warranted, hopefully spurring greater interest and developments in the field.
Following up on Sunday's post on the death of renowned tax professor (Georgetown) and tax lawyer (Fried Frank) Martin D. Ginsburg, husband of Supreme Court Justice Ruth Bader Ginsburg: over two dozen of Marty's tax friends and colleagues offer their remembrances and tributes below the fold.
- Alice Abreu (Temple)
- Ellen Aprill (Loyola-L.A.)
- Reuven Avi-Yonah (Michigan)
- Jordan Barry (San Diego)
- Linda Beale (Wayne State)
- Daniel Berman (Boston University)
- Jack Bogdanski (Lewis & Clark)
- Evelyn Brody (Chicago-Kent)
- Paul Caron (Cincinnati)
- Mark Cochran (St. Mary's)
- Sheldon Cohen (Washington, D.C. tax lawyer and former IRS Commissioner)
- Cliff Fleming (BYU)
- Jonathan Forman (Oklahoma)
- Albert Golbert (Los Angeles tax lawyer and former adjunct professor)
- James Halpern (Judge, U.S. Tax Court)
- Christopher Hanna (SMU)
- Calvin Johnson (Texas)
- Michael Knoll (Pennsylvania)
- Jeffrey Kwall (Loyola-Chicago)
- Louis Lobenhofer (Ohio Northern)
- Roberta Mann (Oregon)
- Elliott Manning (Miami
- James Maule (Villanova)
- Joel Newman (Wake Forest)
- Robert Peroni (Texas)
- Randle Pollard (Widener)
- Toni Robinson (Quinnipiac)
- Adam Rosenzweig (Washington University)
- Deborah Schenk (NYU)
- David Shakow (Pennsylvania)
- Daniel Shaviro (NYU)
Tuesday, June 29, 2010
- Proposed Chapter 3 -- Student Learning Outcomes
- Proposed Rule 24 -- Complaints Process
- Download Appeals Process Memo
- Proposed Transfer Credit Standard
- Proposed Criteria for Approval of Study Abroad Programs
- Proposed Criteria for the Approval of Summer & Intercession Program
Following up on my prior post, Rapper Method Man (Clifford Smith) Arrested on Tax Charges: Mr. Smith pleaded guilty on Monday to evading New York state taxes and paid $106,000 in restitution.
Texas Tech Prof Loses Endowed Chair After Surfing for Porn With Video Feed Still on After Teaching Distance Learning Class
50-year-old Texas Tech Health Sciences Professor Rod Hicks was instructing students this week from Austin via teleconference. We're told that when the class ended, he left the video feed open. This is when students on the other side of the feed saw Hicks surfing for sexual material. ...
We've learned through an open records request that Hicks was removed Thursday from his professorship of the endowed chair.
Treanor joins the Law Center from Fordham University, where he has served as dean of Fordham Law School since 2002. ... Treanor has served on Fordham Law’s faculty since 1991, first as associate professor and then professor before being named dean. As dean, Treanor worked to enhance the academic reputation of Fordham Law by strengthening the school’s clinical program and its global focus. ... From 1998 to 2001, Treanor served as deputy assistant attorney general in the U.S. Justice Department’s Office of Legal Counsel, where he was responsible for supplying advice to the White House and U.S. attorney general.
Proponents of repealing the estate tax have made farmers, along with small business, the face of their cause, driving some policymakers to push for special preferences for farms in estate tax law. One of the most radical of these proposed changes is an unlimited estate tax exemption for farmland, recently introduced by Rep. Mike Thompson (D-CA) in H.R. 5475. This approach is seriously misguided, for three basic reasons.
Faced with a tepid legal marketplace, law students and recent graduates (whether deferred, downsized or simply dismayed) need to rethink their career strategies to adapt to this brave new world. With significantly fewer entry-level associate positions available, now is the time to consider alternative opportunities that may not have initially appeared on your radar screen. ...
[T]here are several careers available to lawyers, including recent law school grads, that go beyond the so-called traditional practice of law. Here, three specific areas will be considered: procurement, compliance and legal administrative opportunities. ...In addition to procurement, compliance and legal administrative opportunities, there are a host of careers that recent graduates can consider, ranging from contract administration to legal publishing. Even in this challenging market, a law degree can provide meaningful career opportunities for law students and recent grads. Stay flexible in your approach, be willing to look beyond the obvious, and just hang in there. There's a place for you; it's just a matter of time.
Princeton University, the fourth- richest institution of higher education in the U.S., paid more than $10 million last year to its prosperous New Jersey community. Municipal officials and residents say the college should do more.
The university would pay about $28 million in additional property taxes if all of its land were taxed, said Princeton Borough Councilman Kevin Wilkes. The college owns 43% of the borough’s assessed land value and 13% of adjoining Princeton Township’s, Wilkes said. ...
It’s the latest round in the town-gown faceoff, as U.S. municipalities still reeling from the economic crisis turn to their local universities, whose land holdings are mostly tax-exempt, to close budget shortfalls. Those institutions say they aren’t in a position to help: They are also scrimping to save money through program and job cuts after record endowment declines. Princeton University’s investments lost 24% in the year ended June 30, 2009. The total value of the endowment fell 23% to $12.6 billion, from $16.3 billion the previous year. ...
Just one third of 30 top research universities made regular voluntary payments in lieu of taxes to their cities or towns, according to a Chronicle of Higher Education survey in January.
It's not news that some children, especially as they hit their teenage and college years, don't get along with their parents. But even experienced attorneys say it's rare when the disagreements grow to a point where litigation is required. So consider the odd case of Dana Soderberg, who went to court to force her father to live up to a deal to pay her tuition at Southern Connecticut State University. ...
Just a week ago, in "A Financial Advice Wonk Falls For The iPad," I described how I had fallen in love with the gizmo and was laboring to make it into a workhorse I could take with me on a trip to Tibet. (I was delighted to discover three U.S. Tax Code apps available, the cheapest for just 99 cents, and that I could manipulate the size of type on the iPad and ditch my reading glasses.)
Since then, I've run into some additional glitches, but also gotten some comic relief from the comments of other tax and law geeks. Robert W. Wood, of Wood & Porter in San Francisco, who writes frequently for Forbes.com as the Tax Lawyer, wrote in an e-mail that he had enjoyed the column, "Plus, I learned that the Internal Revenue Code is worth 99 cents." Paul L. Caron, [Associate] Dean at the University of Cincinnati College of Law, posted on his popular TaxProf Blog a mention of my column under the priceless headline: "How to Get Your Dean to Buy You an iPad."
The deleterious effects of student evaluations extend beyond the personal injuries these comments rehearse; they infect the entire system of higher education. Teachers who fear (correctly) that student evaluations will determine their fate become stand-up comedians — wave your arms around, praise students excessively and “dress sharp,” advises Dr. Bob — and alter their grading policy in an effort to be liked. Since “student evaluations are driven almost entirely by the perception of grades” (Troglomorphic), grade inflation — “an insidious weed choking out real education” (vince) — “is inevitable.” Once it gets going, grade inflation feeds on itself and initiates a race to the bottom, for “just as teachers in public schools will lessen their effectiveness by teaching to the test, college teachers can lessen their effectiveness by teaching to the evaluation” (Roger Bullard). ...
There are, of course, dissenters, and they raise two points: (1) that I display a profound lack of respect for students, and (2) that I offer no alternative to student evaluations and thus seem to leave students, parents and society without protection against bad and unprofessional teaching. (This is a concern expressed by fellow columnist Ross Douthat.)
The graph looks at every eight year period since 1929 (the first year for which National Accounts data is available from the Bureau of Economic Analysis) that can be thought of as a complete “administration.” It notes that there is a very strong negative correlation between the tax burden in the first two years of an administration and the economic growth that follows in the remaining six years of the administration. In plain English – the more the tax burden was reduced during the first two years of an administration, the slower the economic growth in the following six years. Conversely, the more the tax burden was raised during the first two years of each administration, the faster economic growth was during the following six years. ...Michael Kanell and I advanced several theories in
Presimetricsbut the one I think makes the most sense is that changes in the tax burden are a sign of the degree to which an administration enforces laws and regulations.
The logic is simple – (1) collectively, Americans cheat on their taxes and (2) whether the tax burden, the percentage of GDP that the government collects in taxes, rises or falls seems to have nothing whatsoever to do with whether marginal income tax rates rise or fall. Thus, one way for tax burdens to go up is increased enforcement, and one way for tax burdens to fall is decreased enforcement. ...
The graph below shows the change in the tax burden in the first two years of each 8 year administration on the horizontal axis, and the annualized change in real private investment per capita in the remaining six years along the vertical axis [click on graph to enlarge].
Notice… administrations that cut the tax burden early saw mediocre increases in private investment later. On the other hand, administrations that started out by increasing the tax burden enjoyed big increases in private investment in the remainder of their term. ...
So let me revisit once more the explanation that Michael Kanell and I put forward in
Presimetricsand which is consistent with the data presented in both graphs above. Administrations that cut the tax burden tended to do so mostly by reducing enforcement of tax laws and regulations. But people who don’t believe in enforcing tax laws are also not particularly fond of most other forms of rules and regulations, preferring a laissez faire “pro-business” government in all walks of life. Sure, there may well be many private sector winners when the government allows a free-for-all. However, as the costs of exploiting loopholes, breaking laws and creating externalities falls relative to the costs of doing productive things, fewer truly useful productive activities take place, and that kills growth.
Unmarried lovers who conceive are strangers in the eyes of the law. If the woman terminates the pregnancy, the man owes her nothing. If she takes the pregnancy to term, the man’s obligation to support her is limited. The law reflects this lovers-as-strangers presumption by making a man’s obligation towards a woman with whom he conceives derivative of his paternity-related obligations; his duty is towards his child, not towards the woman in her own right. Thus, a pregnant woman’s lost wages and other personal costs are her private problem, and if there is no child at the end of the pregnancy, there is no one — from a legal perspective — that the man must support.
The law also endorses this lovers-as-strangers default in the way in which it treats men who do support their pregnant lovers. It does this through the tax code. Current tax law regards payments between unmarried lovers as gifts or as child support. This characterization not only misses the mark descriptively, but it also misses an opportunity to reward and encourage a behavior that is critically important in an age when sex and procreation outside of marriage are common.
This Article argues that the law should develop a new framework for addressing the unique relationship between unmarried lovers who conceive and that tax reform offers a practical and relatively modest first step for doing so. To this end, it proposes that Congress create a pregnancy support deduction to benefit taxpayers who already support pregnant women, thereby extending to them the same deduction we now give taxpayers who pay alimony.
Applications must be received by October 4, 2010 to be considered. Applicants selected for interviews will be invited to attend the Section’s meeting in Boca Raton on January 20-22, 2011, and asked to participate in interviews on January 22, 2011.
Monday, June 28, 2010
Bilski is at best a mixed bag for those who think tax strategies should be patentable. It gives little help and does allow business method patents, albeit somewhat begrudgingly. It demonstrates that for those who believe that tax strategies should not be patented, legislation is needed.
As expected, all the Justices agreed that patent protection did not extend to Bilksi’s hedging strategy process claims because it involved only an abstract idea. All agreed as well that the Federal Circuit’s machine-or-transformation test was not the sole test for patentability of a process, although it was a useful test in many, even most cases. All rejected the “useful, concrete and tangible result” approach to patentability articulated in the State Street decision. That is, the members of the Court reject all of the Federal Circuit’s attempt to date to give some guidance to this area of patent law.
The majority of the Justices, in an opinion written by Justice Kennedy, however, hold that the term process did not “categorically exclude business methods.” In particular, according to the majority, section 273, a statutory provision permitting a special defense of prior use to a claimed infringement of a business method, acknowledged some business method patents, although “it does not suggest broad patentability of such claimed inventions.”
The Court refuses to offer “categorical rules that might have wide-ranging and unforeseen impacts.” Yet, at the end of its opinion, it pleads with the Federal Circuit to do what it declined to do itself - develop some other test for limiting business method patents. It speculates that the Court of Appeals turned to exclusive use of the machine-or-transformation test “because it case law had not adequately identified less extreme means of restricting business method patents. . . In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purpose of the Patent Act and are not inconsistent with its text.”
Four Justices concur in the result, in an opinion by Justice Stevens. They would have held that business method are not patentable. The concurring opinion bases its conclusion on the history and purpose of American patent law, including the legislative history of section 273.
Yet even the concurring opinion accepted the result in State Street because it addressed whether a piece of software, a machine, could be patented. And tax method patents, like that in State Street, generally do or could involve software.
Thus, Bilski, I believe, leaves us in a greater state of uncertainly than that which existed before it was decided. It asks us to return to the basics of the Supreme Court precedents of Benson, Flook and Diehr. But it gives us no guidance as to how these precedents should apply to business method patents generally. It asks the Federal Circuit to undertake this task instead, even though the Supreme Court has rejected every attempt by the Federal Circuit to do so. The inability or unwillingness of the Supreme Court to address these difficult issues underscores that, for those who believe that tax strategies should not be patentable, legislation is needed.
Update: Linda M. Beale (Wayne State), The Supreme Court's Decision in In re Bilski: Does It Allow Tax Patents or Not?:
The AICPA, which has spearheaded the tax practitioner and accountant community's lobbying against tax strategy patents, issued a release on Monday that noted the continuing uncertainty about patentability of tax strategies. It called on Congress to enact a clear ban to resolve the issue once and for all. AICPA Renews Call for Congressional Action to Ban Tax Patents, PRNewswire, June 28, 2010.
Congress should act, but one suspects that the health and financial battles make enactment of the major Patent Reform Bill practically untenable for now. That means that the most likely possibility for a ban on tax strategy patents would be through a dedicated bill dealing solely with that issue. But you can bet that the IP bar will fight such a bill tooth and nail, as a toe in the door towards narrowing of patent law (and their turf), under the banner of "innovation" and "public disclosure." Innovation is not an inherent good in finance or tax, and there is little merit to the public disclosure of tax strategies for helping people avoid even more taxes than they already do. Meantime, we will remain in suspense as the Patent Office and Federal Circuit work through the Supreme Court's opinion.
Supreme Court: UC-Hastings Can Require Christian Legal Society to Admit Gays/Lesbians to Receive School Recognition
In the view of petitioner Christian Legal Society (CLS), an accept-all-comers policy impairs its First Amendmentrights to free speech, expressive association, and free exercise of religion by prompting it, on pain of relinquishing the advantages of recognition, to accept members who do not share the organization’s core beliefs about religion and sexual orientation. From the perspective of respondent Hastings College of the Law (Hastings or the Law School), CLS seeks special dispensation from an acrossthe-board open-access requirement designed to further thereasonable educational purposes underpinning the school’s student-organization program.
In accord with the District Court and the Court of Appeals, we reject CLS’s First Amendment challenge. Compliance with Hastings’ all-comers policy, we conclude, is a reasonable, viewpoint-neutral condition on access to thestudent-organization forum. In requiring CLS—in common with all other student organizations—to choose between welcoming all students and forgoing the benefits ofofficial recognition, we hold, Hastings did not transgress constitutional limitations. CLS, it bears emphasis, seeksnot parity with other organizations, but a preferential exemption from Hastings’ policy. The First Amendment shields CLS against state prohibition of the organization’sexpressive activity, however exclusionary that activitymay be. But CLS enjoys no constitutional right to state subvention of its selectivity.
From Justice Alito's dissent:
The proudest boast of our free speech jurisprudence is that we protect the freedom to express “the thought thatwe hate.” United States v. Schwimmer, 279 U. S. 644, 654–655 (1929) (Holmes, J., dissenting). Today’s decisionrests on a very different principle: no freedom for expres-sion that offends prevailing standards of political correct-ness in our country’s institutions of higher learning.
- Alliance Defense Fund
- Associated Press
- Constitutional Law Prof Blog
- Inside Higher Ed
- Jonathan Turley
- Law, Religion, and Ethics
- Mirror of Justice
- New York Times
- Religion Clause
- Volokh Conspiracy
- Wall Street Journal
For most of the past fifty years, attending Harvard Law School was a miserable experience. Though students were happy to obtain a Harvard degree, they regretted the great personal cost of earning it. Harvard Law School was widely viewed as irreparable because the obstacles to changing the culture of the hide-bound, ivy-covered walls of an elite law school seemed too great. Student anomie at Harvard appeared to be structural, an inevitable by-product of admitting more than 550 law students each year and pitting them in a three-year competition for grades, elite law review membership, and, ultimately, jobs in fancy law firms. While a handful of students reaped vast rewards, others were scarred for life. A person looking for a challenge could scarcely have found a greater one in the Harvard deanship.
During Elena Kagan’s tenure as dean, a miracle occurred. Harvard Law School was transformed. Today, students embrace the institution. The professors engage with one another. And the school’s widely discussed dysfunctions are distant memories. Kagan accomplished this miracle by modeling two important and traditional American values: hard work and community. Kagan was known for walking the halls tirelessly to learn the views of her bright and independent colleagues and to seek consensus. She broke the gridlock between faculty political factions that had atrophied the academic life of the institution. Even more importantly. she transformed the student experience. This essay seeks to describe Kagan’s transformational leadership and provide insight as to the specific changes Kagan made to accomplish the miracle.
Ann Althouse (Wisconsin) responds in If Elena Kagan Worked a 'Miracle at Harvard', What Effect Might She Have on the Supreme Court?:
Let's take this all as true. Kagan has skills that worked brilliantly in the context a dean transforming a deeply dysfunctional, highly elite law school. But how will those skills apply in the context of an individual Justice on the Supreme Court? When a troubled law school brings in a new dean, it is looking for leadership and transformation. But there is no reason to think that the Supreme Court Justices look toward the newcomer for leadership at all, and she arrives to fill the seat that was vacated, not with any problem to be solved and institution to be transformed.
The last decade saw a tremendous expansion in the use of premium financed life insurance for high net worth individuals. Billions of dollars in premium finance loans were sold as low risk options for purchasing high-value life insurance. But the collapse of the secondary market for life insurance policies eliminated the primary exit strategy for insureds who purchased policies utilizing premium finance loans. When the option of selling the policies on the secondary market evaporated, most viewed the best course of action as surrendering the policies in satisfaction of the loan or allowing the policy to lapse.
But while handing back an underwater policy will eliminate all, or at least most, of the debt on the policy, this cancellation of debt (COD) has potentially dire income tax consequences that must be examined by insureds and their advisers. A taxpayer will usually realize income from COD when a premium finance loan is forgiven. But a number of factors may reduce or eliminate the insured's exposure: the identity of the taxpayer, the structure of the trust holding the policy, the structure of the loan, and the applicability of exceptions to the inclusion of COD income in gross income. Each of these factors must be analyzed to determine whether the insured should be prepared for a doomsday tax scenario or whether the insured will walk away from the deal relatively unscathed.
Biden: What do we owe you?
Manager: Don't worry. It's on us. ... Lower our taxes and we'll call it even.
Biden (a few minutes later): Why don't you say something nice instead of being a smartass all the time? Say something nice.
A primary cause of the length and complexity of recent tax litigation is the government’s assertion of the economic substance doctrine. Although the government’s intent seems to be to frighten people away, once the doctrine is unleashed, the government can’t control what it will do, including possibly upsetting previously settled law.
All Tax Analysts content is available through the LexisNexis® services.
In top suburban schools across the country, the valedictorian, a beloved tradition, is rapidly losing its singular meaning as administrators dispense the title to every straight-A student rather than try to choose the best among them.
Principals say that recognizing multiple valedictorians reduces pressure and competition among students, and is a more equitable way to honor achievement, particularly when No. 1 and No. 5 may be separated by only the smallest fraction of a grade from sophomore science. But some scholars and parents have criticized the swelling valedictorian ranks as yet another symptom of rampant grade inflation, with teachers reluctant to jeopardize the best and brightest’s chances of admission to top-tier colleges. ...
“It’s honor inflation,” said Chris Healy, an associate professor at Furman University, who said that celebrating so many students as the best could leave them ill prepared for competition in college and beyond. “I think it’s a bad idea if you’re No. 26 and you’re valedictorian. In the real world, you do get ranked.” ...William R. Fitzsimmons, the dean of admissions at Harvard, said he had heard of schools with more than 100 valedictorians, and had seen home-schooled students praised as No. 1 — out of one — all of which has helped render the distinction meaningless. “I think, honestly, it’s a bit of an anachronism,” he said. “This has been a long tradition, but in the world of college admissions, it makes no real difference.”
[Al] Franken has a lot of company in going from state to state without paying all of his taxes (he also has a lot of company in dumping on his accountant to weasel out of the blame). It’s a lot of work, and a lot of expense, for a traveling worker to pay taxes in every state. Every state has its own tax rules, and preparing all those returns isn’t cheap. Unfortunately, current law can make you taxable in a state with as little as one day of work.
State taxes are a compliance nighmare for glamour professions like sports, entertainment, construction and auditing. That’s why the Multistate Tax Commission is working on model legislation that would exempt workers from state taxes if they work in a state for less than 20 days in a year. That is, unless they work in sports, entertainment or construction (perhaps the only known instance where auditors aren’t abused worse than other professionals). A bill going nowhere in Congress, the Mobile Workforce State Income Tax Fairness and Simplification Act, would would create a 30-day threshold, but similarly screw entertainers and athletes, but not construction workers.
This raises the obvious question: why do they want to screw the athletes and entertainers? Presumably the states all want to pick Taylor Swift’s pocket (understandably), but for every Taylor Swift there are hundreds of struggling young musicians trying to scrape by and make a name for themselves. Yet the tax law, in all its majesty, requires the same level of tax compliance for millionairess Taylor Swift and the wonderful, but surely less prosperous, Carrie Rodriguez.
Small businesses used to be able to blow off states they only visited for a brief time. That’s becoming a bad bet. Better and cheaper data mining software makes it easier each year for state revenuers to sniff out temporary presence. If there is any publicity for your visit, you leave a Google trail. If you don’t file in a state, the statute of limitations never runs there, and you can build up a painful multi-year liability. If they catch you after the statute of limitations for your home state runs out, you lose your credit on the home state return for taxes paid in the other state — meaning you pay tax on the same income in two states.
Sunday, June 27, 2010
- CBPP: Concentration of Income Among Top 1% Is Greatest Since 1928
- Tax Avoidance and Wal-Mart Stores
- New York's Unconstitutional Amazon Tax
- Death of Marty Ginsburg
- Top 5 Tax Paper Downloads
- Closing the Tax Gap Via 'Understanding'
- Knight and the 2% Floor
Renowned tax professor (Georgetown) and tax lawyer (Fried Frank) Martin D. Ginsburg, husband of Supreme Court Justice Ruth Bader Ginsburg, died today (June 27, 2010) at his home in Washington, D.C., due to complications of metastatic cancer. From the Supreme Court's press release:
Martin Ginsburg was born in Brooklyn, New York on June 10, 1932. He was the son of Morris Ginsburg and Evelyn (Bayer) Ginsburg. He earned an A.B. from Cornell University in 1953 and a J.D. magna cum laude from Harvard Law School in 1958. It was at Cornell University that Martin Ginsburg and Ruth Bader Ginsburg met on a blind date in 1951. They were married on June 23, 1954 at his parents’ home on Long Island.
Martin Ginsburg served in the U.S. Army from 1954 until 1956 and was stationed at Fort Sill, Oklahoma where he taught in the Artillery School. He returned to law school in 1956 and joined the firm of Weil, Gotshal & Manges following graduation. He was admitted to the New York bar in 1959 and to the District of Columbia bar in 1980. He taught at New York University Law School in the 1960s and was the Beekman Professor of Law at Columbia Law School. When Ruth Bader Ginsburg was appointed to the United States Court of Appeals for the District of Columbia Circuit in 1980 and the family moved to Washington, D.C., Martin Ginsburg joined the faculty of the Georgetown University Law Center. He was also of counsel to the firm of Fried, Frank, Harris, Shriver & Jacobson. He was a visiting professor at Stanford Law School in the spring of 1978, at Harvard Law School in the spring of 1986, at University of Chicago Law School in the spring of 1990, and at New York University Law School in the spring of 1993.
Professor Ginsburg was co-author, with Jack S. Levin of Chicago, of Mergers, Acquisitions, and Buyouts, a semi-annually updated tax treatise. He held numerous positions as an expert in the tax field including chair of the Committee on Simplification of the American Bar Associations Tax Section, chair of the New York State Bar Association’s Tax Section, and consultant to the American Law Institute’s Federal Income Tax Project. He also served as a member of advisory groups to the Commissioner of the Internal Revenue, the Treasury Department, and the Tax Division of the Department of Justice. In 2006, he was awarded the American Bar Association Tax Section’s Distinguished Service Award.
Mr. Ginsburg is survived by his wife and his two children, Jane Carol Ginsburg, the Morton Janklow Professor of Literary and Artistic Property at Columbia Law School, and James Steven Ginsburg, founder and president of the Chicago Classical Recording Foundation. He is also survived by four grandchildren.
A private interment service will be held at Arlington National Cemetery.
- Above the Law
- Associated Press
- National Law Journal
- New York Times
- Wall Street Journal
- Washington Post
For posts that capture Marty's unique personality:
- TaxProf Blog, Marty Ginsburg: "The Funniest [Tax] Law Professor in America" (Dec. 27, 2007)
- Speech by Ruth Bader Ginsburg (Mar. 13, 2009)
- Georgetown Law Center, In His Own Words
(Hat Tip: Calvin Johnson.)
Update: Jack Bogdanski (Lewis & Clark), Heaven Just Got Funnier:
Leave it to Marty to leave this world when matters of death and taxes are unsettled. He and his previously departed colleagues are probably laughing it up right now over the fact that nobody knows for sure what the tax "basis" is in the stuff he left behind.
2. [509 Downloads] The Generation-Skipping Transfer Tax: A Quick Guide, by Mark Powell (Chapman)
3. [407 Downloads] Taxation and the Financial Sector, by Douglas A. Shackelford (University of North Carolina, Kenan-Flager Business School), Daniel Shaviro (NYU) & Joel B. Slemrod (University of Michigan, Ross School of Business)
4. [357 Downloads] An Overview of Tax Issues for Synagogues (and Other Religious Congregations), by Ellen P. Aprill (Loyola-L.A.)
Part II of this Note will explain the tax gap and its effects. Part III of this Note will explain the several causes behind the tax gap. Part IV of this Note will detail specific strategies designed to reduce the tax gap and which strategies are most in line with providing guidance and being effective. Finally, Part V will discuss President Obama’s policies and their potential impact on the tax gap.
Nathan R. O’Tool (J.D. 2011, William Mitchell) has published Comment, Knight and the Two Percent Floor: Still in Search of a Workable Standard to Evaluate the Tax Deductability of Fiduciary Expenses, 36 Wm. Mitchell L. Rev. 1333 (2010). Here is the Conclusion:
The estate planning and wealth management community had high expectations when the Supreme Court granted certiorari in the Knight case. These expectations were rooted in the fact that for more than twenty years, since the adoption of section 67, trustees were unsure as to how the 2% floor applied to certain fiduciary fees and expenses. The Supreme Court took on the case to resolve a longrunning conflict among federal appeals courts. There was hope that the Supreme Court would settle this conflict and establish a brightline rule by which both the IRS and trustees would be able to determine with certainty which fiduciary expenses would be fully deductible and which expenses would be subject to the 2% floor.
The opinion, while logical and well written, did little to clarify the confusion which surrounds section 67(e). Instead, the Supreme Court seemed content in setting the boundaries within which the IRS and Treasury would be allowed to make their own clarification— specifically, what constitutes “common” or “customarily.” This clarification, however, has yet to be made. In issuing the final regulations, the IRS and Treasury should avoid setting forth a rule that would require a case-by-case analysis of each and every fiduciary fee or expense. Instead, they should issue a bright-line rule that is cost-effective and reasonable to administer for both fiduciaries and for the IRS.Given the language of section 67(e), establishing this bright-line rule is easier said than done. Depending on the success that the IRS and Treasury have with setting forth this rule, the next logical step is for Congress to address the poorly written statute. This process, however, may take longer than the two decades it took courts to address this issue. But until Congress inserts itself into this process, trustees will wait patiently in tax law limbo for the finalized regulations—hoping some reasonable guidance will be provided.
Saturday, June 26, 2010
The gaps in after-tax income between the richest 1% of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007 (the period for which these data are available), according to data the Congressional Budget Office (CBO) issued last week. Taken together with prior research, the new data suggest greater income concentration at the top of the income scale than at any time since 1928.
Update: Peter Pappas, A Win for the Tax the Rich Crowd?:
The survey does, indeed, show, as fellow tax bloggers Jim Maule and Linda Beale are sure to point out, that the rich have gotten richer. What it does not show, and what is not to be automatically inferred from it, is that the poor and the middle-class have gotten poorer.
Of course, I fully expect the tax-the-rich types to suggest that very thing. But by doing so they only betray one of their many faulty premises: Namely, that wealth, like energy, is finite and an increase in one individual’s wealth is always be matched by a commensurate decrease in another individual’s wealth.
Jeremy M. Wilson (J.D. 2010, North Carolina) has published Recent Development, Statutory Interpretation in Wal-Mart Stores East, Inc. v. Hinton and Why North Carolina Courts Should Apply Anti-Tax Avoidance Judicial Doctrines in Future Cases, 88 N.C. L. Rev. 1471 (2010). Here is the abstract:
In its 2009 decision Wal-Mart Stores East, Inc. v. Hinton, the North Carolina Court of Appeals held that the North Carolina Secretary of Revenue had the statutory authority to force combination of Wal-Mart Stores East and its related corporate entities. This action led to Wal-Mart Stores East paying nearly $30 million in back taxes, interest, and penalties resulting from a complex corporate tax avoidance strategy. This Recent Development argues that although the North Carolina Court of Appeals reached the correct result from a public policy standpoint in Wal-Mart Stores East, it did so after conducting an incomplete statutory analysis. Underlying this incomplete analysis was the inability of the state’s tax statutes to respond to new and evolving corporate tax avoidance strategies. In future cases, North Carolina courts should apply anti-tax avoidance judicial doctrines to egregious cases of tax avoidance in which state officials lack clear statutory authority to intervene. Applying these doctrines would help North Carolina achieve important policy benefits, including protecting state revenues, providing for simpler tax law, promoting fairness between individual and corporate taxpayers, and promoting economic efficiency.
As the current economic downturn continues to ripple through every sector of the economy, state governments from North Carolina to California are struggling to develop innovative tax policies to boost their plummeting revenues. Traditional methods of taxation are no longer sufficient to satisfy state expenditures—either government spending must change drastically or legislatures must approve new taxes to bolster falling revenues. The recent “Amazon tax” passed by the New York State Assembly is a prime example of the latter. The tax requires out-of-state retailers—such as Amazon.com, Inc. and Overstock.com, Inc.—to collect a use tax from in-state consumers if the retailers have marketing affiliates in the state which produce at least $10,000 in sales. In Quill Corp. v. North Dakota, however, the United States Supreme Court held that, under the Commerce Clause of the U.S. Constitution, a state cannot require an out-of-state retailer to collect and remit a use tax unless the retailer has a “substantial nexus” with the taxing state. The Court invalidated a sales tax imposed by North Dakota on an out-of-state mail-order retailer, which had no offices or employees in the state. By invalidating this tax, the Court reaffirmed the bright-line rule of National Bellas Hess, Inc. v. Department of Revenue of Illinois that “a vendor whose only contacts with the taxing State are by mail or common carrier lacks the ‘substantial nexus’ required by the Commerce Clause;” in other words, some physical presence is required. Attempts by New York and other states to create statutorily this “substantial nexus” between out-of-state Internet retailers and the taxing state through the retailers’ marketing affiliates run afoul of Quill and its bright-line rule.
This Recent Development analyzes the recent New York County Civil Supreme Court decision, Amazon.com v. New York State Department of Taxation & Finance, which upholds the constitutionality of the tax. The focus is on Amazon’s Dormant Commerce Clause argument and the trial court’s application of the Supreme Court’s decision in Quill. This Recent Development argues that the New York trial court failed to apply Quill’s “substantial nexus” test properly and exaggerated the role of Amazon’s associates. As a result, the trial court incorrectly held that the tax on Amazon did not violate the Commerce Clause. When applied correctly, the Quill decision should invalidate New York’s tax on Amazon and similar out-of-state Internet retailers.
Friday, June 25, 2010
The IRS today provided guidance [Information Center; Q&A] to individuals and businesses affected by the oil spill in the Gulf of Mexico and announced a number of new efforts to help affected taxpayers, including a special Gulf Coast Assistance Day on July 17. ...
The guidance released today is based on current law, and it explains how recipients of payments from BP should treat the payments for tax purposes. According to the current law, BP payments for lost income are taxable in the same way that the wages or business income these payments are replacing would have been. The law treats compensation for lost wages or income differently for tax purposes than compensation for physical injuries or property loss, which generally are nontaxable. ...
To help people in the Gulf Coast area dealing with tax issues, the IRS also announced a special assistance day on July 17 in seven cities. Taxpayers and tax preparers will be able to work directly with IRS employees to resolve tax issues, including specific topics related to the oil spill. The IRS will hold the Gulf Coast Assistance Day in four states:
- Alabama: Mobile
- Florida: Panama City and Pensacola
- Louisiana: New Orleans, Houma and Baton Rouge
- Mississippi: Gulfport
Here is an update on the highly anticipated U.S. News-Best Lawyers Best Law Firms rankings, which are scheduled to be released in the October 2010 issue of U.S. News and on our website in mid-September.
Some of the highlights of the methodology of the U.S. News-Best Lawyers Best Law Firms: surveys were sent to 52,480 clients of law firms; to 43,900 practicing lawyers in the United States including every American lawyer listed in Best Lawyers; to 2,314 law firm marketing officers; to 2,322 law firm recruiting officers; to 8,597 law firms without marketing- or recruiting-office contacts; and to 2,322 associates at law firms; and 1,775 law firm summer associates.
The response has been very positive: 1,859 firms participated in the marketing-officer and recruiting-officer surveys; 9,514 clients— including every Fortune 100 company and 587 of the Fortune 1000 companies—provided 194,370 firm practice-area evaluations; 6,190 clients provided 11,181 comments about law firm practice areas and individual lawyers; and 8,842 lawyers provided 594,012 firm practice-area evaluations.
The client and lawyer surveys collected mostly reputational ratings on such areas as expertise, cost-effectiveness and responsiveness. Marketing-officer and recruiting-officer surveys provided a wide array of demographic, client and other lawyer profile data about their firms. In addition to information from these surveys, the rankings will incorporate the 3.1 million evaluation. ...
Because firms were often separated by small or insignificant differences in the overall score, the Best Law Firms rankings will be published alphabetically within tiers rather than as a numerical ranking.
New York Times, Deep in the Heart of Texas, by Stanley Fish:
If a waiter asks me, “Was everything to your taste, sir?”, I am in a position to answer him authoritatively (if I choose to). When I pick up my shirt from the dry cleaner, I immediately know whether the offending spot has been removed. But when, as a student, I exit from a class or even from an entire course, it may be years before I know whether I got my money’s worth, and that goes both ways. A course I absolutely loved may turn out be worthless because the instructor substituted wit and showmanship for an explanation of basic concepts. And a course that left me feeling confused and convinced I had learned very little might turn out to have planted seeds that later grew into mighty trees of understanding.
“Deferred judgment” or “judgment in the fullness of time” seems to be appropriate to the evaluation of teaching. And that is why student evaluations (against which I have inveighed since I first saw them in the ’60s) are all wrong as a way of assessing teaching performance: they measure present satisfaction in relation to a set of expectations that may have little to do with the deep efficacy of learning. Students tend to like everything neatly laid out; they want to know exactly where they are; they don’t welcome the introduction of multiple perspectives, especially when no master perspective reconciles them; they want the answers.
New York Times, In Defense of Student Evaluations, by Ross Douthat:
Allow me to respectfully dissent. Yes, in an ideal world, a student’s impression of his teacher’s abilities would be allowed to ripen, over years and decades, before anyone asked for an assessment of said teacher’s pedagogy. But I still think that more often than not, a good teacher will be recognized as such by his students while he’s teaching them, and a bad one will be accurately-pegged as well. (A decade removed from my own classroom education, I’ve revised my opinions of some of my teachers, but not that radically …) Such evaluations will always be necessarily imperfect measures of a teacher’s real quality. But in the context of a higher education system that has radically undervalued teaching skills in favor of a “publish or perish” model of professorial advancement, I think there’s a strong case for placing more emphasis on how students react to their classroom experience, however provisional those reactions may be.
Law Student Sues North Carolina, Fears She Won't Get a Job if Her Online Purchase of Obama Zombies Is Disclosed in Sales Tax Dispute
Two lawyers and a law student were among seven plaintiffs who filed suit on Wednesday to block the North Carolina Department of Revenue from collecting detailed information about purchases state residents made through online retailer Amazon.com Inc. ...
The ACLU's complaint alleges that the sales information the state has requested infringed the privacy of buyers by disclosing their names and detailed information about what they purchased.
Amazon has turned over product codes of purchased items to the state for auditing purposes, but has resisted turning over customer names and addresses.
Among the anonymous plaintiffs is the general counsel of a global company who purchased "books with overt leanings," including Michael Moore's Dude, Where's My Country and Al Franken's Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right, according to the complaint. Other plaintiffs include a retired lawyer and a law student who hopes to work in the public sector. The student fears her ability to get a job in legislative or public policy will be hindered if her Amazon purchases are made public. She has purchased Jason Materra's Obama Zombies: How The Liberal Machine Brainwashed My Generation and Thomas E. Woods Jr.'s Who Killed The Constitution? The Federal Government vs. American Liberty From World War I to Barack Obama.
"What a person chooses to purchase on Amazon reveals personal, private and profoundly intimate information about that person's life and identity," the complaint reads. "For example, an individual's purchase history can provide details about his or her political or religious beliefs, organizations or groups he or she associates with, who his or her friends or family are, and whether he or she has any medical, psychological or family problems."
Sales tax revenue is at the heart of the larger dispute, with North Carolina expected to lose nearly $162 million in sales tax revenue from online purchases, according to a University of Tennessee estimate. Amazon doesn't collect the state's 5.75% sales tax because the company doesn't have warehouses or offices in North Carolina. The responsibility to pay the tax lies with the buyer.
Individuals that renounce their U.S. citizenship are held to a special taxation regime as a consequence for their expatriation that is unique in the world and, this article will argue, unconstitutional. Originally, renunciation of citizenship was seen as the ultimate income tax reduction device, but this option has now lost much of its attractiveness as Congress has passed “exit tax” provisions that impose a tax liability on individuals who have renounced U.S. citizenship similar to that imposed on U.S. citizens.
This article will argue that, as it currently stands, the exit tax is not constitutional because it is not narrowly tailored to achieve a compelling government interest and must be judged at that standard because it infringes on the fundamental right to expatriate and discriminates based on national origin.
- Steve Black (Franklin Pierce) to LSU (2010-11)
- Neil Buchanan (George Washington) to Cornell (Visiting Scholar, Fall 2010)
- Paul Caron (Cincinnati) to San Diego (Summer 2010) and Pepperdine (Spring 2011)
- David Elkins (Netanaya College School of Law, Israel) to SMU (Fall 2010)
- Vic Fleischer (Colorado) to NYU (Fall 2010)
- Cliff Fleming (BYU) to Central European University, Hungary (April 2010) and Murdoch University, Australia (June 2010)
- Terri Lynn Helge (Texas-Wesleyan) to Baylor (Summer 2010)
- Henry Lischer (SMU) to Georgetown (Fall 2010)
- Gary Lucas (Texas-Wesleyan) to Florida State (Spring 2011)
- Ruth Mason (Connecticut) to Yale (2010-11)
- Jack Miller (Idaho) to U. Washington (2010-11)
- Shari Motro (Richmond) to Georgetown (Spring 2011)
- George Mundstock (Miami) to San Diego (Summer and Fall 2010)
- Adam Rosenzweig (Washington U.) to Texas (2010-11)
- Walter Schwidetzky (Baltimore) to California Western (2009-10)
- Andre Smith (Florida International) to Widener-Wilmington (2010-11)
Following up on Tuesday's post, $20b Gulf Coast Disaster Payments: Income to Victims, Deductible by BP: Sen. Mary Landrieu (D-LA) on Wednesday sent this letter to the Treasury Department and the IRS seeking public written guidance by July 2 on the tax treatment of BP oil spill claims payments to individuals and businesses:
As of June 22, 2010 -- Day 63 of this tragedy -- your agencies had yet to issue any guidance to advise recipients recipients of BP payments on how they should treat these payments for federal tax purposes. While I share your goal of ensuring that U.S. tax laws are followed and I am aware that this situation has triggered some unprecedented questions of tax policy, this delay in action is unacceptable.
It is my strong belief that every relevant tax question triggered by this disaster cannot nor should not be answered immediately. I also appreciate that your agencies need sufficient time to develop sound tax policies on how these payments should be treated for tax purposes. However, as I write to you today, now is the time for impacted Gulf Coast residents to receive basic guidance on fundamental issues that have been triggered by the disaster such as:
- Whether income replacement payments are taxable;
- Whether property damage payments are taxable; and
- And whether payments for personal injury claims are taxable.
Please join us for a roundtable discussion on federal tax expenditures in which we will ask whether all the deductions, credits, and other write-offs are worth the hundreds of billions of dollars in lost federal tax revenues each year.
- Christopher Bergin (President and Publisher, Tax Analysts) (Moderator)
- Edward D. Kleinbard (Former Staff Director, Joint Tax Committee; Professor, USC Law School)
- Eric Toder (Institute Fellow, Urban Institute; Codirector, Tax Policy Center)
- Andrew Schulz (Vice President, Council on Foundations)
- Brian Flahaven (Director of Government Relations, Council for Advancement and Support of Education)
This short article outlines a possible agenda for a California Constitutional Convention. The goal is not to achieve originality in the substance of each proposal so much as to propose reasonable compromises that might ameliorate California’s chronic fiscal woes. At the moment, the prospects for such a convention have dimmed considerably, but the compromises outlined below could still be reached through legislative action and/or voter referenda. The proposals, in brief, are:
Proposal 1: More Local Control and Likely Greater Resources but Accepting More Disparity in Resources.
Proposal 2: Split the Property Tax Roll and Impose (Gradually) a Statewide Tax on Commercial Property Based on Market Values, but Eliminate (Gradually) the Corporate Income Tax.
Proposal 3: Expand the Current Sales Tax to Services but Lower Its Rate and Allow Deficit Spending.
Proposal 4: Retain the Tax on Capital Gains, but Place A Large Percentage of Resulting Revenues in the Rainy Day Fund.
Proposal 5. Enable More State Borrowing But Require Commitment of New Revenues to All Borrowing.
Proposal 6: Make it Easier to Raise Tax Rates, but Restrain Spending in Some Other Way. Proposal 7: Ease Residential Property Tax Limitations, but Institute Aggressive Circuit Breakers.
Thursday, June 24, 2010
I had very different ideas about how to fill up my iPad's 64 gigabytes of memory. I envisioned it not as a plaything, but as a portable workhorse. Having never owned a smartphone, I figured the iPad would answer a pressing need to retrieve e-mail on the go and might be a capable reading device. And near term I saw enormous potential for the 1.6-pound iPad to lighten my load on a vacation to Tibet this summer.
The icing on the cake was that the entire Internal Revenue Code was available in a choice of three different iPad apps, one of which cost just 99 cents. Yes, I'm serious. As a financial writer, I need the IRC (as tax geeks call it) for my work. In book form it's heavy and expensive and the free online versions are cumbersome to use. So once Congress passes various tax bills now pending, I'll put the IRC app on my buy list. Because, to put it in teenspeak, "That app is mad cool."
When I mentioned these plans to my editor, she said she'd be intrigued by a column about "how middle-aged boring people (no offense) actually use iPad."
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Significant uncertainty exists under current law regarding the tax treatment of cancellation of indebtedness income realized by tax-exempt entities. This article examines current law and proposes viable solutions for eliminating uncertainty.