TaxProf Blog

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

Saturday, June 30, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Brad Toben, America's Second Longest-Serving Law School Dean, Has Grown Baylor's Endowment From $875,000 To $120,000,000

Toben 2Texas Lawyer, Baylor Law Dean Brad Toben Quietly Outpaces Texas Law School Dean Tenure:

In 1991 when Brad Toben became dean of Baylor University School of Law, the Lone Star State was headed by Texas Gov. Ann Richards, the U.S. president was George H.W. Bush and the Soviet Union dissolved, ending the Cold War.

Now on the job for more than 26 years, Toben is the second longest-serving law dean in the whole country, according to Rosenblatt’s Deans Database, a repository of information about law deans at Mississippi College School of Law in Jackson. Toben’s tenure is beat only by the first longest-serving dean, John O’Brien, the 30-year dean of New England Law Boston.

Toben has far outpaced the average of four years of service that most law deans put in and also beat all other Texas law deans by a long shot. In fact, the Texas dean who comes closest is South Texas College of Law Houston dean Donald Guter, who is the 21st longest-serving law dean with nine years of service and who plans to retire next year.

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June 30, 2018 in Legal Education | Permalink | Comments (4)

Legal Services Delivery At The Speed of Business — And Why It Matters To Law Schools

Forbes, Legal Delivery at The Speed of Business — And Why It Matters:

“Time is Money wrote Benjamin Franklin in a 1748 essay titled Advice to a Young Tradesman. Franklin was a polymath—scientist, statesman, publisher, inventor and diplomat. Is it coincidence that he was almost everything except an attorney?  Lawyers have a different take on time than other industries. The legal profession uses it as a price gauge—more is better. Lawyers rationalize excessive time as ‘attention to detail’-- and justification for a larger bill. The profession rewards input (time/origination) over output (efficiency/results). This is the inverse of Franklin’s view that time is a precious commodity to be apportioned prudently. It is also contrary to business where rapid risk assessment and decisive decision-making is the norm.

How have lawyers preserved a culture and tempo so asynchronous to the clients—and society—they covenant to represent zealously, competently, and within the boundaries of the law? The legal profession seeded and assiduously cultivated an ethos of “lawyers and ’non-lawyers’” that became the cornerstone of lawyer exceptionalism. Law is provincial by design; each jurisdiction has its own practice rules designed to keep out ‘interlopers.’ The profession constructed regulatory barriers to ensure that ‘non-lawyers’ could not compete for what lawyers deemed ‘legal’ work. Law was insular and operated at a pace designed to accommodate a ‘scorched earth’ approach to all tasks, regardless of value. This served the economic model of the traditional law firm partnership model.

Law has operated as a guild for generations. It controlled membership, licensure, practice rules, regulation, delivery, supply, pricing, and terms of engagement. Lawyers dictated how, by whom, within what timeframes, and at what price their services were delivered. Their economic model was built on leverage, high rates, exorbitant billable hours, and no ‘outside’ competition. The judicial process also operated at its own languid pace. Judges were loath to rule from the bench or chastise counsel for dilatory practices. If justice delayed is justice denied, then the judiciary is out-of-synch with a world that demands rapid, binding, and efficient resolution of disputes. ...

Law schools—and their ABA accreditors—must take steps to reduce the crippling cost of legal education and compress programs to two years of ‘classroom’ courses and one devoted to experiential learning/legal residency. Flipped classrooms, self-help tools, and webinars will reduce cost and foster agile, just-in-time learning. Law schools would benefit students, themselves, the industry, and consumers were they to forge alliances with the marketplace and to teach the skills it demands. Fewer graduates will have traditional ‘practice’ careers, but there are expanding opportunities for ‘T-shaped’ legal professionals. The industry—and consumers—will benefit from a more diverse pool of legal professionals.

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June 30, 2018 in Legal Education | Permalink | Comments (5)

The IRS Releases New Postcard Form 1040

Following up on Tuesday's  post, NY Times: The New Tax Form Is Postcard-Size, But More Complicated Than Ever:  the IRS yesterday released a draft version of the new Form 1040:

1040

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June 30, 2018 in IRS News, Tax | Permalink | Comments (4)

Friday, June 29, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Aprill's Section 501(c)(4) Social Welfare Organizations

This week, Orly Mazur (SMU) reviews a new work by Ellen P. Aprill (Loyola-L.A.), Examining the Landscape of Section 501(c)(4) Social Welfare Organizations, 21 N.Y.U. J. Legis. & Pub. Pol'y ___ (2018).

Mazur (2017-2)In recent years, there has been a lot of controversy regarding the use of organizations exempt from taxation under section 501(c)(4) of the Internal Revenue Code for political campaigning activities. In her new work, Ellen Aprill takes a broader look at the role and impact of section 501(c)(4) organizations on our tax system and suggests some necessary reforms to strengthen the benefits of that role and minimize any negative impacts.

Aprill begins the article by explaining the requirements to qualify as a tax-exempt section 501(c)(4) “social welfare” organization and the ambiguities that exist in making this determination. She goes on to thoroughly explain the legislative history of the provision, the various additional requirements that have developed over time, and the types of entities that choose to operate in this form. This part of the paper is especially helpful for those of us familiar with 501(c)(3) charitable organizations, but less familiar with 501(c)(4) organizations. It also plays an important part in demonstrating that, contrary to the public media’s portrayal of 501(c)(4) organizations, these organizations engage in many activities beyond political activities, such as community service clubs, volunteer fire departments, and hospital chains. Any reform proposal should also take these other activities into account.

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June 29, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Can 'Dumb' Contracts Be Made 'Smart'?

Fullrobot-2I don't know if it's ready for Broadway, but the article I mentioned in a post a while back (it's gained two quotation marks since then:  The Persistence of "Dumb" Contracts) is all set for out-of-town previews on SSRN.  

There is a group calling themselves Blockgeeks, and one of their number shows up in footnote 1 for this headline from its website: “Smart Contracts: The Blockchain Technology That Will Replace Lawyers”.

The theme of the article is: "could that be?"  Spoiler alert: Probably not. Here is the abstract:

“Smart contracts” are a hot topic. Presently, smart contracts mostly consist as evidence of property, like crypto-currencies or mortgages, created and/or transferred on blockchain technology. This is an exploration of the theoretical possibilities of artificial intelligence in a far broader range of complex and heretofore negotiated transactions that occur over time. My goal is to understand what it means to make a contract smarter, i.e. to delegate more and more of the creation, performance, and disposition of legally binding transactions to machine thinking. Moreover, I want to do so from the perspective of one who is neither a true believer in the purported technological singularity to come nor a digital Luddite.

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June 29, 2018 in Jeff Lipshaw, Legal Education, Miscellaneous, Scholarship | Permalink | Comments (0)

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 71, No. 3 (Winter 2018):

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June 29, 2018 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

The Real Reason Degrees Are Getting Easier: 'Learning Objectives’ Have Reduced Higher Education To Tick-Box Training

Spiked, The Real Reason Degrees Are Getting Easier: 'Learning Objectives’ Have Reduced Higher Education to Tick-Box Training:

Grade inflation in British universities is rocketing. ... The Reform study rightly dismisses most of the usual explanations for this, which all fall under the broad heading of ‘marketisation’, such as league-table competition and students seeing themselves as ‘customers’. These trends may be worth challenging in themselves, but as the report notes, there is little research evidence demonstrating the impact of these changes on grades.

Instead, it suggests grade inflation can be put down to two main causes. The first is the use of ‘degree algorithms’, which are used to translate marks achieved during a degree programme into a final classification. ... Secondly, the study confirms what academics already knew to be true anecdotally – that lecturers are being pressured to mark their students more generously, particularly those from disadvantaged or minority groups.

But while algorithms and managerial pressure have played a role, the Reform report misses another important factor: the introduction of ‘learning objectives’, which spell out what students are expected to learn, and ‘marking criteria’, which assess students’ work according to these objectives. These criteria degrade education enormously, turning the pursuit of knowledge and insight into a regurgitative, tick-box exercise.

If a student has to write a 3,000-word essay on a topic with six learning objectives, the easiest approach to get the top grade is to write 500 words on each objective. The lecturer then marks it in accordance with the matching marking criteria. Lazy student work is met with lazy marking by lecturers. Under this instrumentalist approach, marks inevitably increase and standards decline.

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June 29, 2018 in Legal Education | Permalink | Comments (5)

A 'Most Serious Problem' At The IRS: Private Debt Collectors

Taxpayer Advocate (2016)National Taxpayer Advocate Blog, One Year Later, The IRS Has Not Adjusted Its Private Debt Collection Initiative To Minimize Harm To Vulnerable Taxpayers:

Since the IRS implemented the private debt collection (PDC) initiative last year, I have been concerned that taxpayers whose debts are assigned to private collection agencies (PCAs) will make payments even when they are likely in economic hardship – that is, they are unable to pay their basic living expenses. As discussed in my 2017 Annual Report to Congress, this is exactly what has been happening. The recent returns of approximately 4,100 taxpayers who made payments to the IRS after their debts were assigned to PCAs through September 28, 2017 show:

  • 28 percent had incomes below $20,000;
  • 19 percent had incomes below the federal poverty level; and
  • 44 percent had incomes below 250 percent of the federal poverty level. ...

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June 29, 2018 in IRS News, Tax | Permalink | Comments (0)

Call For International Tax Papers: 2018 Brooklyn International Business Law Scholars' Roundtable

Brooklyn Logo (2016)Call for Papers: 2018 International Business Law Scholars’ Roundtable at Brooklyn Law School:

The Dennis J. Block Center for the Study of International Business Law will sponsor a Scholars’ Roundtable on November 16-17, 2018 at Brooklyn Law School. Scholars writing in a diverse range of fields related to international business, economic, and financial law are invited to submit proposals to present works in progress for an intense day of discussion with other scholars in the field. Participants will be expected to read all papers in advance of the Roundtable and offer commentary on each of the presentations.

Scholars selected for the Roundtable will receive a $500 stipend from Brooklyn Law School to defray the cost of attendance.

Requirements for Submission

  • Applicants must hold a fulltime tenured, tenure-track, or visitor/fellowship position at a law school or university. Scholars from outside the U.S. are encouraged to apply.
  • Scholars who anticipate holding a faculty appointment in the 2019-2020 academic year are also welcome.
  • Applicants should submit a 2-5 - page proposal, abstract, or summary of the paper. All papers presented must be unpublished at the time of the Roundtable. Papers that have been accepted for publication but are not yet in print are welcome.

Possible topics include:

  • Conflicts of laws / private international law
  • Corporate law, securities, and international banking
  • Dispute resolution and arbitration
  • International business transactions
  • International economic law (e.g. trade and investment)
  • International intellectual property
  • International taxation
  • Law and development
  • “Mega-regional” economic integration agreements
  • Regulation of corrupt business practices

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June 29, 2018 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, June 28, 2018

WSJ: As Treasury Targets Workarounds To Tax Law, Impact May Extend Beyond High-Tax States

Wall Street Journal, As Treasury Targets Workarounds to Tax Law, Impact May Extend Beyond High-Tax States:

Donations are pouring into Monroe County Hospital in Forsyth, Ga., offering a lifeline that is expected to close a $1 million operating deficit and help preserve local medical care and jobs. The lifeline may not last, however, because it could be collateral damage from a coming Treasury Department regulation aimed at curbing efforts by New York, New Jersey and other high-tax states to work around deduction caps in the new U.S. tax law.

In Georgia, those contributions came through a state program that gives donors a dollar-for-dollar reduction on their state taxes for gifts to rural hospitals. On top of that, the donations are deductible from federal income taxes as charitable contributions, creating a savvy, increasingly popular and potentially endangered tax strategy.

People hitting the new $10,000 federal cap on state-and-local tax, or SALT, deductions can transform nondeductible state-tax payments into deductible donations, turning a profit on charity. For a Georgia taxpayer in the 37% tax bracket and facing the new cap, a $5,000 donation to a rural hospital there lowers that person’s state taxes by $5,000 and federal taxes by $1,850.

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June 28, 2018 in Tax | Permalink | Comments (0)

Is The Mayo Clinic’s Primary Activity Health Care Or Education? Millions In Taxes Ride On The Answer.

MayoNonprofit Quarterly:  Mayo Clinic’s Primary Activity Could Cost It Millions in Taxes, by Michael Wyland:

When people think of the Mayo Clinic, they think of doctors and nurses providing health care to patients from all over the world. Mayo is also well known for its rich history of medical research and education. A seemingly minor provision of the US Tax Code, however, makes it very important to define which aspect of the organization is its primary activity.

Here’s the details: 501c3 organizations that make money on debt-financed real estate investments typically owe unrelated business income taxes (UBIT) because that income is unrelated to their charitable purpose. However, educational institutions are exempted from this provision and do not owe the tax.

Mayo Clinic claims its primary function is as an educational institution. They have 3,800 enrolled students and provide part-time instruction for up to 100,000 health care professionals annually. Mayo says it meets the legal standard for an educational institution: “a regular faculty and curriculum for a regularly enrolled group of students attending at a place where teaching is normally carried out.” Based on this, Mayo is seeking more than $11 million in refunds of taxes paid since the early 2000s on its debt-financed real estate investments.

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June 28, 2018 in New Cases, Tax | Permalink | Comments (0)

33 Jurisdictions Now Use Uniform Bar Exam; California And Florida Are Two Biggest Holdouts

UBE

Law.com, Uniform Bar Exam Gains Major Traction Across the Country:

The Uniform Bar Exam continues its march across the United States, with 33 jurisdictions now using or soon to adopt the standard test for attorney admissions.

The Supreme Courts of Illinois and Rhode Island this month formally adopted the uniform exam, and the Tennessee Supreme Court did so in April. Maryland and North Carolina each adopted the exam in November, and Texas could be next. A court-appointed task force in May recommended that the Lone Star state begin using the uniform exam while a similar committee in Ohio is expected to release its own recommendation next month.

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June 28, 2018 in Legal Education | Permalink | Comments (2)

U.S. Tax Reform Presentation Slides

Reuven S. Avi-Yonah (Michigan), US Tax Reform: Potential Impact on Europe and EU Corporations (Presentation Slides):

Tax Cuts and Jobs Act (“TCJA”) signed into law by President Trump on 22 December 2017 contains multiple provisions that significantly impact Europe and the way European corporations are being taxed by the US. The US corporate tax rate is set to be 21% (reduced from 35%). Most importantly, the shift towards participation exemption and the adoption of the base erosion anti-abuse tax (“BEAT”), the global intangible low-taxed income (“GILTI”) and the foreign-derived intangible income (“FDII”) changed the delicate balance of US-EU taxation. Nonetheless, TCJA should not be considered as a ‘tax war’: it is a long-overdue response to the BEPS by US and a correct application of the single tax principle to prevent double non-taxation.

Mindy Herzfeld (Florida), US Tax Reform: Worth Waiting 30 Years For? (Presentation Slides):

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June 28, 2018 in Scholarship, Tax | Permalink | Comments (0)

Senate Holds Hearing Today On Charles Rettig's Nomination To Be IRS Commissioner

RettigThe Senate Finance Committee holds a hearing today on the nomination of Pepperdine Law School graduate Charles Rettig's nomination to be the Commissioner of the IRS.

Bloomberg, Trump's IRS Nominee to Face Questions on Management Experience:

President Donald Trump’s nominee to lead the Internal Revenue Service, Charles Rettig, has spent decades helping wealthy and famous people fight the agency’s efforts to collect taxes.

At a Thursday confirmation hearing, the criminal tax lawyer from Beverly Hills, California, will face questions from lawmakers about whether he’s qualified to run the IRS. Democrats will question whether he has the management skills to run an agency struggling to implement the biggest tax overhaul in a generation. ...

Rettig, 61, who has represented the estate of Michael Jackson and the creator of the "Girls Gone Wild" video franchise, probably will win the 51 votes needed for confirmation in the Republican-controlled Senate.

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June 28, 2018 in Congressional News, IRS News, Tax | Permalink | Comments (2)

How Income Equality Helped Elect Donald Trump

Wall Street Journal op-ed:  How Income Equality Helped Trump, by Phil Gramm & Robert B. Ekelund Jr.:

Frenzied rhetoric about income inequality was a larger theme in Hillary Clinton’s 2016 presidential campaign than in any previous American election. When the ballots were counted, however, not only did income inequality fail to move voters, but a massive shift in voting preference among lower-middle and middle-income Americans led to the election of the wealthiest president since George Washington. Now, startling new data on government spending and taxes suggests a novel explanation for this voter shift: It was a backlash against rising income equality among the bottom 60% of American household earners.

The new analysis was published in April by the Cato Institute’s John F. Early, a former assistant commissioner of the Bureau of Labor Statistics, and it provides the most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S [Reassessing the Facts about Inequality, Poverty, and Redistribution]. His study includes the roughly $1 trillion of annual government spending not currently counted in the U.S. Census Bureau’s income-distribution tables. That includes Medicaid, food stamps, the earned-income tax credit, and 85 other federal payments and services, along with similar state and local income supplements. The study also subtracts federal, state and local taxes from individuals’ measured income, an adjustment not contained in the census data.

The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending and the economic and wage stagnation during the Obama era. Hardworking middle-income and lower-middle-income families must have recognized that their efforts left them little better off than the growing number of recipients of government transfers. The perceived injustice of this equality helped drive the political shift among blue-collar workers, many of whom supported the pro-growth candidacy of Donald Trump in 2016 despite having voted for Mr. Obama in the two previous presidential elections.

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June 28, 2018 in Tax | Permalink | Comments (2)

WSJ: Elite Business Schools Are Having Trouble Finding Deans

MBA 2Wall Street Journal, At B-Schools, Leaders Are Hard to Find:

There is something missing at dozens of business schools where high-profile corporate chiefs and prominent government officials have gone to polish their management credentials: a leader.

Elite M.B.A. programs at Northwestern University, Yale University and the University of California’s Berkeley and Los Angeles business schools, are all searching for new deans, as longtime administrators return to teaching or take positions outside academia.

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June 28, 2018 in Legal Education | Permalink | Comments (1)

More Commentary On The Supreme Court's Wayfair Online Sales Tax Decision

Wednesday, June 27, 2018

Oei & Osofsky: Constituencies And Control in Statutory Drafting — Interviews With Government Tax Counsels

Shu-Yi Oei (Boston College) & Leigh Osofsky (Miami; moving to North Carolina), Constituencies and Control in Statutory Drafting: Interviews with Government Tax Counsels, 104 Iowa L. Rev. ___ (2019):

Tax statutes have long been derided as convoluted and unreadable. But there is little existing research about drafting practices that helps us contextualize such critiques. In this Article, we conduct the first in-depth empirical examination of how tax law drafting and formulation decisions are made. We report findings from interviews with government counsels who participated in the tax legislative process over the past four decades. Our interviews revealed that tax legislation drafting decisions are both targeted to and controlled by experts. Most counsels did not consider statutory formulation or readability important, as long as substantive meaning was accurate. Many held this view because their intended audience was tax experts, regulation writers, and software companies, not ordinary taxpayers. When revising law, drafters prioritize preserving existing formulations so as to not upset settled expectations, even at the cost of increasing convolution. While Members, Member staff, and committee staff participate in high-level policy decisions, statutory formulation decisions are largely left to a small number of tax law specialists.

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June 27, 2018 in Scholarship, Tax | Permalink | Comments (0)

National Taxpayer Advocate Releases Mid-Year Report To Congress

TASIR-2018-143 (June 27, 2018), National Taxpayer Advocate Identifies Priority Areas in Mid-Year Report to Congress:

National Taxpayer Advocate Nina E. Olson today released her statutorily mandated mid-year report to Congress that presents a review of the 2018 filing season, identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the upcoming fiscal year and contains the IRS’s responses to each of the 100 administrative recommendations the Advocate made in her 2017 Annual Report to Congress.

The most significant challenge the IRS faces in the upcoming year is implementing the Tax Cuts and Jobs Act of 2017 (TCJA), which among other things requires programming an estimated 140 systems, writing or revising some 450 forms and publications and issuing guidance on dozens of TCJA provisions. Ms. Olson expresses confidence that the IRS will implement the law successfully. “Make no mistake about it. I have no doubt the IRS will deliver what it has been asked to do,” she writes in the preface to the report.

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June 27, 2018 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

Online Students Want Three Things

ChronicleChronicle of Higher Education, What Do Online Students Want? 3 Findings From a New Survey Offer Some Clues:

What do online students want? According to a new survey, they want to conduct more of their course activities on their mobile phones or tablets, and they’d like better career-planning services. Their biggest regrets? They all relate to not having done enough research about the college and what it would cost before they enrolled.

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June 27, 2018 in Legal Education | Permalink | Comments (0)

Avi-Yonah: The International Provisions Of The Tax Cuts And Jobs Act

Reuven S. Avi-Yonah (Michigan), The International Provisions of the TCJA: A Preliminary Summary and Assessment:

The Tax Cuts and Jobs Act (TCJA), as passed by Congress and signed into law on December 22, 2017, represents the most far reaching reform of the US international tax rules since Subpart F was enacted in 1962. Most importantly, TCJA for the first time since the income tax was enacted in 1913 changes the rule that US resident taxpayers have to pay tax on all income “from whatever source derived” (US Constitution, Amendment XVI; IRC section 61). Under the TCJA, dividends paid to US corporate parents from non-Subpart F income of their foreign subsidiaries are exempt from US tax. That remains true even if the dividend was not subject to a withholding tax at source and was paid out of earnings that were not subject to foreign tax in the country where the subsidiary is incorporated.

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June 27, 2018 in Scholarship, Tax | Permalink | Comments (1)

4 Takeaways From Female Law Profs' Equal Pay Settlement

Denver Logo (2015)Law 360, 4 Takeaways From Female Law Profs' Equal Pay Settlement:

Last month, a Colorado federal judge approved a deal in which the University of Denver agreed to institute salary increases and pay $2.66 million to settle an equal pay lawsuit filed by the U.S. Equal Employment Opportunity Commission on behalf of seven female professors. The EEOC took up the case after investigating a charge of sex discrimination in compensation made by Sturm College of Law professor Lucy Marsh. A 2012 letter from the law school had observed pay differences between male and female professors several years before the filing of the complaint. However, the law school did not take steps to address the gap, and further salary increases widened it. Marsh, the lowest-paid professor, then filed a charge with the EEOC.

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June 27, 2018 in Legal Education | Permalink | Comments (0)

Republican Tax Law Hits Churches

Politico, Republican Tax Law Hits Churches:

Republicans have quietly imposed a new tax on churches, synagogues and other nonprofits, a little-noticed and surprising change that could cost some groups tens of thousands of dollars.

Their recent tax-code rewrite requires churches, hospitals, colleges, orchestras and other historically tax-exempt organizations to begin paying a 21 percent tax on some types of fringe benefits they provide their employees.

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June 27, 2018 in Tax | Permalink | Comments (3)

ABA Gives An Inch In Accreditation Fight With Florida Coastal Law

Florida Coastal (2017)Law.com, ABA Gives an Inch in Accreditation Fight with Florida Coastal Law:

The American Bar Association has granted Florida Coastal School of Law a reprieve from disclosing its weak bar pass record to current students by July 2.

The ABA stayed a requirement that the school inform each student of its recent first-time bar pass rates in Florida and Georgia—broken down by quartiles—as well as which quartile of the class the student falls into based on their grades. Hence, there is no need for a federal judge to immediately step into the fray over the school’s accreditation status, according to a motion in opposition of Florida Coastal’s request for a preliminary injunction filed Monday by the ABA. The bar pass disclosure is one of several requirements the ABA’s accreditation committee imposed in April after finding the Jacksonville school out of compliance with its standards pertaining to admissions and academic support.

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June 27, 2018 in Legal Education | Permalink | Comments (0)

Chodorow: The Parsonage Exemption

Adam Chodorow (Arizona State), The Parsonage Exemption, 51 UC Davis L. Rev. 849 (2018):

The parsonage exemption allows “ministers of the gospel” to exclude the value of housing benefits from income, whether received in-kind or as a cash allowance. Critics argue that the provision violates the First Amendment’s Establishment Clause, while supporters contend that it does not single religion out for a cognizable benefit. Alternately, supporters claim that it is a permissible accommodation for religion under the First Amendment’s Free Exercise Clause. This Article fills an important gap in the debate by offering a nuanced explanation of how the parsonage exemption and other housing provisions function within the tax code.

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June 27, 2018 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, June 26, 2018

WSJ: Student-Debt Forgiveness Is A Wonderful Boon, Until The IRS Comes Calling

WSJWall Street Journal, Student-Debt Forgiveness Is a Wonderful Boon, Until the IRS Comes Calling:

Students seeking relief on their college and graduate-school debt could be sitting on a hidden tax bomb: Billions of dollars in one-time bills from the Internal Revenue Service for any debt they get forgiven.

The tax bills are a feature of the “income-driven repayment plans” that have been offered by the Education Department since 2007. One version of these plans allows borrowers to set their monthly student-loan payments at 10% of their discretionary income. The balances often grow over time because the payments aren’t big enough to cover accruing interest.

Private-sector workers pay for 20 or 25 years. At the end of that period, any remaining balance would be forgiven. Under federal tax rules, that disappearing debt is considered part of a borrower’s income for that given year, and taxed as such.

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June 26, 2018 in Legal Education, Tax | Permalink | Comments (5)

The 'Think Like a Lawyer' Approach To Law School Is Outdated

ABA Journal (2014)ABA Journal:  The 'Think Like a Lawyer' Approach to Law School Is Outdated, by Mary E. Juetten (Founder & CEO, Traklight):

I have been writing about change within the legal industry for a few years, but have held off commenting directly on the law school and bar experience for a couple of reasons.

First, I had not taken the bar exam until this February and second, I wanted the time to talk to people in other professions and in other countries. I believe we need to make substantial adjustments to the U.S. law school education and qualifications in order to better serve our clients.

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June 26, 2018 in Legal Education | Permalink | Comments (5)

NY Times: The New Tax Form Is Postcard-Size, But More Complicated Than Ever

New York Times, The New Tax Form Is Postcard-Size, but More Complicated Than Ever:

The Trump administration’s new “postcard” tax form still must be mailed in an envelope, unless you want your neighbors to see your Social Security number. It will save a little bit of time for some taxpayers but could add pages more paperwork for millions of others.

A draft copy of the new version of the standard 1040 income tax form, obtained by The New York Times, shows the administration has succeeded in its goal of shrinking the form that most Americans send to the Internal Revenue Service every year. The new form eliminates more than half of the 78 line items from the previous form, reducing it from two full pages of text to one double-sided half page.

New 1040

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June 26, 2018 in Tax | Permalink | Comments (1)

Report: The Tax Cuts And Jobs Act Will Deepen Racism And Inequality In America

Washington Post op-ed:  Trump’s Tax-Cut Scam Will Only Deepen Racism and Inequality, by Katrina vanden Heuvel:

The six-month anniversary of the Tax Cuts and Jobs Act passed last week with little fanfare. Despite Republicans’ dishonest spin, most Americans recognize that President Trump’s crowning legislative achievement was a plutocratic heist that will do nothing to help working people. Greedy corporations have used their windfalls to reward chief executives and stockholders, while workers’ wages have actually declined. Barely a third of Americans now support the law.

Yet the racial implications of Trump’s tax scam have been radically underreported and remain poorly understood. While fair tax reform could reduce the impact of structural racism in the economy, the law that Republicans passed in December will make it much worse.

That’s the conclusion of an important new report [Hidden Rules of Race are Embedded in the New Tax Law] from economists Darrick Hamilton and Michael Linden of the Roosevelt Institute (where I serve on the board). As the institute has documented, the U.S. economy is shaped by informal rules that create disparities that harm people of color in virtually every part of society. Many of these “hidden rules of race” can be found in the federal tax code.

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June 26, 2018 in Tax | Permalink | Comments (5)

Vermont Law School Cuts More Than A Dozen Tenured Faculty

Vermont Law School Logo (2017)Following up on my previous posts:

Vermont Digger, Vermont Law School Restructuring Faculty:

More than a dozen faculty at Vermont Law School will lose tenure this year as the institution struggles to level its budget, two senior faculty members confirmed.

While many of the tenured faculty will remain at the school on contract, they will no longer have employment protections under tenure. The school is negotiating terms with each affected member of the faculty this week before the fiscal year ends Friday, the sources confirmed. Some contract faculty have not been given renewal offers; others have been encouraged to retire.

President Thomas McHenry was tight-lipped about the nature of the reductions in an interview last week, including the number of faculty who would not be returning to the school, saying it was a personnel matter. The school employs about 60 faculty, 20 of which are tenure positions. “We are restructuring the faculty into different positions — some of those people are tenure,” McHenry said. “Some of those people will no longer be tenure.” ...

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June 26, 2018 in Legal Education | Permalink | Comments (10)

Basic Income Could Work—If You Do It Canada-Style

MITMIT Technology Review, Basic Income Could Work—If You Do It Canada-Style:

Lindsay, a compact rectangle amid the lakes northeast of Toronto, is at the heart of one of the world’s biggest tests of a guaranteed basic income. In a three-year pilot funded by the provincial government, about 4,000 people in Ontario are getting monthly stipends to boost them to at least 75 percent of the poverty line. That translates to a minimum annual income of $17,000 in Canadian dollars (about $13,000 US) for single people, $24,000 for married couples. Lindsay has about half the people in the pilot—some 10 percent of the town’s population.

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June 26, 2018 in Tax | Permalink | Comments (0)

Six New Ideas From The Diversity In Law Hackathon

Bloomberg Law, Six New Ideas From the Diversity in Law Hackathon:

Nine teams competing in the Diversity in Law Hackathon gathered at Harvard Law School on Friday, after four months of brainstorming, to sell a discerning panel of judges their proposals to increase diversity in the legal industry.

The hackathon, organized by Diversity Lab and sponsored by Bloomberg Law, was the second of its kind. The first event, hosted in 2016, led to the creation of the Mansfield Rule, a policy that requires law firms to consider women and minority lawyers when it comes to promoting and hiring talent. Dozens of law firms have already implemented a pilot program of that rule.

Nine teams, each made up of law firm partners, legal department heads, and Harvard Law students, spent the last four months developing their “hacks” for law firm diversity.

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June 26, 2018 in Legal Education | Permalink | Comments (0)

Tesla Sells $195 million In Transferable Tax Credits To Boost Its Bottom Line

TeslaLos Angeles Times, How Tesla Uses Cash From Nevada Casinos to Boost Its Bottom Line:

Given Elon Musk’s dubious track record for hitting his goals, it may be a roll of the dice whether the Tesla CEO delivers a profit later this year. Fittingly, his success will depend partly on money from Nevada casinos.

Since 2015, Tesla has boosted its bottom line by selling tax credits to casinos such as the MGM Grand.

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June 26, 2018 in Tax | Permalink | Comments (0)

Monday, June 25, 2018

Abreu & Greenstein Review Lawsky's A Logic For Statutes

Jotwell (Tax) (2016)Alice Abreu (Temple) & Richard Greenstein (Temple), Rules vs Standards (JOTWELL) (reviewing Sarah Lawsky (Northwestern), A Logic for Statutes 20 Fla. Tax Rev. ___ (2018)):

Professor Sarah Lawsky (Northwestern) has written a fascinating and thought-provoking essay on the logic of statutory interpretation—specifically as it applies to the Internal Revenue Code. Notwithstanding a long tradition of scholarship addressing the interpretation of legislative texts in general, careful attention to interpretation of the Code has received comparatively little attention. An important reason for this, as we have argued in previously published articles, has been the tendency to frame Code provisions as rules and to apply them deductively to the facts of particular cases. Such a practice pushes in the direction of a more-or-less mechanical interpretation of the Code, which in turn makes questions regarding statutory interpretation seem fairly uninteresting. Professor Lawsky’s essay engages directly and critically with this practice.

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June 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

Law Schools Need A New Governance Model

Mark Pulliam (Law & Liberty; Retired Partner, Latham & Watkins), Law Schools Need a New Governance Model:

The governance of law schools, although not a secret, is poorly-understood and seldom discussed. This lack of transparency empowers—or at least emboldens—some of the behind-the-scenes influencers to take unreasonable positions and to pursue self-interested goals that are contrary to the ostensible objective of training students to be effective and ethical lawyers. The result is a dysfunctional legal academy.

In my initial installment on this topic, I briefly discussed the role of the American Bar Association (ABA) in regulating legal education (through its Section of Legal Education and Admissions to the Bar), and in this post I’d like to further develop this critique. However, I don’t want to suggest that the ABA exerts exclusive control, or constitutes the only problem.  As explained in detail by Walter Olson in his 2011 book Schools for Misrule, and Professor Brian Tamanaha in his 2012 book Failing Law Schoolsmany different forces play a role in determining how law schools operate: faculty, administrators, alumni, the legal culture, donors, accrediting organizations, the marketplace for law graduates (which affects the applicant pool), peer pressure, compilers of rankings, and, in the case of publicly-funded schools, the state legislatures. And perhaps others.

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June 25, 2018 in Legal Education | Permalink | Comments (0)

Appel Posts Two International Tax Papers

Alan Appel (New York Law School), A Guide to Understanding the U.S. Tax Consequences of Foreign Person Investing in U.S. Real Property:

This paper describes some of the possible structuring alternatives a foreign investor may use to limit his or her U.S. tax exposure with respect to ownership and subsequent disposition of U.S. real estate.

Alan Appel (New York Law School), Transparency, Tax Law and the U.S. As the World's Favorite Tax Haven:

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June 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

Merritt: Law Schools And The Justice Chasm

Deborah Jones Merritt (Ohio State), The Justice Chasm:

The justice gap has become a chasm. Almost one-fifth (19%) of Americans now live in poverty or near poverty (p. 16). These low-income individuals collectively experience about 140 million civil legal problems a year (p. 14). Fifty-five percent of those problems affect the individuals “very much” or “severely” (p. 23): that’s 77 million serious problems a year. Yet these individuals receive legal assistance for only 30% of their serious legal problems (p. 35). Our legal system fails to address some 54 million weighty legal problems a year–and that doesn’t count the unaddressed legal problems of middle-income Americans or small businesses.

Pro bono services won’t bridge this gap. There are only 1.34 millionactive attorneys in the United States. Even if every one of us provided pro bono services to low-income clients, we would each have to handle about 40 pro bono civil matters a year. That’s in addition to the pro bono criminal, appellate, and law reform matters some attorneys already pursue. And each of these 40 matters would affect a client “very much” or “severely.”

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June 25, 2018 in Legal Education | Permalink | Comments (1)

Lesson From The Tax Court: Into The Weeds on COGS

MrMoneyMedicalMarijuanaWCap1I avoid inventory accounting in my basic tax class. It is taxing enough (pun intended) to teach students the basics of depreciating business equipment and business realty and the interplay of §167, §179, §168(k) and §168(a) (in that order). I remind them that they are learning to be tax lawyers and not tax accountants: if they cannot do the numbers, hire a CPA. So I only mention cost of goods sold (COGS) concepts in passing. Also, I’m pretty clueless about the subject.

In real life, however, inventory accounting can be crucial, and you had better have good representation when the IRS questions your numbers. That is the lesson I see in the recent case of Laurel Alterman and William A. Gibson v. Commissioner, T.C. Memo. 2018-83 (June 13, 2018), a case involving poor representation of a medical marijuana business. Disclaimer: not only do I not teach COGS but I also never practiced it, so if you dive below the fold, you may catch me out in error. I know for some readers that is actually an incentive to read on---kind of like waiting for a crash on the racetrack. But if you find yourself guffawing at something, please do not hesitate to publicize the error in the comments section. And remember, at least I’m not representing anyone!

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June 25, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (13)

Letters Of Recommendation For Academic Jobs Discriminate Against Women

Inside Higher Ed, Help That Hurts Women:

Some scholars have questioned academe’s reliance on letters of recommendation, saying they’re onerous for the professors writing them or speak more about connections to “big-name” scholars than substance, or both.

A recent study explores another concern about letters of recommendation: whether they’re biased against the women they’re supposed to help. The short answer is yes.

The longer answer — and the study’s obvious takeaway for recommendation-letter writers and readers — is that letters about women include more doubt-raising phrases than those about men, and that even one such phrase can make a difference in a job search.

"Doubt raisers,” as the study calls them, come in different forms. But all suggest less than complete confidence in the letter seeker. First, there are “hedges,” as in, “She might be good.” Then there are “negatives,” such as, “She’s not great,” along with “faint praises,” such as, “She’ll do OK.” Last, irrelevant information also raises red flags for a reader.

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June 25, 2018 in Legal Education | Permalink | Comments (1)

Call For Papers: Midwestern Law & Economics Association Annual Meeting At Alabama

Alabama LogoCall for Papers: Midwestern Law & Economics Association Annual Meeting

The University of Alabama School of Law (UASL) is pleased to host the 18th Annual Meeting of the Midwestern Law & Economics Association (MLEA) September 14-15, 2018 in Tuscaloosa, Alabama. ...

We invite participants from across the nation (not just the Midwest) and abroad. There are no registration or membership fees. Participants will finance their own travel and hotel costs.

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June 25, 2018 in Conferences, Scholarship, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, June 24, 2018

More On The Supreme Court's Denial Of Canada's First Christian Law School

Trinity Western 2Following up on last Sunday's Post, Supreme Court Votes 7-2 To Deny Accreditation Of Canada's First Christian Law School, Says LGBT Rights Trump Religious Freedom To Ban Student Sex Outside Of Heterosexual Marriage:

Wall Street Journal op-ed:  Canada Attacks Religious Freedom, by Bob Kuhn (President, Trinity Western University):

We tried to open a law school that upholds Christian values. That’s not allowed.

Canada legalized same-sex marriage in 2005, amid many promises that traditional religious believers would be protected. Those promises have proved empty. Earlier this month the Supreme Court of Canada told Trinity Western University, which I lead, that it could not open a law school. Accrediting a school that upholds traditional Christian teachings on marriage could send the wrong message to Canadians who disagree with Trinity’s beliefs, we were told. ...

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June 24, 2018 in Legal Education | Permalink | Comments (1)

Valparaiso Law School May Move To Tennessee

ValpoMTSUFollowing up on my previous post, After 86% Enrollment Decline, Valparaiso Law School Stops Admitting Students And Will Likely Close:  Press Release, MTSU, Valparaiso Discuss Transfer of Law School to Murfreesboro:

Middle Tennessee State University and Valparaiso University announced Friday, June 22, that they have entered into a nonbinding letter of intent to transfer Valparaiso’s American Bar Association-accredited law school from Indiana to the Murfreesboro campus.

University leaders emphasized that these discussions are preliminary, however, as both MTSU and Valparaiso determine whether such a move would be in the best interests of their respective stakeholders.

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June 24, 2018 in Legal Education | Permalink | Comments (1)

February 2018 California Bar Exam Results

California Bar ExamThe California bar has released the results of the February bar exam for first-time and repeat takers, by law schools with more than 11 takers.

  • Overall pass rate: 27.3%, 33.8% for CA ABA-accredited schools
  • First-time taker pass rate: 39.3%, 45.3% for CA ABA-accredited schools
  • Repeater pass rate: 22.8%, 31.3% for CA ABA-accredited schools

 

School (US News Rank)

First-Time

School (US News Rank)

Repeater

1

Santa Clara (113)

77% (10/13)

UC-Berkeley (9)

63% (17/27)

2

Loyola-L.A. (64)

70% (16/23)

UCLA (16)

53% (18/34)

3

Cal-Western (Tier 2)

52% (29/56)

Loyola-L.A. (62)

53% (54/102)

4

Golden Gate (Tier 2)

50% (8/16)

San Diego (95)

46% (19/41)

5

Ave. (ABA-Approved)

45% (143/316)

UC-Davis (37)

45% (19/42)

6

San Francisco (Tier 2)

35% (6/17)

UC-Hastings (58)

42% (53/127)

7

Southwestern (Tier2)

35% (13/37)

USC (20)

38% (9/24)

8

UC-Hastings (58)

33% (4/12)

UC-Irvine (21)

36% (9/25)

9

Western State (Tier 2)

29% (5/17)

Pepperdine (62/64)

35% (23/66)

10

T. Jefferson (Tier 2)

19% (6/32)

Chapman (139)

35% (24/69)

11

Whittier (Tier 2)

0% (0/17)

Cal-Western (Tier 2)

32% (22/68)

12

 

 

Southwestern (Tier 2)

32% (55/171)

13

   

Ave. (ABA-Approved)

31% (445/1423)

14

   

San Francisco (Tier 2)

28% (21/76)

15

   

McGeorge (Teir 2)

25% (21/76)

16

   

T. Jefferson (Tier2)

20% (26/133)

17

   

La Verne (Tier 2)  

19% (7/36)

18

    Whittier (Tier 2)

16% (20/123)

19

    Western State (Tier 2)

8% (4/50)

20

   

Golden Gate (Tier 2) 

7% (5/75)

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June 24, 2018 in Legal Education | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN Logo (2018)There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #5:

  1. [272 Downloads]  The New U.S. Tax Preference for 'Foreign-Derived Intangible Income', by Chris Sanchirico (Pennsylvania)
  2. [258 Downloads]  IRC Section 678 and the Beneficiary Deemed Owner Trust (BDOT), by Edwin Morrow
  3. [229 Downloads]  Higher Education Savings and Planning: Tax and Nontax Considerations, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  4. [207 Downloads]  Code Sec. 1031 after the 2017 Tax Act, by Brad Borden (Brooklyn)
  5. [194 Downloads]  Introduction to Tax Policy Theory, by Allison Christians (McGill)

June 24, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 23, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Minnesota Associate Dean Tells The Story Behind The Media Coverage Of The Law School's Budget Challenges

Minnesota LogoIn response to yesterday's post, University Of Minnesota Approves $3.6 Million Subsidy For Law School; Regent Urges School To Drop Quest To Retain Top 20 Ranking Due To Projected $100 Million 10-Year Subsidy, incoming Minnesota Associate Dean Bill McGeveran requested that I post this response:

While there have been challenges here at Minnesota, readers should know that the recent media coverage you cite doesn't include the whole story.

First, of the 11 public law schools in the top 30, the only ones to get a lower percentage of their revenue from state support are Berkeley, Michigan, and Virginia — all with endowments 2 to 4 times larger than ours. The so-called "subsidy" is actually bringing us into line with our peers.

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June 23, 2018 in Legal Education | Permalink | Comments (1)