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Tuesday, December 31, 2013

Tax Preparers Must Renew Their PTINs by Midnight Tonight, But IRS Website Is Down Until Jan. 2

PTINIR-2013-101, Tax Preparers Must Renew Their PTINs for 2014:

The IRS today reminded professional tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) if they plan to prepare returns in 2014. Current PTINs expire Dec. 31, 2013.

Anyone who prepares or helps prepare all or substantially all of a federal tax return, claim for refund or other federal forms for compensation must have a valid PTIN. All enrolled agents also must have a PTIN. Tax professionals can obtain or renew their PTINs at www.irs.gov/ptin.

Those renewing their PTINs can complete the process in about 15 minutes. The renewal fee is $63. Tools are available to assist any preparers who have forgotten their user name, password or email address.

New tax return preparers who are obtaining a first-time PTIN must create an online PTIN account as a first step and then follow directions to obtain a PTIN. Their fee is $64.25.

The annual PTIN requirement is part of the IRS’s ongoing effort to enhance tax administration and improve services to taxpayers.

There are approximately 700,000 tax preparers with 2013 PTINs. More than 400,000 have already renewed their PTIN, plus more than 25,000 have obtained a first-time PTIN for 2014.

Update:  Unfortunately, the IRS PTIN website is down until Jan. 2:

PTIN System Down
The IRS Preparer Tax Identification Number (PTIN) system will be unavailable from the afternoon of Dec. 31, 2013, until mid-day on Jan. 2, 2014, for end of year maintenance. We apologize for the inconvenience.

Prior TaxProf Blog coverage:

December 31, 2013 in IRS News, Tax | Permalink | Comments (1)

Faculty Pretend to Teach, Students Pretend to Learn

5 YearWall Street Journal op-ed:  We Pretend to Teach, They Pretend to Learn: At Colleges Today, All Parties Are Strongly Incentivized to Maintain Low Standards, by Geoffrey L. Collier (South Carolina State University):

The parlous state of American higher education has been widely noted, but the view from the trenches is far more troubling than can be characterized by measured prose. With most students on winter break and colleges largely shut down, the lull presents an opportunity for damage assessment.

The flood of books detailing the problems includes the representative titles Bad Students, Not Bad Schools and The Five Year Party. To list only the principal faults: Students arrive woefully academically unprepared; students study little, party much and lack any semblance of internalized discipline; pride in work is supplanted by expediency; and the whole enterprise is treated as a system to be gamed in which plagiarism and cheating abound.

The problems stem from two attitudes. Social preoccupations trump the academic part of residential education, which occupies precious little of students' time or emotions. Second, students' view of education is strictly instrumental and credentialist. They regard the entire enterprise as a series of hoops they must jump through to obtain their 120 credits, which they blindly view as an automatic licensure for adulthood and a good job, an increasingly problematic belief.

BadEducation thus has degenerated into a game of "trap the rat," whereby the student and instructor view each other as adversaries. Winning or losing is determined by how much the students can be forced to study. This will never be a formula for excellence, which requires intense focus, discipline and diligence that are utterly lacking among our distracted, indifferent students. Such diligence requires emotional engagement. Engagement could be with the material, the professors, or even a competitive goal, but the idea that students can obtain a serious education even with their disengaged, credentialist attitudes is a delusion.

The professoriate plays along because teachers know they have a good racket going. They would rather be refining their research or their backhand than attending to tedious undergraduates. The result is an implicit mutually assured nondestruction pact in which the students and faculty ignore each other to the best of their abilities. This disengagement guarantees poor outcomes, as well as the eventual replacement of the professoriate by technology. When professors don't even know your name, they become remote figures of ridicule and tedium and are viewed as part of a system to be played rather than a useful resource.

(Hat Tip: Greg McNeal.)

December 31, 2013 in Book Club, Legal Education | Permalink | Comments (5)

Christopher Hanna Named Endowed Professor of Law at SMU

HannaChristopher H. Hanna has been named the Alan D. Feld Endowed Professor of Law at SMU:

In 1998, Professor Hanna served as a consultant in residence to the Organization for Economic Co-operation and Development (OECD) in Paris. From June 2000 until April 2001, he assisted the U.S. Joint Committee on Taxation in its complexity study of the U.S. tax system and, from May 2002 until February 2003, he assisted the Joint Committee in its study of Enron, and upon completion of the study, continued to serve as a consultant to the Joint Committee on tax legislation. Prior to coming to SMU, Professor Hanna was a tax attorney with the Washington, D.C. law firm of Steptoe & Johnson. ... He has received the Dr. Don M. Smart Teaching Award for excellence in teaching at SMU Dedman School of Law on eight separate occasions. ... Professor Hanna received his undergraduate degree in accounting at the University of Florida (B.S. Acc., 1984) and his law degrees at the University of Florida College of Law (J.D., 1988) and New York University School of Law (LL.M. (in Taxation), 1989).

December 31, 2013 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 236

Monday, December 30, 2013

Columbia and Hebrew University Host Conference Today on Taxation and Public Policy

ConfereceColumbia Law School and Hebrew University Faculty of Law host a conference today on Taxation and Public Policy:

Session #1:  Chair:  Yoram Margaliot (Tel Aviv University Faculty of Law)

Session #2:  Chair: Ilan Benshalom (Hebrew University Faculty of Law)

December 30, 2013 in Conferences, Scholarship, Tax | Permalink | Comments (0)

France Constitutional Court Approves 75% Tax on Millionaires

NPR: Colleges Use Photoshop to Paint Faux Diversity

WisconsinNPR, A Campus More Colorful Than Reality: Beware That College Brochure:

Diallo Shabazz was a student at the University of Wisconsin in 2000 when he stopped by the admissions office. "One of the admissions counselors walked up to me, and said, 'Diallo, did you see yourself in the admissions booklet? Actually, you're on the cover this year,' " Shabazz says.

The photo was a shot of students at a football game — but Shabazz had never been to a football game. "So I flipped back, and that's when I saw my head cut off and kind of pasted onto the front cover of the admissions booklet," he says.

This Photoshopped image went viral and became a classic example of how colleges miss the mark on diversity. Wisconsin stressed that it was just one person's bad choice, but Shabazz sees it as part of a bigger problem.

Even without Photoshop, colleges try to shape the picture they present to prospective students, says Tim Pippert, a sociologist at Augsburg College in Minnesota. ... Pippert and his researchers looked at more than 10,000 images from college brochures, comparing the racial breakdown of students in the pictures to the colleges' actual demographics. They found that, overall, the whiter the school, the more diversity depicted in the brochures, especially for certain groups. "When we looked at African-Americans in those schools that were predominantly white, the actual percentage in those campuses was only about 5 percent of the student body," he says. "They were photographed at 14.5 percent."

(Hat Tip: Francine Lipman.)

December 30, 2013 in Legal Education | Permalink | Comments (5)

WSJ: Law Libraries Are Doomed

Law LibraryWall Street Journal Law Blog, Law Libraries Are Doomed, Says Professor, by Jacob Gersham:

As law schools are forced to tighten their belts, law libraries are getting squeezed especially hard. The future of the law library isn’t merely bleak, according to law professor James G. Milles. He thinks they’re doomed.

“Legal education in the United States is about to undergo a long-term contraction, and law libraries will be among the first to go,” writes Mr. Milles, who teaches legal ethics and information privacy at SUNY Buffalo Law School, in a new working research paper.

He doesn’t mean that they’ll literally be wiped out like dinosaurs. But he expects that it won’t be long before “a few schools will operate successfully without anything resembling a law library.” His point is that the days of the law library being seen as a vital organ of faculty and student life — led by respected, tenured directors — are coming to an end.

December 30, 2013 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 235

IRS Logo 2Forbes op-ed:  President Obama's Top 10 Constitutional Violations of 2013, by Ilya Shapiro (Cato Institute):

[A]s we reach the end of another year of political strife that’s fundamentally based on clashing views on the role of government in society, I thought I’d update a list I made two years ago and hereby present President Obama’s top 10 constitutional violations of 2013. ...

6. Political profiling by the IRS. After seeing a rise in the number of applications for tax-exempt status, the IRS in 2010 compiled a “be on the lookout” (“BOLO”) list to identify organizations engaged in political activities. The list included words such as “Tea Party,” “Patriots,” and “Israel”; subjects such as government spending, debt, or taxes; and activities such as criticizing the government, educating about the Constitution, or challenging Obamacare. The targeting continued through May of this year.

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December 30, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, December 29, 2013

Tax Court Denies Deduction for M.B.A. Expenses

MBAHart v. Commissioner, T.C. Memo. 2013- 289 (Dec. 23, 2013):

Petitioner husband graduated from college in 2007. In January 2009 he enrolled in an M.B.A. program with a concentration in finance at Rollins College. ... On Schedule A, Itemized Deductions, for their 2009 joint tax return, petitioners reported an itemized deduction of $18,600 on line 21, unreimbursed employee expenses. ... Respondent disallowed this deduction as an unreimbursed employee business expense. ...

Petitioner husband contends that he was in the business of selling pharmaceuticals and that the M.B.A. classes he took enabled him to obtain employment in 2009. Respondent contends that petitioner husband was not established in a trade or business in 2009 and that his employers did not require him to enroll in an M.B.A. program. ...

Implicit in both section 162 and the regulations is that the taxpayer must be established in a trade or business before any expenses are deductible. ... Respondent contends petitioner husband was not established in a trade or business before entering the M.B.A. program. Petitioner husband contends that he was in a trade or business because he focused on the selling of cancer pharmaceuticals, which is a specialized field. After reviewing the record in this case, and despite an effective pro se representation, we find that petitioner husband was not established in a trade or business before enrolling in the M.B.A. program, and therefore, his expenses are not deductible.

Petitioner husband graduated from college only two years before starting his M.B.A. program. ... Carrying on a trade or business has been defined as entailing considerable continuous and regular activity. ... Petitioner husband's employment in the cancer pharmaceutical sales field was not continuous, and there is no evidence in the record that petitioner was carrying on a trade or business before he enrolled in the M.B.A. program. Because we conclude that petitioner husband was not carrying on a trade or business, we need not consider whether petitioner husband's M.B.A. qualified him for a new trade or business.

Prior TaxProf Blog coverage:

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December 29, 2013 in Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

Schizer: A Framework for Limiting Tax Expenditures

David Schizer (Dean, Columbia), A Framework for Limiting Tax Expenditures: Programmatic Incentives, Excess Burden, and Distribution:

To rein in unsustainable federal budget deficits, we need to cut spending, raise more revenue, or both. In response, political leaders have begun focusing on an important source of potential savings: repealing or limiting tax expenditures, such as the home mortgage deduction, the exclusion for employer-provided health insurance or other tax provisions that promote “nontax” policy goals. ... Since there are many ways to raise revenue or cut spending – from increasing marginal rates to improving enforcement or scaling back entitlements – how do we know whether repealing or limiting tax expenditures is the right strategy? We need a general framework for identifying the costs and benefits of repeal or limits, as well as an understanding of the tradeoffs among different types of limits. These issues have not been adequately explored in the literature, and this Article seeks to fill this gap. The goal is not to advocate repealing or limiting any specific tax expenditure, which is a fact-intensive inquiry, but to identify key questions that must be explored in deciding whether to do so. The analysis here is relevant whether we choose to use this savings to fund marginal rate cuts or, alternatively, to reduce the deficit without (further) increasing marginal rates.

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December 29, 2013 | Permalink | Comments (0)

The IRS Scandal, Day 234

IRS Logo 2The Business Journals:  The Top 10 Stories of 2013:

Nerds Gone Wild: IRS Made 'Star Trek' Parody, but Targeting Tea Party Was No Joke:

Nobody loves the taxman, and that was especially true this year, when the Internal Revenue Service found itself under fire for picking on Tea Party groups and spending too much money on conferences.

I don't expect you to sympathize with the IRS, but the agency's trials and tribulations were so bad this year that it merited the No. 8 spot on my top 10 list of 2013 stories.

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December 29, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, December 28, 2013

The 1% Use South Dakota Dynasty Trusts to Shelter Billions From Tax Forever

Dynasty TrustBloomberg:  Moguls Rent South Dakota Addresses to Dodge Taxes Forever, by Zachary R. Mider:

Among the nation’s billionaires, one of the most sought-after pieces of real estate right now is a quiet storefront in Sioux Falls, South Dakota.

A branch of Chicago’s Pritzker family rents space here, down the hall from the Minnesota clan that controls the Radisson hotel chain, and other rooms held by Miami and Hong Kong money.

Don’t look for any heiresses in this former five-and-dime. Most days, the small offices that represent these families are shut. Even empty, they provide their owners with an important asset: a South Dakota address for their trust funds.

In the past four years, the amount of money administered by South Dakota trust companies like these has tripled to $121 billion, almost all of it from out of state. The families needn’t actually move to South Dakota, or deposit their money at a local bank, or even touch down in the private jet. Little more than renting an address in Sioux Falls is required to take advantage of South Dakota’s tax-friendly trust laws. [Graphic]

South DakotaStates like South Dakota are “creating laws that are conducive to a massive exploitation of a federal tax loophole,” said Edward McCaffery, a professor at the University of Southern California’s Gould School of Law. “We have a tax haven in our midst.”

South Dakota’s sudden popularity illustrates how, at a time of rising U.S. economic inequality, the wealthiest Americans are embracing ever more creative ways to reduce taxes legally. Executives at South Dakota Trust Co., one of the biggest in the state, estimate that one-quarter of their business comes from special vehicles known as “dynasty trusts,” which are designed to avoid the federal estate tax. Creation of such trusts has surged in recent years as changes in federal law enabled more money to be placed in them.

While the super-rich use various tools to escape the levy -- some have exotic names like the “Jackie O” trust and the “Walton GRAT” -- the advantage of dynasty trusts is that they shield a family’s wealth forever. That defies the spirit of the estate tax, enacted almost 100 years ago to discourage the perpetuation of dynastic wealth. ...

President Barack Obama has called for closing the dynasty trust loophole in annual budget proposals, even though the change wouldn’t boost tax receipts under his administration. The impact of dynasty trusts on federal revenue is far in the future -- though potentially enormous, said Lawrence Waggoner, a retired professor at University of Michigan Law School. “The federal government won’t lose out for maybe 90 years, and maybe that’s why Congress is not terribly interested in the subject,” Waggoner said. “The longer they procrastinate, you have larger and larger amounts in perpetually tax-exempt trusts.”

One clue to how much wealthy families might save comes in [Pierce H. McDowell, III, The Dynasty Trust: Protective Armor for Generations to Come, Tr.. & Est., Oct. 1993, at 47]. Just $1 million invested in a dynasty trust, and earning 12 percent a year, would swell to $1.9 billion in 85 years, he wrote -- compared with $488 million if the same trust was located in New York, subject to both state income taxes and the federal estate tax when it expired.

(Hat Tip: Francine Lipman, George Mundstock.)

December 28, 2013 in Tax | Permalink | Comments (0)

Leichter: It's Still Not a Good Time to Apply to Law School

The American Lawyer:  No, It's Still Not a Good Time to Apply to Law School, by Matt Leichter:

In mid-December, the ABA Section of Legal Education publicized the number of first-year students for the fall of 2013—39,675. The decline in 1Ls since the 2012-13 academic year exceeded 10 percent—the biggest one-year drop since the early 1950s. Meanwhile, the average number of 1Ls per law school reached its lowest level since 1968.

Thanks to these developments, some writers argue, legal education is becoming a fairer deal, and savvy applicants who buck the downward trend will be rewarded. While it's certainly true that generous merit scholarships enable prospective law students to pay less for a legal education now than they would have a few years ago, there are still many compelling reasons to believe the benefits of law school still don't outweigh its costs—and won't for the foreseeable future.

The ABA Journal recently reported on the most rigorous analysis of the applicant decline's impact on potential job opportunities for future law school graduates. In the article, Appalachian School of Law professor Paula Marie Young shared a dialogue on the subject with Professor Deborah Jones Merritt of The Ohio State University Moritz College of Law. Using National Association of Law Placement (NALP) and ABA data, Young maintained that by 2015 or 2016, the number of ABA law school graduates will equalize with the number of lawyer job openings. Merritt asserted that Young misread the ABA's graduate data, and the more accurate equilibrium estimate is 2021. The discussion then shifted to whether "JD Advantage" jobs should really count in these calculations and whether positions classified as "full-time" fairly represent indefinite career jobs because they only need to last one year to count.

It's not fruitful to rehash the entire back-and-forth in detail, and while I generally agree with Merritt's line of thinking, there are additional points worth considering that may make even 2021 an overly optimistic estimate. ...

[A]lthough it's not invalid to use NALP or ABA jobs data, it should be noted that the Bureau of Labor Statistics (BLS) just released its own employment projection for the 2012 to 2022 period. The news is mostly bad. ... Here is my estimate of the cumulative number of law graduates and licensed lawyers over the previous 35 years compared to the current number of employed lawyers and active and resident attorneys.

... A generation of Americans maturing into a lifetime of chronic underemployment and debt will not be able to afford homes, start families, open businesses, or discharge their student loans. Lawyers who would normally serve them in "small law" matters like estate and business planning will increasingly struggle to find clients. Prospective law students have little reason to compete with them.

Law school optimists are undeniably right that many people finishing law school in 2017 will pay less for their educations than their recent, underemployed predecessors did. It's also certain that law school will continue to be a prerequisite for some of the most prestigious positions in society, such as the judiciary. However, a host of other data points indicate that the profession law school applicants hope to enter won't provide the long-term, career-spanning employment that justifies three extra years of education. They would be wiser to walk by.

December 28, 2013 in Legal Education | Permalink | Comments (9)

State Tax Person of the Year: Richard Pomp (UConn)

Tax Analysys Logo (2013)Person of the Year, 70 State Tax Notes 715 (Dec. 23, 2013):

State Tax Notes is pleased to announce its annual year in review edition, featuring person of the year, given to the individual or organization that had the most influence on state tax policy and practice. The editorial staff has compiled a list of the best in our profession in five categories: academics, practitioners, organizations, administrators, and lawmakers.

This year's person and academic of the year is Richard Pomp for his pro bono work as the hearing officer for the Multistate Tax Commission's proposed amendments to Article IV of the Multistate Tax Compact. The compact's apportionment formula, Article IV, incorporates nearly verbatim the Uniform Division of Income for Tax Purposes Act as drafted in 1957.

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December 28, 2013 in Legal Education, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 233

IRS Logo 2Wall Street Journal editorial:  Reid's New Senate Rules:

It's barely been a month since Democrats changed Senate rules to confirm nominees with 51 votes, but it is already clear how they intend to use their new power. Last Friday on their way out of town, the Senate rushed through the confirmations of Alejandro Mayorkas to be Deputy Secretary of Homeland Security and John Koskinen for IRS Commissioner, two nominations wrapped up with ongoing investigations. ...

Mr. Koskinen is the White House choice to rehabilitate the IRS after last spring's revelation that the tax authority had targeted conservative groups for additional scrutiny during President Obama's re-election campaign. Touted as a turnaround specialist, he will take over an agency that has dug in against the investigation into the targeting scandal.

The IRS has frustrated congressional investigators on the House Oversight Committee with its efforts to stonewall the investigation. In an interview with congressional investigators, IRS Chief Counsel William Wilkins claimed he could "not recall" some 80 times during questioning about his knowledge of the treatment of conservative groups, or any conversations he may have had with his bosses at Treasury.

The agency has also launched an attempt to further regulate the political speech of the same 501(c)(4) groups it was caught targeting. Mr. Koskinen told Senate Minority Leader Mitch McConnell that he thinks the IRS should stay out of the business of regulating political speech, so we'll look forward to seeing him critically assess the agency's proposed rule in his new role as commissioner.

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December 28, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, December 27, 2013

Weekly Tax Roundup

L.A. Times: Transferable Movie Tax Credits Hurt States, Enrich Studios, Tax Lawyers

MoviesLos Angeles Times:  Hollywood's New Financiers Make Deals With State Tax Credits:

Ric Reitz makes movies. He helped bankroll the Matt Damon thriller "Contagion," Clint Eastwood's "Trouble With the Curve" and the Robert Downey comedy "Due Date." ...

Reitz is one of Hollywood's new financiers. Just about every major movie filmed on location gets a tax incentive, and Reitz is part of an expanding web of brokers, tax attorneys, financial planners and consultants who help filmmakers exploit the patchwork of state programs to attract film and TV production.

In his case, he takes the tax credits given to Hollywood studios for location filming and sells them to wealthy Georgians looking to shave their tax bills — doctors, pro athletes, seafood suppliers, beer distributors and the like. ...

The trade benefits both sides. The studios get their money more quickly than if they had to wait for a tax refund from the state, and the buyers get a certificate that enables them to cut their state tax bills as much 15%.

About $1.5 billion in film-related tax breaks, rebates and grants were paid out or approved by nearly 40 states last year, according to Times research. That's up from $2 million a decade ago, when just five states offered incentives, according to the nonprofit Tax Foundation.

Film tax credits have become so integral to the filmmaking process that they often determine not only where but if a movie gets made. Studios factor them into film budgets, and producers use the promise of credits to secure bank loans or private investment capital to hire crews and build sets. ...

The credits and incentives can cover nearly one-third of production costs. In 14 states, there is an added benefit: They can be sold, typically enabling the filmmakers to get their money months sooner than if they had to wait for refunds. States that permit the sale of tax credits, including Georgia and Louisiana, are now among the most popular for location shooting.

As more states provide more and bigger incentives, film production has shifted away from California to New York and many other states. States approved or handed out $1.5 billion in tax credits and film incentives in 2012, with New York leading the way. Thirteen states allow the sale or transfer of tax credits, which Nevada will also offer starting Jan. 1.

Note: Oklahoma, West Virginia , Washington, Rhode Island, Colorado, Montana, Wisconsin, Kentucky, Wyoming, Missouri, Maine and Minnesota each distributed $5 million or less in incentives. West Virgina, Rhode Island and Missouri offer transferable credits.

       States That Allow Sale of Tax Credits:

Not everyone is such a fan. Hollywood's trade workers — the electricians, carpenters, caterers and others who work behind the scenes — have long complained that they've lost their livelihood as states vie for film business with ever-richer incentives. The number of top-grossing films shot in California has plummeted 60% in the last 15 years, according to a Times review of public records, industry reports and box-office tracking data. ...

A snapshot of two years, 1997 and 2012, illustrates the diminishing role California plays in the production of feature films. Incentives help drive the film industries in other states as well as around the world. Here are the U.S. states, Canadian provinces and countries where the top 100 films at the box office released that year were entirely or partially filmed.

Locations For Top 100 Films (1997):
1997map
Locations For Top 100 Films (2012):
2012map

Some economists question whether these programs create long-term benefits to the local communities they are supposed to help. The sale of tax credits, meanwhile, has triggered criticism that companies and people with no connection to the film industry are benefiting from film credits.

December 27, 2013 in Tax | Permalink | Comments (1)

Court: Home Depot Cannot Use Out-of-State IP Affiliate to Shift Income From Arizona

Home DepotArizona Daily Sun:  Appeals Court: Companies Can’t be Split to Avoid Taxes:

National companies can’t divide up their business in ways designed solely to minimize their Arizona corporate tax liability, the state Court of Appeals has ruled.  [Home Depot v. Arizona Department of Revenue, No. 1-CA-TX-12-0005 (Ariz. Ct. App. Dec. 5, 2013)]

In a unanimous ruling, the judges rebuffed a bid by Home Depot USA Inc. to claim that an affiliate that owns the “Home Depot” trademark is not really part of the retail chain that is doing business in Arizona. The judges said the arguments presented by the company make no sense.

The ruling most immediately affects Home Depot with dozens of retail stores in the state. And the numbers may be huge.

Nationally, the company claims that the income from Home Depot stores in a three-year period at issue was $3.8 billion. But it says that revenues for that same period for the out-of-state affiliate known as “Homer” which happens to own the “Home Depot” trademark — and whose income the corporation argued could not be considered in Arizona — were $4.7 billion.

The exact dollar effect for Arizona was not listed in the court records. But the ruling has broader implications, affecting all major corporations and the ways they divide up their business.

(Hat Tip: Bob Kamman.)

December 27, 2013 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 232

IRS Logo 2Washington Examiner:  Report: RS Regs Would Silence Obama's Critics, Set No Limits on Liberal Groups:

On Wednesday, WND reported that new rules being proposed by the IRS are designed to silence conservative critics of President Obama while setting no limits on liberal groups.

Mathew Staver, founder and chief counsel of Liberty Counsel, told WND that after the agency was caught "intentionally targeting conservative groups in the prior two elections, now the president wants his IRS to totally silence the voices of his political adversaries.”

According to Staver, the new rules are “designed to silence and greatly restrict the activities of Liberty Counsel Action and other 501(c)(4) nonprofit organizations during the upcoming election year.” 

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December 27, 2013 in IRS News, IRS Scandal | Permalink | Comments (2)

Thursday, December 26, 2013

Doran: Tax Legislation in the Contemporary U.S. Congress

Michael Doran (Georgetown; moving to Virginia), Tax Legislation in the Contemporary U.S. Congress, 67 Tax L. Rev. ___ (2013):

This paper identifies and analyzes a recent trend toward “clean” federal tax legislation. Existing explanations of the tax-legislative process account for the regular, highly particularistic tax legislation prevalent during the 1980s and the early 1990s using legislator-motivation and traditional policy models. But a new tax-legislative process, characterized by alternating periods of tax gridlock and strikingly non-particularistic tax legislation, emerged during the late 1990s. This paper argues that tax gridlock and non-particularistic tax legislation are best understood as companion phenomena, and it examines three general determinants of recent tax-legislative outcomes. First, exogenous events, particularly macro-economic and macro-political developments, typically provide the central policy objective for any item of major tax legislation. Second, the voting behavior of individual legislators on tax legislation corresponds closely to generally accepted understandings of legislator motivations. Third and most importantly, several legislative-organizational developments within Congress – specifically, the emergence of sharp coalitional polarization and strong coalitional cohesion, the re-establishment of centralized chamber management, and the relaxation of restrictions on the federal budget – combined to produce the new tax-legislative process during the late 1990s and the 2000s. This paper does not offer a positive theory of the tax-legislative process or make predictions about tax-legislative outcomes. Rather, it builds on existing accounts to provide an updated and more nuanced explanation of the tax-legislative process in the contemporary Congress.

December 26, 2013 in Scholarship, Tax | Permalink | Comments (0)

Mark Zuckerberg's $2 Billion Tax Bill

ZuckerbergForbes:  Mark Zuckerberg's $2 Billion Tax Bill Double Last Year, Higher Than Most Billionaries, by Robert W. Wood:

Last year Mark Zuckerberg caused a kerfuffle by generating what many called the biggest tax bill ever for an individual, about $1 billion in taxes. That was impressive, but much of it was done via withholding as part of his Facebook pay. Besides, Facebook got a tax deduction for every dollar.

The Facebook founder and CEO is in for an even bigger tax hit now. But as with last year, it seems largely within his control. Company filings say he is selling 41.4 million shares worth approximately $2.3 billion. Most of the net proceeds are supposed to be used to pay the taxes Mr. Zuckerberg will incur by exercising options to purchase 60 million shares of Facebook Class B common stock.

Mr. Zuckerberg now has 58.8% of the voting power, but this whopping sale of shares would take him down to 56.1%. Still, post-sale he will retain more than 444 million shares. And he may still have unexercised options too.

But it is easy to see that even among elite filers, Mr. Zuckerberg is, well, elite. According to IRS data on the top 400 tax returns, the average in that elite group was about $48 million. And the entire group of 400 paid only $16 billion.

That was in 2009, but even accounting for inflation and a now somewhat more robust economy, the $2 billion tax payment is astounding, on top of big numbers last year. Warren Buffett paid less than $7 million in 2010. Yes, that was million, not billion.

Prior TaxProf Blog coverage:

December 26, 2013 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Christians: What the Baucus International Tax Reform Plan Reveals About Tax Competition

Tax Analysys Logo (2013)Allison Christians (McGill), What the Baucus Plan Reveals About Tax Competition, 72 Tax Notes Int'l 1113 (Dec. 23, 2013):

Conventional wisdom explains tax competition as an external constraint on lawmaking: All countries compete for investment in a global capital market, and therefore each is forced, as by an incontrovertible law of nature, to lure investment into their jurisdiction with attractive tax policies. Conventional wisdom then also surmises that the only way governments can curb tax competition is by working together cooperatively to eliminate beggar-thy-neighbor tax policies. The international tax reform plan recently introduced by Sen. Max Baucus, D-Mont., squarely confronts both parts of this conventional wisdom and reveals some very disturbing observations about tax competition: that it is as much a supply-side as a demand-side problem (luring strategies require a supply of otherwise tax-favored capital), that governments have always had the power to counter this problem, and that accordingly, political will is the reason why tax competition has become the overwhelming force that it is today.

All Tax Analysts content is available through the LexisNexis® services.

December 26, 2013 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 231

IRS Logo 2World Net Daily:  IRS Rule May Allow Political Targeting:

Barack Obama’s Internal Revenue Service was caught this year targeting conservative groups with harassment that included invasive probes into the content of prayers and unwarranted delays.

That issue is being worked out in court. But the IRS, nevertheless, remains on the attack, proposing new regulations that would silence the president’s critics.

Mathew Staver, founder and chief counsel of Liberty Counsel, said that after “being caught intentionally targeting conservative groups in the prior two elections, now the president wants his IRS to totally silence the voices of his political adversaries.” New rules proposed in the Federal Register, Staver said, are “designed to silence and greatly restrict the activities of Liberty Counsel Action and other 501 (c) 4 nonprofit organizations during the upcoming election year.”

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December 26, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, December 25, 2013

A Hallelujah Christmas


I've heard about this baby boy
Who's come to earth to bring us joy
And I just want to sing this song to you
It goes like this, the fourth, the fifth
The minor fall, the major lift
With every breath I'm singing Hallelujah
Hallelujah

A couple came to Bethlehem
Expecting child, they searched the inn
To find a place for You were coming soon
There was no room for them to stay
So in a manger filled with hay
God's only Son was born, oh Hallelujah
Hallelujah

The shepherds left their flocks by night
To see this baby wrapped in light
A host of angels led them all to You
It was just as the angels said
You'll find Him in a manger bed
Immanuel and Savior, Hallelujah
Hallelujah

A star shown bright up in the east
To Bethlehem, the wisemen three
Came many miles and journeyed long for You
And to the place at which You were
Their frankincense and gold and myrrh
They gave to You and cried out Hallelujah
Hallelujah

I know You came to rescue me
This baby boy would grow to be
A man and one day die for me and you
My sins would drive the nails in You
That rugged cross was my cross, too
Still every breath You drew was Hallelujah
Hallelujah

December 25, 2013 in Legal Education, Tax | Permalink | Comments (0)

In Hoc Anno Domini

The Wall Street Journal has published this wonderful editorial each Christmas since 1949, In Hoc Anno Domini:

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.

But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?

There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?

Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God. Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me. And he sent this gospel of the Kingdom of Man into the uttermost ends of the earth.

Read the rest here.

December 25, 2013 in Legal Education, Tax | Permalink | Comments (0)

World Giving Index 2013: U.S. Is #1

World Giving 2013:

This fourth edition of the World Giving Index again presents giving data from across the globe over a five year period (2008-2012). The World Giving Index 2013 includes data from 135 countries across the globe that was collected throughout the calendar year of 2012. .... The Index is based on an average of three measures of giving behaviour - the percentage of people who donate money to charity, volunteer their time, and help a stranger, in a typical month. ...

The United States is ranked first in this year’s World Giving Index (Table 1), reclaiming a position it previously held in 2011. Its score of 61% is the highest on record. The United States’ return to the top of the World Giving Index is due mainly to the fact that helping a stranger is more commonplace here than in any other country in the world – when asked, 77% of Americans said they helped somebody they didn’t know, up from 71% in 2011. The United States ranks third globally in terms of volunteering, and 13th in terms of donating money.

2013 5

December 25, 2013 in Legal Education, Tax | Permalink | Comments (5)

Santa's Tax Bill

SANTA CLAUS 1040_Page_1

Forbes:  The True Cost of Christmas: Santa's Tax Bill, by Kelly Phillips Erb:

[W]e’ve had quite a few discussions in my household about how Santa manages, in one night, to get all of his work done. Clearly, he has help. And that has financial and tax consequences, right? So we had a little chat about Santa’s money and his tax bill. And here’s what we – a tax attorney and three kids – decided: ...

His deductions appear to far outweigh his revenue, at least according to our mostly very unscientific surmisings. That said, Santa, if you’re reading, two quick things: One, I realize I’m not under age 14 but I’ve been really, really good this year. Just saying. Two, taxes can be confusing. It wouldn’t do to see Santa audited so call me with any questions. You have the number (my kids are sure of it).

From Jay Katz:  Christmas is the Time of the Year when Tax Nerds Mostly Wonder:

10. If every person who sings Christmas songs is named Carol.
9.  If a person who does not believe in Santa is a rebel without a Claus.
8.  If a prudent taxpayer should shop only at the After Tax Dollar Store.
7.  If Santa’s helpers are W-2 employees or 1099 subcontractors.
6.  How long it takes to prepare and file all of Santa’s gift tax returns.
5.  If Santa is entitled to a tax credit for every solar paneled chimney he goes down.
4.  Whether Santa should depreciate or take the standard mileage deduction for his reindeer.
3.  Whether Santa’s workshop qualifies for a home office.
2.  Whether Santa can take a hobby loss for the model airplane that fell out of his bag.
1.  Whether it is fair that Santa has to work every Christmas Eve.

December 25, 2013 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

The IRS Scandal, Day 230 (Christmas Edition)

Tuesday, December 24, 2013

'Twas the Night Before Christmas (Legal Edition)

Check out the original and legal versions of the classic poem, 'Twas the Night Before Christmas [click on chart to enlarge]:

Twas_the_night_before_christmas_pag

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December 24, 2013 | Permalink | Comments (0)

How A Christmas Carol Shaped My World

Christmas CarolBarry Sullivan (Loyola-Chicago), A Book that Shaped Your World: Charles Dickens, A Christmas Carol, 50 Alberta L. Rev. 934 (2013):

To celebrate the Alberta Law Review's fiftieth volume, the book review editors invited friends and alumni to put aside for a moment their required reading, and reflect briefly on the books that have shaped their approaches to life and the law. Professor Sullivan chose to reflect upon the perennially popular A Christmas Carol, to thoughtful and poetic effect.

The Victorians still have much to say to us. After all, apart from Shakespeare and the Greeks, who has written so insightfully as Trollope about the moral complexity and ambiguities of political life, with its competing claims of conscience and compromise, altruism and self-interest, idealism and corruption? But Dickens also merits our patronage. Dickens is the great moralist. His brief sounds in equity; his interest is fairness. Sentimental and didactic, he does not speak to our intellects in the way that Trollope does. Dickens shamelessly plays on our emotions. He speaks to our hearts. He manipulates us. He points us to the deepest truths about what it means to be human. And nowhere does he do that more effectively or with greater economy than in A Christmas Carol. ... The "power" that Scrooge attributes to Fezziwig is one that belongs to all of us. It is the power to act for good, and lawyers have that power in abundance.

December 24, 2013 in Book Club, Legal Education, Tax | Permalink | Comments (4)

Blank Presents Collateral Compliance Today at IDC-Herzliya

BlankJoshua D. Blank (NYU) presents Collateral Compliance, 162 U. Pa. L. Rev. ___ (2014), today at the Radzyner Law School of the Interdisciplinary Center (IDC)-Herzliya in Herzliya, Israel as part of its Faculty Colloquium Series hosted by Alon Klement:

As most of us are aware, the failure to comply with the tax law can lead to tax penalties, which almost always take the form of monetary sanctions. But tax noncompliance has other consequences as well. Collateral sanctions for tax noncompliance — which apply on top of traditional tax penalties and revoke or deny government-provided benefits — increasingly apply to individuals who have failed to obey the tax law. They range from denial of hunting permits to suspension of driver’s licenses to revocation of passports. Further, as the recent Supreme Court case Kawashima v. Holder demonstrates, some individuals who are subject to tax penalties for committing tax offenses involving “fraud or deceit” may even face deportation from the United States.

When analyzing sanctions as incentives for tax compliance, tax scholars have focused almost exclusively on the design and implementation of monetary tax penalties. This Article, in contrast, introduces the collateral tax sanction as a new form of tax penalty that does not require noncompliant taxpayers to pay the government money and that does not require the taxing authority to apply it. Drawing on behavioral research and experiments that have been conducted in the tax context and other areas, I argue that collateral tax sanctions can promote voluntary tax compliance more effectively than the threat of additional monetary tax penalties, especially if governments increase public awareness of these sanctions. Governments should embrace collateral tax sanctions as a means of tax enforcement and taxing authorities should publicize them affirmatively.

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December 24, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 229

IRS Logo 2USA Today:  Voter Registration Could be Curtailed Under IRS Rule:

The Obama administration's proposal to clamp down on political spending by tax-exempt groups wouldn't just target conservatives. Liberal groups say the rules, as written, would also curtail efforts to register voters, distribute candidate guides and get voters to the polls on Election Day.

"This would affect vast numbers of organizations that span the left, middle and right," said Nan Aron,president of the Alliance for Justice, which represents more than 100 liberal organizations and advises others about navigating tax and election rules. 

The rules proposed by the Treasury Department last month attempt to better define what constitutes political activity by tax-exempt social-welfare groups. It comes after the Internal Revenue Service admitted it targeted Tea Party groups for extra scrutiny based solely on their names. The new rules would define voter registration and get-out-the-vote drives as "candidate-related political activity," even if they were done in a non-partisan way. ...

Republicans aren't happy with the proposed rules, either. In a floor speech last week, Senate Minority Leader Mitch McConnell, R-Ky., slammed the IRS proposal as the "latest in a long and troubling pattern of Chicago-style tactics under this administration." The draft rules, McConnell said, target "the speech of those who criticize the administration while leaving its supporters untouched."

Not so, others say. "The assertion that this is a rule-making targeting the Tea Party is ridiculous," said Paul Ryan, a lawyer with the Campaign Legal Center, which has called for more aggressive IRS enforcement. "This will affect groups across the political spectrum." ...

Marcus Owens, a Washington lawyer who spent 10 years as director of the IRS division that oversees tax-exempt organizations, said the proposal may add more confusion than clarity. "Internal Revenue agents, who supposedly were having difficulty applying tax-law standards, now have a brand new set of standards to learn," Owens said. "What this is doing is making the rules incredibly complex because they are going to be an amalgam of election law and an amalgam of tax law."

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December 24, 2013 in IRS News, IRS Scandal | Permalink | Comments (1)

Monday, December 23, 2013

Should You Work on Christmas?

XmasCorporate Counsel, To Work or Not to Work on Vacation?:

As 2013 draws to a close, many employees are using leftover vacation days that might not roll over into the new year. Vacation is intended to be a time to unwind and forget about the trials and tribulations of working life—however, some employers and employees might not see it that way. Some feel tempted to stay in work mode all the time—whether it’s by checking their email or finally making those calls they’ve been meaning to get to.

Working while on vacation certainly doesn’t sound like much fun, but is it illegal? Paul DeCamp, a shareholder at Jackson Lewis and former administrator for the U.S. Department of Labor’s Wage and Hour Division, told CorpCounsel.com that some employees who do work tasks during vacation must be compensated, but the rules differ depending on status under the Fair Labor Standards Act (FLSA).

For salaried employees exempt from the FLSA, according to DeCamp, if the employee is still being paid for the week of their vacation, doing some work during that time is fine. However, if the employee is not being paid for the week—if they are on furlough, for example—there is a risk to letting them do work, as time they put in can trigger the entitlement to a full week’s salary.

For nonexempt employees with FLSA protections, the situation is a bit different. Since they are not salaried, the hours of work they do on a vacation day are compensable. If workers do some amount of work on a vacation day employers “still need to measure and pay for that work,” DeCamp said.

And in the unlikely scenario that the nonexempt employee exceeds 40 hours of work during vacation, he or she would be entitled to overtime pay.

December 23, 2013 in Legal Education, Tax | Permalink | Comments (0)

Johnston: District Court Rebukes IRS Church Plan Rulings

Tax Analysys Logo (2013)David Cay Johnston (Syracuse), District Court Rebukes IRS Church Plan Rulings, 141 Tax Notes 1349 (Dec. 23, 2013):

Johnston reports on the first court case in an expanding effort to exempt pension plans from ERISA on religious grounds. The decision implicitly criticizes the IRS Office of Chief Counsel.

All Tax Analysts content is available through the LexisNexis® services.

December 23, 2013 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 228

IRS Logo 2National Review:   The IRS and the Tea Party: Resist the IRS — And Protect the Political Process, by James V. DeLong:

The principle involved in the recent IRS scandal appears to be that every group with an interest in twisting the electoral process to its own advantage is exempted; only those groups that stand for disinterested good government are muzzled.

The IRS recently proposed rules to “provide guidance” to tax-exempt “social welfare” organizations concerning restrictions on their political activities. As Kimberly Strassel noted in the Wall Street Journal, this notice represents the IRS’s response to the revelations about its use of the tax laws to hamstring tea-party groups before the 2012 election.

The new rules are designed to eliminate the citizen groups before the 2014 election. They would have the effect of squelching tea-party communications with the public “referring to” a candidate or party, with especially tough restrictions during the run-up to an election. The blacklist applies to “direct or indirect candidate-related political activity.” Covered activities include direct funding, volunteer work, sponsorship of debates, preparation of voter guides, website maintenance, e-mail or social-media campaigns, and registration drives. If an unspecified, but too-large, portion of a group’s activities falls within the definitions, its tax-exempt status is jeopardized.

The proposal does not apply to political activities conducted by unions, business organizations, agricultural associations, or similar entities. Nor does it apply to charities, which are supposed to be more stringently regulated than social-welfare organizations, but which frequently push the envelope. And as salt in the wound, the K Street lobbyists’ social-welfare groups, which serve as go-betweens and bagmen for lobbyists and government officials but do not communicate with the public, would also be untouched. Washington organizations with broad membership out in the nation at large would, however, be stifled along with the tea-party groups.

The IRS rules might not survive legal scrutiny, but this is irrelevant. Once final, the rules would be applied retroactively, so the IRS can leave them in the “proposed” stage until after November 2014, which makes them unreviewable by a court even as they paralyze the citizen groups. The IRS could also start applying the new standards immediately by requiring that organizations requesting tax-exempt status promise to abide by them. ...

[T]ea-party groups ... are clearly social-welfare organizations, under the IRS definition of “promoting the common good and general welfare of the community.” Compared with other exempt organizations, such as unions or business associations, the tea-party groups are uniquely selfless in that they do not seek advantages for themselves. They must be politically active, because their function is to educate the public and to encourage elected officials and candidates who embrace tea-party values, such as limited government and the rule of law. ...

[T]ea-party political activity is offensive to the IRS — so the current notice classifies any references to candidates, even in voter guides or open forums, as political. Then, to nail the door shut, the proposal contemplates eliminating the “primary purpose” test and forbidding social-welfare organizations from engaging in any political activity. (Repeat: This proposal does not apply to unions, business associations, or other organizations exempt under other subsections.)

Obviously, this proposal has nothing to do with protecting tax revenues. The idea that a tea-party group, run on a shoestring and the energy of volunteers, threatens the collection of the nation’s taxes is a joke. ...

The proposal has nothing to do with revenue protection, and should be held by a court to be ultra vires. ​Why is it within either the mission or the institutional competence of the IRS to decide that a particular political activity should be squelched? As long as an organization is not being used for tax evasion or avoidance schemes, the IRS has no legitimate interest. ...

[T]he discrimination of this proposal is blatant. Tea-party groups and other 501(c)(4)s are hit, but not the myriad organizations granted exemptions by other subsections of 501, such as unions, trade associations, cooperatives, and business groups. Even charities, which are supposed to be more stringently regulated, escape the proposal.

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December 23, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, December 22, 2013

Joint Tax Committee Releases Description of President Obama's Tax Proposals

Joint Tax CommitteeJoint Committee on Taxation, Description of Certain Revenue Provisions Contained in the President's Fiscal Year 2014 Budget Proposal (JCS-4-13) (220 pages):

This document ... provides a description and analysis of certain revenue provisions modifying the Internal Revenue Code ... that are included in the President’s fiscal year 2014 budget proposal. ... Because many of the provisions in the 2014 budget proposal are substantially similar or identical to the fiscal year 2013 budget proposal, the Joint Committee Staff has described only those provisions that did not appear in the fiscal year 2013 budget proposal or that are substantially modified. The document generally follows the order of the proposals as included in the Department of the Treasury’s explanation of the President’s budget revenue proposals. For new provisions, there is a description of present law and the proposal (including effective date), and a discussion of policy issues related to the proposal. For modified provisions, there is a description of the modification, and a footnote directing the reader to the Joint Committee Staff’s description of the revenue provision as it appeared in the fiscal year 2013 budget proposal.

December 22, 2013 in Congressional News, Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

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

  1. [334 Downloads]  Basic Gift and Estate Tax Treatment of Joint Tenancies, by Bridget J. Crawford (Pace) & Michael Epstein (Comerica Bank, Boca Raton, FL)
  2. [279 Downloads]  Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, by Michael S. Kirsch (Notre Dame)
  3. [252 Downloads]  Moving Money: International Financial Flows, Taxes, & Money Laundering, by Andrew P. Morriss (Alabama) & Richard K. Gordon (Case Western)
  4. [191 Downloads]  The Most Successful Tax Reform in History, by Bruce Bartlett
  5. [185 Downloads]  Hanging Together: A Multilateral Approach to Taxing Multinationals, by Reuven S. Avi-Yonah (Michigan)

December 22, 2013 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Maps of the Seven Deadly Sins in America

Maps of Seven Deadly Sins in America:

Geographers from Kansas State University have created a map of the spatial distribution of the Seven Deadly Sins [wrath, greed, sloth, pride, lust, envy, gluttony] across the United States. How? By mapping demographic data related to each of the Sins. Below are screenshots of the maps in standard deviation units; red naturally is more sinful, blue less sinful. 

Lust

December 22, 2013 in Legal Education, Tax | Permalink | Comments (1)

The IRS Scandal, Day 227

IRS Logo 2News Busters:  Year-End Awards: The ‘Move Along, Nothing to See Here Award,’ for Denying Obama’s Scandals:

This week, the Media Research Center announced our “Best Notable Quotables of 2013,” reviewing the worst media bias of the year, as selected by our panel of 42 expert judges.

2013 was the year that scandal after scandal — from the IRS targeting the Tea Party, to Benghazi, to the lies surrounding ObamaCare, and on and on — hit the Obama administration, but journalists kept acting as if the President and his team were clean as a whistle. So today, the results of our “Move Along, Nothing to See Here Award,” for denying Obama’s scandals. ...

Coming in second, MSNBC daytime host Martin Bashir, who back on June 5 tried to claim that it was just racist for Republicans to investigate the political abuses at the IRS:

The IRS is being used in exactly the same way as they tried to use the President’s birth certificate...Despite the complete lack of any evidence linking the President to the targeting of Tea Party groups, Republicans are using it as their latest weapon in the war against the black man in the White House....This afternoon, we welcome the latest phrase in the lexicon of Republican attacks on this President — the IRS. Three letters that sound so innocent, but we know what you mean.

While Bashir claimed the investigation was motivated by racism, his primetime colleague Lawrence O’Donnell on May 15 said the whole thing was just a misunderstanding, that the IRS targeting of conservative organizations was entirely correct:

I do not believe what the IRS was reported to have been doing is an outrage. I believe that the IRS agents in this case did nothing wrong. Let me say it again. You won’t hear it anywhere else. The IRS agents did nothing wrong. They were simply trying to enforce the law as the IRS has understood it since 1959.”

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December 22, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, December 21, 2013

WSJ: How Will the IRS Tax Bitcoin?

BitcoinWall Street Journal Tax Report:  How Will the IRS Tax Bitcoin?, by Laura Saunders:

Despite a recent plunge, bitcoin has had a banner year. Now comes the hard part—figuring out the taxes on it.

For the uninitiated, bitcoin is the most prominent of several "virtual currencies"—money that exists only online and isn't backed by any government. Released in 2009 by an unknown person or group going by the name Satoshi Nakamoto, bitcoin is maintained by a decentralized network of computers, called "miners," that process and verify transactions. As of Friday afternoon, the value of all bitcoins in circulation was nearly $8 billion, according to CoinDesk.

This year the price of a bitcoin has risen from about $13.50 to about $650 on some exchanges, down from a November high of about $1,200 just before concerns arose that China will crack down on the virtual currency.

Experts say, however, that there's no agreement on a host of fundamental questions for U.S. taxpayers holding or using virtual currencies. "People who invested in bitcoin or used it to buy goods or services this year have gains or losses, but no rules for reporting them," says Omri Marian, a professor of law at the University of Florida in Gainesville. "What should they do in April?"

Among the pressing issues: When should bitcoin be considered a commodity, a currency or a capital asset for tax purposes? Are bitcoin transactions similar to barter? Is bitcoin subject to the same stringent tax rules as secret offshore accounts? And how will U.S. officials keep bitcoin, which is even more anonymous than cash, from being used to promote tax evasion or money laundering?

So far, the IRS hasn't ruled on or addressed such issues directly. An agency spokesman released the following statement: "The IRS continues to study virtual currencies and intends to provide some guidance on the tax consequences" of transactions involving them. The agency is also "aware of the potential tax compliance risks posed by virtual currencies," he added.

Jennifer Isom (New Mexico), As Certain as Death and Taxes: Consumer Considerations of Bitcoin Transactions for When the IRS Comes Knocking:

Bitcoin is the first decentralized digital-currency. Due to the infancy and only recent popularity, consumers transacting in bitcoins are likely unaware of the tax implications involved. At this time, there are no known legal decisions on how Bitcoin transactions should be taxed. This paper explores the likely tax implications for everyday consumers exchanging bitcoins for property and services

Prior TaxProf Blog coverage:

December 21, 2013 in IRS News, Tax | Permalink | Comments (0)

NY Times: Breadwinner Moms, Caregiving Dads

Mr. MomFollowing up on my previous post, NY Times: High-Achieving Women Increasingly Have Stay-at-Home Husbands:  New York Times Letter to the Editor:  Breadwinner Moms, Caregiving Dads, by Tax Prof Leigh Osofsky (Miami):

While your article nominally discussed both stay-at-home fathers and their working partners, it, like so many others, focused on the story and struggles of stay-at-home fatherhood. The article did not highlight the relative isolation that breadwinner mothers experience.

They must carve out work time to do things like pump breast milk and be present enough to be treated as the mother of the children by the school, community and family members, while still experiencing some judgment and exclusion from these networks based on the assumption of mothers as the primary caregivers.

As a breadwinner mother with a phenomenal stay-at-home husband, I appreciate the value of and challenges facing stay-at-home fathers. But changing a history of gendered parenting roles is difficult. I wish The Times would include more on the challenges facing breadwinner mothers as part of the narrative.

December 21, 2013 in Legal Education | Permalink | Comments (0)

Bartlett: Is the Tax Tide Turning Against the Rich?

Tax Analysys Logo (2013)Bruce Bartlett, Is the Tax Tide Turning Against the Rich?, 141 Tax Notes 887 (Nov. 25, 2013):

The trend of the last 50 years has been to reduce taxes on the wealthy. But this article argues that the United States has come to the end of that trend. The need for additional federal revenue, and rising wealth and income inequality are fueling a change in direction. There is rising support in Congress for higher taxes on the wealthy, strong support in public opinion polls, increasing numbers of the wealthy supporting higher taxes on themselves, and economic research showing that the economic cost of higher taxes on the rich is minimal. Although it will not happen soon, it is inevitable that taxes on the wealthy will rise in the future.

All Tax Analysts content is available through the LexisNexis® services.

December 21, 2013 | Permalink | Comments (1)

The IRS Scandal, Day 226

IRS Logo 2FactCheck.org, Whoppers of 2013:  We Highlight the Real Doozies Among the Falsehoods of the Year:

A Whooper From the IRS.
A political firestorm erupted this year over IRS employees’ extra scrutiny of conservative groups seeking tax-exempt status. Lois Lerner, director of the IRS’ exempt organizations division, wrongly told reporters on May 10 that she first learned of employees targeting these groups in 2012 from media reports on conservative organizations that complained about delays. But a Treasury inspector general’s report released four days later showed she knew about the flagging of conservative groups nearly a year earlier, and that she tried to correct it.

Lerner, the IG report said, was briefed in late June 2011 about employees singling out groups applying for 501(c)(4) status with “tea party” or “patriot” descriptors. The status is for “social welfare” organizations that can be involved in politics as long as it is not their “primary activity.” Lerner raised concerns and “instructed that the criteria be immediately revised,” the report said. She also learned in early 2012 that the IRS had sent the groups letters asking “unnecessary” questions — as determined by her office — such as the identity of donors. But when questioned by reporters just days before that report was released, Lerner said that “we started seeing information in the press that raised questions for us and we went back and took a look.” Lerner retired from the IRS in September.

IRS Officials Misled Congress, Public, May 21

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December 21, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, December 20, 2013

Weekly Tax Roundup

December 20, 2013 in Tax | Permalink | Comments (0)

Weekly SSRN Tax Roundup

SSRN Logo

December 20, 2013 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Note Tax Roundup

Weekly RoundupShaun P. Mahaffy (J.D. 2013, Yale), Note, The Case for Tax: A Comparative Approach to Innovation Policy, 123 Yale L.J. 812 (2013):

The federal government deploys a variety of institutions—patent, tax, and spending, among others—to encourage innovation. But legal scholars have given short shrift to how these institutions should be coordinated. In this Note, I argue that tax credits could be used to ameliorate a number of inefficiencies that arise from the failures of patent law. Deploying strong tax credits narrowly could improve incentives for small businesses and in emerging industries at a relatively low cost. I argue that this style of comparative institutional analysis should be part of every innovation scholar’s toolbox.

December 20, 2013 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)