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Thursday, March 5, 2015

Georgetown Lateral Hires: Lilian Faulhaber (From BU), Brian Galle (From BC)

Georgetown Law School, Tax Scholars Join Georgetown Law Faculty:

Georgetown University Law Center is pleased to announce that tax scholars Lilian V. Faulhaber and Brian Galle will be joining the Law Center faculty next year. ...

Faulhaber (2016)Faulhaber joins Georgetown Law from Boston University School of Law. Since 2013, she has worked at the Organisation for Economic Co-operation and Development, where she is an adviser to the Base Erosion and Profit Shifting Project. Before joining the Boston University faculty, she was a Climenko Fellow and Lecturer on Law at Harvard Law School. Her research and teaching interests include international tax law, federal income tax law, tax policy, European Union law and international law.  She clerked for Senior Judge Robert E. Keeton and Judge William G. Young, both on the U.S. District Court for the District of Massachusetts, and was an associate at Cleary Gottlieb Steen & Hamilton LLP in New York. A graduate of Harvard College, she received an M.Phil. from Cambridge University and a J.D. from Harvard Law School, where she was editor-in-chief of the Harvard International Law Journal

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March 5, 2015 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Tax Prof Richard Gershon Will Not Seek Another Term as Mississippi Dean

GershonOle Miss Law Dean Richard Gershon Resigns, Deborah Bell Appointed Interim:

After five school years at the helm of the University of Mississippi Law School, dean Richard Gershon will resign later this year.

In a release from Ole Miss, Provost Morris H. Stocks said:

Dean Richard Gershon has informed me that he has decided not to stand for quadrennial review and that his service as dean of the School of Law will conclude on June 30, 2015. I have asked Professor Deborah Bell to assume the role of interim dean of the School of Law in the near future. Dean Gershon and Dean Bell will begin to work out the plans for transition immediately.

March 5, 2015 in Legal Education | Permalink | Comments (0)

Mankiw: Dynamic Scoring in Congress Is Defensible but Slippery

New York Times:  Dynamic Scoring in Congress Is Defensible but Slippery, by N. Gregory Mankiw (Harvard):

Until now, conventional budget analysis has used a process called static scoring, which assumes that the path of gross domestic product remains the same when the government changes taxes or spending. This procedure has the virtues of simplicity and transparency.

Yet the assumption of unchanged G.D.P. also has one notable drawback: It is patently false. Much economic theory and empirical research confirm that fiscal policy influences the course of the economy.

Indeed, having an economic impact is a big part of why policy makers use the tools at their disposal, whether it is the tax cuts of Ronald Reagan and George W. Bush or the stimulus package of Mr. Obama. It seems somehow churlish for Congress’s economists to assume that a policy change won’t accomplish its goal simply to make their jobs easier. ...

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March 5, 2015 in Tax | Permalink | Comments (0)

WSJ: Are Prestigious Private Colleges Worth the Cost?

Wall Street Journal, Are Prestigious Private Colleges Worth the Cost?:

When college-acceptance letters are mailed to high-school seniors this spring, students who get offers from a wide range of schools may find themselves contemplating this question: Are prestigious, private colleges worth the additional cost?


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March 5, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 665

IRS Logo 2Letter From Orrin G. Hatch (Chair, Senate Finance Committee) & Paul Ryan (Chair, House Ways & Means Committee) to John Koskinen (Commissioner, IRS) (Mar. 4, 2015):

As Chairmen of the Senate Committee on Finance and House Committee on Ways and Means, we have the obligation to conduct oversight of the administration of the Internal Revenue Code. This includes compliance with IRC §6103, which establishes rules governing the use of confidential tax return information and governs the manners in which it may be disclosed. As you know, §6103(g) provides the President of the United States and certain White House officials access to this information in limited circumstances and with certain required procedures. In carrying out our oversight obligations, we are seeking to determine the degree to and manner in which the Internal Revenue Service shares taxpayer information with the Executive Office of the President.

You will recall that former Ways and Means Chairman Dave Camp requested that the IRS provide all communication between the IRS and Executive Office of the President on April 30, 2014. You responded that your agency would be unable to provide the requested communication because of limited resources. In light of your response, our committees sought these records from the White House in two separate letters earlier this year. On February 17, White House officials responded to our requests, refusing to provide the documents and redirecting the request to the Internal Revenue Service. In light of the White House Counsel’s refusal to comply with our request, we ask that you provide the documents – originally requested in April of last year – without delay. This production will include all electronic communication in the agency’s possession from or to an “” email address, or regarding White House communication, from January 1, 2010 through the date of this letter.

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March 5, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, March 4, 2015

Blouin Presents The Role of 'Check-the-Box' on Multinational Tax Planning Today at Penn

Blouin (2015)Jennifer Blouin (Pennsylvania) presents Does Organizational Form Affect Firms' Foreign Operations? The Role of 'Check-the-Box' on Multinational Tax Planning at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Chris William Sanchirico and Reed Shuldiner:

This study investigates the effect of the 1997 check-the-box tax legislation on the current effective income tax rates of U.S. multinational firms. Following the empirical methodology developed in Dyreng and Lindsey (2009), we measure the effect that the change in legislation has on the average worldwide, U.S., and foreign taxes paid on worldwide, federal and foreign pretax book income for a large sample of U.S. multinational firms. We find that on average U.S. multinational firms’ worldwide tax rates declined by 4.3% in the post-1996 period. Further, we find that the effect of the legislation was greater on U.S. multinational firms’ average foreign tax rates as compared to their average U.S. foreign tax rates. Our results also suggest that the effect is concentrated in the U.S. multinational firms that had a greater change in their ownership structures and a greater change in the balance of their intercompany payments in the post-1996 period. Although our results do suggest that the 1997 legislation served to reduce U.S. tax collections, our results imply that the 1997 legislation had a greater effect on firms’ foreign tax burdens.

March 4, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes

Bloomberg, U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes:

Eight of the biggest U.S. technology companies added a combined $69 billion to their stockpiled offshore profits over the past year, even as some corporations in other industries felt pressure to bring cash back home.

Microsoft, Apple, Google and five other tech firms now account for more than a fifth of the $2.10 trillion in profits that U.S. companies are holding overseas, according to a Bloomberg News review of the securities filings of 304 corporations. The total amount held outside the U.S. by the companies was up 8 percent from the previous year, though 58 companies reported smaller stockpiles.

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March 4, 2015 in Tax | Permalink | Comments (0)

Kleinbard: A Lower Corporate Tax Rate Would Overcome Resistance to Tax Reform by Encouraging Incorporation of Pass-Through Entities

Bloomberg View:  Take the Odds on Corporate Tax Reform, by Edward D. Kleinbard (USC):

The smart money always wagers against tax reform, but 2015 may be the year that the sucker bet pays off, at least for business taxes. The driver could be the outdated corporate tax system:  The current 35 percent rate is out of step with world norms and holds back investment in the U.S. 

There is general agreement that the corporate tax rate should be in the mid-20s. There is also near-consensus that most tax incentives and subsidies should be thrown out to free up the revenue needed for lower rates. 

Two big hurdles remain. The more intractable one involves so-called pass-through entities. These firms -- sole proprietorships, partnerships, limited liability companies and S corporations -- are often conflated with small businesses and entrepreneurs, even though many of them are well-heeled hedge funds, law firms and private-equity shops. 

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March 4, 2015 in Tax | Permalink | Comments (1)

Jennifer Bard Named Dean at Cincinnati

BardJennifer Bard (Texas Tech) has been named the next Dean of the University of Cincinnati College of Law, effective July 1, 2015. She will replace Louis Bilionis, who is returning to full-time teaching after serving two terms as dean.

A Yale JD who studied at Oxford and graduated from Wellesley, Professor Bard is an expert in public health and bioethics. She has a Masters of Public Health degree and a PhD in higher education. She will hold a secondary faculty appointment in the Department of Internal Medicine in UC's College of Medicine.

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March 4, 2015 | Permalink | Comments (1)

Clausing: Beyond Territorial and Worldwide Systems of International Taxation

Kimberly A. Clausing (Reed College), Beyond Territorial and Worldwide Systems of International Taxation:

The dialogue regarding the international taxation of multinational firms should move beyond the rhetoric of comparing supposedly territorial and worldwide systems of taxation. Among major countries, there are no pure territorial or pure worldwide systems, just systems that lie on a spectrum between these extremes. Once one recognizes the characteristics that determine where on the spectrum particular countries lie, it is far from clear that purportedly worldwide countries are further to the “pure worldwide” end of the spectrum than are many purportedly territorial countries. Still, along the spectrum, tradeoffs between “competitiveness” and efficient capital allocation (with attendant effects on the home country tax base) are inevitable. Thus, I describe international tax system design proposals that might transcend this tradeoff, examining several such options. Finally, I discuss the current efforts of the BEPS process.

March 4, 2015 in Scholarship, Tax | Permalink | Comments (0)

Slate: Admitting Law Students Without LSAT Scores Is An 'Awful Idea'

Slate:  Some Law Schools Will Now Accept Students Who Didn’t Take the LSAT. That’s an Awful Idea., by Jordan Weissmann:

Recently, two law schools announced that they will begin accepting a select number of students who have not taken the LSAT, the much-loathed exam that has traditionally served as the make-or-break measuring stick for J.D. applicants and punctuated the academic career of many an aimless history major. As Bloomberg Business reported last week, "The State University of New York-Buffalo Law School and the University of Iowa College of Law said they would admit students from their respective undergraduate colleges" based on their grades and scores on other standardized tests. They're the first institutions to pounce on a major rule change by the American Bar Association that will let law schools start filling 10 percent of their classes with non-LSAT takers who meet other academic requirements. But chances are that other schools will follow suit.

Mostly, this is yet another example of just how desperate law schools are to fill their classroom seats. Enrollments have plunged—Buffalo's first-year class has shrunk 18.3 percent since 2011, while Iowa's is down 21.7 percent—and that has created financial stress on institutions.

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March 4, 2015 in Legal Education | Permalink | Comments (1)

Should Law Schools Offer Reduced Teaching Loads to Retain Star Faculty?

WisconsinInside Higher Ed, Matching More With Less:

The chancellor of the University of Wisconsin at Madison came under fire last month for publicly admitting to a tactic common among her counterparts at research universities. To keep top faculty members from accepting outside offers, she sometimes will reduce their teaching loads. Critics seized on Chancellor Rebecca Blank’s comments as an example of what’s wrong with higher education, saying that rewarding good professors by reducing their exposure to students was a kind of perverse incentive -- and an expensive one, to boot. But how fair is the criticism, and just how common and how bad -- if at all -- is the practice? It depends on whom you ask.

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March 4, 2015 in Legal Education | Permalink | Comments (19)

Merrill Lynch Hires Tax Expert Lewis Steinberg From Credit Suisse

SteinbergNew York Times Deal Book, Merrill Lynch Hires Tax Expert From Credit Suisse:

Bank of America Merrill Lynch has hired Lewis Steinberg, a senior banker from Credit Suisse, to serve as its in-house tax expert, the firm announced in an internal memorandum on Monday.

He will join in May as head of structured solutions for the American operations of the mergers business and will report to the co-heads of the unit, Patrick Ramsey and Jack MacDonald, according to the memo, which was reviewed by DealBook.

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March 4, 2015 in Tax | Permalink | Comments (1)

Death of Jerome Kurtz, Former IRS Commissioner

New York Times, Jerome Kurtz, 83, Dies; Headed I.R.S. in Carter Administration:

Jerome Kurtz, who as commissioner of the Internal Revenue Service during the Carter administration was known for cracking down on tax shelters and other tax advantages for the wealthy, died on Friday in Manhattan. He was 83. The cause was complications of surgery, his family said. ...

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March 4, 2015 in Obituaries, Tax | Permalink | Comments (0)

Senate Report Blames Tax Pros for Unfair Tax Code

Senate LogoFollowing up on yesterday's post, Senate Holds Hearing Today on Fairness in Taxation:  Democratic Staff, Senate Finance Committee, How Tax Pros Make the Code Less Fair and Efficient: Several New Strategies and Solutions:

Have you ever heard of a collar? Or a basket option? Or a wash sale? Most people haven’t. But many taxpayers use these sophisticated transactions to cut the taxes they could owe in half, often paying effective rates far lower than people who earn a regular paycheck.

This report describes each of these little known tax avoidance strategies identified for Senator Wyden by the nonpartisan staff of the Joint Committee on Taxation (JCT) and outside independent experts, relying on memoranda, examples, and descriptions. A preliminary analysis indicates that reforms to rein in some of these strategies could reduce the amount of taxes avoided by tens of billions of dollars over the next decade while making the tax code fairer and simpler overall.

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March 4, 2015 in Congressional News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 664

IRS Logo 2George Will, Stopping the IRS:

Rep. Peter Roskam is now chairman of the Ways and Means subcommittee whose jurisdiction includes oversight of the Internal Revenue Service, and hence of Lois Lerner's legacy. He knows how interesting her career was before she, as head of the IRS exempt-organizations division, directed the suppression of conservative advocacy groups by delaying and denying them the tax exempt status that was swiftly given to comparable liberal groups.

In 2013, Roskam, in a televised committee hearing, told the story of Al Salvi, who in 1996 was the Republican's Senate candidate against then congressman, now senator, Dick Durbin. Democrats filed charges with the Federal Election Commission against Salvi's campaign, charges that threatened to dominate the campaign's final weeks. Salvi telephoned the head of the FEC's Enforcement Division, who he says told him: "Promise me you will never run for office again, and we'll drop this case." So said Lois Lerner. After Salvi lost, FBI agents visited his elderly mother, demanding to know, concerning her $2,000 contribution to her son's campaign, where she got "that kind of money." When a federal court held that the charges against Salvi were spurious, the FEC's losing lawyer was Lois Lerner.

Roskam's telling of Salvi's story elicited no denial from Lerner. Neither did the retelling of it in this column (June 13, 2013). No wonder: The story had not been deemed newsworthy by the three broadcast networks' evening news programs, by The New York Times or The Washington Post. With most of the media uninterested in the use of government institutions to handicap conservatives, stonewalling would work.

It still is working through dilatory and incomplete responses to subpoenas, and unresponsive answers to congressional questions. Lerner's name now has an indelible Nixonian stain, but there probably will be no prosecution. If the administration's stonewalling continues as the statute of limitations' clock ticks, Roskam says, "She will get away with it."

Now in his fifth House term, Roskam, 53, says, "The advantage in this town is always with the entity that doesn't want to do anything." Many thousands of Lerner's emails that supposedly were irretrievably lost have been found, but not released. The Justice Department's investigation, which was entrusted to a political appointee who was a generous contributor to Barack Obama's campaign, is a stone in the stone wall.

Roskam says the task now is "to see that Lois Lerner 2.0 is impossible." One place to begin is with the evidence -- anecdotal but, in the context of proven IRS corruption, convincing -- of other possibly punitive IRS behavior toward Republican contributors and other conservative activists. This justifies examining the IRS' audit selection process. This would produce interesting hearings for most of the media to ignore.

Next, there should be hearings into the illegal disclosure of taxpayer information about conservative individuals and groups to the media and to liberal officials and groups. Cleta Mitchell, a lawyer for some groups abused by the IRS (and for this columnist on different matters), also suggests prohibiting IRS employees from joining a union.

The National Treasury Employees Union,” she says, “provides no protection to IRS employees that federal statutes and the civil service system do not already provide. It already takes an act of God to hold an IRS employee accountable for his or her actions. But it is worse than merely redundant for IRS employees to belong to the NTEU. Because it adds nothing to its members’ protections, it is a purely political organization. In 2014, fully 95 percent of its contributions went to Democrats, including 11 Democratic members of the House Committee on Oversight and Government Reform. So, the IRS employees’ union dues finance the election of people who are supposed to scrutinize IRS’ behavior.

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March 4, 2015 in About This Blog, IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, March 3, 2015

Mason Presents Citizenship Taxation Today at NYU

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

The United States is the only country that taxes its citizens’ worldwide income, even when those citizens live indefinitely abroad. This Article critically evaluates the traditional equity, efficiency, and administrability arguments for taxing nonresident citizens. It also raises new arguments against citizenship taxation, including that it puts the United States at a disadvantage when competing with other countries for highly skilled migrants.

March 3, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weinzierl Presents Revisiting the Classical View of Benefit-Based Taxation Today at Georgetown

Weinzierl (2016)Matthew Weinzierl (Harvard Business School) presents Revisiting the Classical View of Benefit-Based Taxation at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John BrooksItai Grinberg, and David Schizer:

This paper explores how the persistently popular "classical" logic of benefit-based taxation, in which an individual's benefit from public goods is tied to his or her income-earning ability, can be incorporated into modern optimal tax theory. If Lindahl's methods are applied to that view of benefits, first-best optimal policy can be characterized analytically as depending on a few potentially estimable statistics, in particular the coefficient of complementarity between public goods and innate talent. Constrained optimal policy with a Pareto-efficient objective that strikes a balance–controlled by a single parameter– between this principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods. A wide range of optimal policy outcomes can result, including those that match well several features of existing policies. To the extent that such an objective reflects the mixed normative reasoning behind prevailing policies, this model may offer a useful approach to a positive optimal tax theory.

March 3, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

WaPo: The Role of Tax Lawyers, Tax Profs, and the Tax Press in the Fate of ObamaCare at the Supreme Court

ObamaCareWashington Post, Six Words Might Decide the Fate of Obamacare at the Supreme Court:

When the Supreme Court takes up the latest challenge to President Obama’s health-care law this week, how the justices interpret a six-word phrase in the bill could determine its fate.

The law, adopted in 2010, says the federal government can pay subsidies to help people afford insurance bought through “an Exchange established by the state.”

But two-thirds of the states have opted against setting up their own exchanges, and as a result, more Americans have been buying insurance through the federal insurance marketplace. Now, opponents of the law will make their case to the high court that Americans who are not using the state exchanges are ineligible for subsidies. And if they win, insurance premiums could skyrocket and many people might drop their coverage — possibly undermining the whole health-care program.

And as the justices weigh whether the health-care law in fact has a fatal glitch, one of the key questions is this: Why did the Obama administration rule-writing officials in the Internal Revenue Service and its parent agency, the Treasury Department, ultimately interpret the language the way they did?

It had never occurred to the Treasury Department official responsible for making the changes in the tax code required by the law that there was more than one way to read the phrase — until she happened across an article in a trade journal.

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March 3, 2015 in Tax | Permalink | Comments (6)

NY Times: Britain’s Elite Still Enjoying a Tax Break 100 Years Old

NY Times Dealbook (2013)New York Times Deal Book, Britain’s Elite Still Enjoying a Tax Break 100 Years Old:

They are among the British moneyed elite: the head of the nation’s largest bank, a billionaire hedge fund manager and the owner of some of London’s most luxurious nightclubs.

Yet for tax purposes, they are not entirely British.

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March 3, 2015 in Tax | Permalink | Comments (0)

Senate Holds Hearing Today on Fairness in Taxation

Senate LogoThe Senate Finance Committee holds a hearing today on Fairness in Taxation (links to statements and testimony below):

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March 3, 2015 in Congressional News, Tax | Permalink | Comments (0)

President Obama Is 'Very Interested' in Raising Taxes Through 'Executive Action'

Sen. Bernie Sanders (D-VT) on Friday sent this letter to President Obama calling on him to use unilateral executive action to raise over $100 billion in taxes by closing six "loopholes":

  1. The Check the Box Loophole
  2. The Hewlett-Packard Loophole
  3. The REIT Loophole
  4. The Corporate Inversion Loophole
  5. The Carried Interest Loophole
  6. The Valuation Discount Loophole

There are undoubtedly more loopholes that the Administration could close on its own. This list is not intended to be exhaustive but rather to illustrate that if Congress fails to act, the Administration can act to resolve some of the problems with our tax code.

White House Press Secretary Josh Earnest on Monday stated that President Obama is "very interested" in the idea of raising taxes through unilateral executive action.

Press and blogosphere coverage:

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March 3, 2015 in Tax | Permalink | Comments (17)

WSJ: IRS Confirms Illegal Immigrants Under Obama’s Executive Action on Immigration to Receive Tax Refunds For Prior Years

Wall Street Journal, IRS Confirms Illegal Immigrant Tax-Refund Ruling, Sparking GOP Outcry:

The Internal Revenue Service on Monday confirmed it would allow illegal immigrants benefiting from President Barack Obama’s recent executive action to file for tax refunds for prior years, fueling an outcry from Republicans.

The IRS explanation came in a letter from Commissioner John Koskinen to a veteran GOP lawmaker, Sen. Charles Grassley (R., Iowa). The letter confirmed and expanded on previous public comments by agency officials. In response, Mr. Grassley vowed to push legislation to overturn the policy.

The November executive action offers some four million illegal immigrants who qualify the chance to apply for “deferred action,” which gives a temporary reprieve from deportation and the ability to apply for work permits.

Because of Mr. Obama’s executive action and the IRS interpretation, “these individuals will be eligible to claim billions of dollars in tax benefits based on earnings from unauthorized work in the United States,” Mr. Grassley said. “The tax code shouldn’t reward those who broke our immigration laws,” he added.

Other Republican lawmakers have charged that the payments would amount to an “amnesty bonus” under Mr. Obama’s action.

March 3, 2015 in Tax | Permalink | Comments (3)

From 3L to In-house at HP

HP LogoCorporate Counsel,  From 3L to In-house:

Hewlett-Packard's general counsel says he's really pleased with his department's program to hire and train young lawyers. So why is he hoping he loses one?

Nearly five years ago, Hewlett-Packard Co.'s law department began hiring and training lawyers right out of law school. The tech giant has lured top talent from some of the nation's best law schools. The new recruits have impressed their colleagues, and they also seem pleased with the match. The lawyer who oversees the program touts an 85 percent retention rate. Not many companies have embraced this model, but HP seems very happy with the results.

But the company's general counsel says he'd like to see that number dip just a bit. His fondest wish for the program, says John Schultz, is that a big law firm hires away one of his budding young stars. "That's what I wait and hope for," he says.

Say what? It sounds like Schultz is issuing a nice guy's version of Dirty Harry's throw-down: "Go ahead, make my day." But he isn't kidding, and he's not saying this to be provocative. His company's ambition is to create a training program the equal of any law firm's, and he'll know they've succeeded when a law firm hires away someone who's been through it. ...

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March 3, 2015 | Permalink | Comments (1)

IRS Releases Winter 2015 SOI Bulletin

IRS Logo 2The IRS's Statistics of Income Division has released (IR-2015-35) the Winter 2015 SOI Bulletin (Vol. 35, No. 2), with these articles:

March 3, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 663

IRS Logo 2Wall Street Journal, Best of the Web, by James Taranto:

Still Suppressing Speech
The IRS scandal continues: “Nearly two years after the IRS was exposed for improperly sidetracking requests for tax exemptions from tea party groups, Politico has learned that at least a half-dozen conservative applicants are still waiting for an answer.”

One of them is Karl Rove’s Crossroads GPS, which managed to spend tens of millions last year. But most “are mom-and-pop outfits from New Mexico to New Jersey, run by volunteers out of their own houses and operating at a fraction of Crossroads’ budget”:

The years-long delay has gutted these groups’ membership, choked their ability to raise funds, forced them to reserve pots of money for possible back taxes and driven them into debt to pay legal bills.

IRS’ website says it has closed 95 percent of “priority” groups that had been pulled for extra scrutiny.

The agency said it cannot comment on specific cases, but it deflected blame, in part, to the Justice Department. When an applicant is suing the IRS, Justice also has a say in whether to issue a final ruling during litigation. Almost all the groups in limbo have taken the IRS to court.

The IRS reports that in May 2013, when the scandal broke, the IRS “released a list of 176 political nonprofits it said it had approved already, many of them groups it once labeled ‘inflammatory,’ ‘anti-Obama’ and engaging in ‘propaganda.’ ”

Those that were still on hold were offered “immediate approval if they pledged to spend less than 40 percent of their time and resources on political campaigns”—a lower threshold than the usual 51%. “Several of the groups dismissed that option on principle, calling it unfair because it was a stricter standard than other 501(c)(4)s had to abide by.”

So the IRS admittedly denied tax-exempt status improperly to at least 176 groups, tried to apply extralegal restrictions to others, and is still delaying approval for those groups that have gone to court in an effort to vindicate their rights. It’s been over a year since President Obama himself said, in answer to a question from Fox News’s Bill O’Reilly, that there was “not even a smidgen of corruption.” Maybe it’s time somebody put the question to him again.

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March 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, March 2, 2015

Oei Presents Can Sharing Be Taxed? Today at Pepperdine

OeiShu-Yi Oei (Tulane) presents Can Sharing Be Taxed? (with Diane M. Ring (Boston College)) at Pepperdine today as part of our Tax Policy Colloquium Series:

The past few years have seen the rise of a new model of production and consumption of goods and services, often referred to as the “sharing economy.” Fueled by startups such as Uber and Airbnb, sharing enables individuals to obtain rides, accommodations, and other goods and services from peers via the Internet or mobile application in exchange for payment. The rise of sharing has raised questions about how it should be regulated, including whether existing laws and regulations can and should be enforced in this new sector or whether new ones are needed.

In this Article, we explore those questions in the context of taxation. We argue that, contrary to the claims of some commentators, the application of substantive tax law to sharing is mostly (though not completely) clear, because current law generally contains the concepts and categories necessary to tax sharing. However, tax enforcement and compliance may present challenges, as a result of two distinctive features of sharing. First, some sharing businesses tend to opportunistically pick the more favorable regulatory interpretation if there is ambiguity regarding which rule applies or whether a rule applies. This leads to compliance and enforcement gaps. Second, the “microbusiness” nature of sharing raises unique compliance and enforcement concerns. We suggest strategies for addressing these dual challenges, including lower information reporting thresholds, safe harbors and advance rulings to simplify tax reporting, and targeted enforcement efforts.

Jordan M. Barry (San Diego) is the commentator.  For more, see Jordan M. Barry & Paul L. Caron, Tax Regulation, Transportation Innovation, and the Sharing Economy, 82 U. Chi. L. Rev. Dialogue ___ (2015).

Update:  Post-presentation lunch:



March 2, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Optimist's Case For Tax Reform

CLubForbes:  Hey, It Could Happen! The Optimist's Case For Tax Reform, by Joseph Thorndike (Tax Analysts):

It’s easy to be cynical about tax reform. Politicians tell us that fixing the tax system is imperative and essential. But comprehensive reform is unusual and durable changes rarer still. That’s not exactly a recipe for optimism.

Ed Kleinbard, USC law professor and former chief of staff for the Joint Committee on Taxation, is ... feeling hopeful. “A rough framework is emerging that could stun pundits by actually becoming the basis of corporate tax reform legislation,” he contends in a recent essay [Why Corporate Tax Reform Can Happen]. “In short, and contrary to many claims, corporate-only tax reform, properly constructed, is feasible.” ... 

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March 2, 2015 in Tax | Permalink | Comments (1)

Avi-Yonah: The Obama Budget Proposals and BEPS

Reuven S. Avi-Yonah (Michigan), All or Nothing? The Obama Budget Proposals and BEPS:

There is a wide bipartisan consensus that the US international tax regime is broken. We have the highest corporate tax in the OECD, which at 35% imposes a real burden on corporations earning mostly US source income. At the same time, US based multinationals pay very low effective tax rates on foreign source income earned through their subsidiaries, leading to a strong incentive to shift profits out of the US. Finally, the US is among the few countries to fully tax dividends paid by foreign subsidiaries to their domestic parents, leading to the “trapped income” phenomenon in which $2 trillion of low-taxed earnings of those subsidiaries cannot be repatriated because of the tax on repatriations, and have to be declared as “permanently reinvested” overseas despite increasing difficulties to find something to do with this pile of money.

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March 2, 2015 in Scholarship, Tax | Permalink | Comments (0)

Joint Tax Committee: The Top 1% Receives 19% Of All Income, Pays 49% Of All Income Taxes

Joint Tax CommitteeThe Joint Committee on Taxation has released Fairness and Tax Policy (JCX-48-15):

The Senate Committee on Finance has scheduled a public hearing on March 3, 2015, titled “Fairness in Taxation.” This document ... describes concepts of tax equity and provides data related to the current and historical distribution of income and taxes. ...

For 2015, the top 10 percent (in terms of income) of all tax returns receive 45 percent of all income and pay 82 percent of all income taxes. The top five percent of all tax returns receive 34 percent of all income and pay 71 percent of all income taxes. The top one percent of all tax returns receives 19 percent of all income and pay 49 percent of all income taxes. 

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March 2, 2015 in Congressional News, Gov't Reports, Tax | Permalink | Comments (13)

IRS Releases Fall 2014 SOI Bulletin

IRS Logo 2The IRS Statistics of Income Division has released the Fall 2014 SOI Bulletin (Vol. 34, No. 1), with these articles:

March 2, 2015 in IRS News, Tax | Permalink | Comments (0)

McMahon, McGovern & Shepard: 2014 Federal Income Tax Developments

Florida Tax ReviewMartin J. McMahon Jr. (Florida), Bruce A. McGovern (South Texas) & Ira B. Shepard (Houston), Recent Developments in Federal Income Taxation: The Year 2014, 15 Fla. Tax Rev. ___ (2015):

This recent developments outline discusses, and provides context to understand the significance of, the most important judicial decisions and administrative rulings and regulations promulgated by the Internal Revenue Service and Treasury Department during 2014 — and sometimes a little farther back in time if we find the item particularly humorous or outrageous. Most Treasury Regulations, however, are so complex that they cannot be discussed in detail and, anyway, only a devout masochist would read them all the way through; just the basic topic and fundamental principles are highlighted — unless one of us decides to go nuts and spend several pages writing one up. This is the reason that the outline is getting to be as long as it is.

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March 2, 2015 in Scholarship, Tax | Permalink | Comments (0)

Citations, Justifications, and the Troubled State of Legal Scholarship

Jeffrey Harrison (Florida) & Amy Mashburn (Florida), Citations, Justifications, and the Troubled State of Legal Scholarship: An Empirical Study:

Recent pedagogical, economic and technological changes require law schools to reevaluate their resource allocations. Although typically viewed in terms of curricular changes, it is important also to focus on the very significant investment in legal scholarship and its impact. Typically this has been determined by some version of citation counting with little regard for what it means to be cited. This Article discusses why this is a deeply flawed measure of impact. Much of that discussion is based on an empirical study the authors conducted. The investigation found that citation by other authors is highly influenced by the rank of the review in which a work is published and the school from which the author graduated. Courts, on the other hand, are less sensitive to these markers of institutional authority. Perhaps more importantly, when the purpose of the citation is examined, a very small handful of those citing a work do so for anything related to the ideas, reasoning, methodology, or conclusions found in the cited work. This is slightly less true for judicial citation compared to citations by other authors. Given the level of current investment in legal scholarship and findings that reliance on it is far lower than citation counts would suggest, the authors offer a number of recommendations designed to increase accountability of legal scholars and the utility of what they produce.

March 2, 2015 in Legal Education, Scholarship | Permalink | Comments (1)

Tuition at Top Law Schools Surpasses $55K Per Year

National Law Journal:  An Elite Education's Going to Cost You: Tuition at Top Law Schools Surpasses $55K Per Year:

Tuition at U.S. law schools continues to increase even as demand for law degrees declines. And the increases are particularly pronounced at the elite schools that send the most graduates into the nation's largest law firms.

Columbia last year set annual tuition at $60,274 and Cornell Law School was not far behind. Altogether, 10 law schools charge more than $55,000 a year. It was just five years ago that Columbia, Cornell and Yale first crossed the $50,000 tuition mark.

Average tuition among all American Bar Association-accredited law schools rose from $32,227 in 2011 to $35,312 in 2014 — a nearly 10 percent increase. (That figure is based on data released by the ABA.) Tuition rose even faster among the elite schools. The National Law Journal's annual Go-To Law Schools identified 10 schools that sent the highest percentage of 2014 graduates to the largest 250 firms in the country. These schools increased tuition on average from $49,907 in 2011 to $56,292 — almost 13 percent. A small number of schools have announced freezes or reductions, but they are outliers.


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March 2, 2015 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 662

IRS Logo 2Commentary, New Revelations Show IRS Is Judge, Jury, Executioner–And Grave Robber:

The most important piece of information about the IRS’s targeting of conservative and pro-Israel groups is this: it is still going on. Politico reported yesterday that there are two categories of groups still being delayed and silenced by the IRS’s tax-exempt apparatchiks. The first category is Karl Rove (and his Crossroads organization). The second category is financially strapped mom-and-pop shops who have been driven into debt by the IRS’s corrupt practices in which critics of the Obama administration are deprived of some of their constitutional rights.

The story notes that this contradicts new IRS director John Koskinen’s claim that the agency “completed” its set of recommendations to get the corruption under control. As of this week, it’s still taking place. What this means in practice is that these groups, some of which applied several years ago, are still in limbo, unable to proceed. The point is to destroy the groups by bankrupting and suffocating them. Politico quotes a former IRS official using the agency’s term for this: “death by bureaucratic delay.” ...

Some groups, Politico notes, “went belly-up while waiting.” That’s the point of the death-by-delay targeting. In other cases, the IRS demanded back taxes to try to pick the pockets of the activists one more time before the groups faded away. The IRS is both executioner and grave robber. ...

The IRS, by the way, has basically proved that it shouldn’t be the free-speech gatekeeper not only because it’s unconstitutional but also because it’s simply incapable of respecting the rights of ordinary Americans. For example, the IRS, according to Politico, made the groups an offer: “immediate approval if they pledged to spend less than 40 percent of their time and resources on political campaigns. But several of the groups dismissed that option on principle, calling it unfair because it was a stricter standard than other 501(c)(4)s had to abide by.”

Precisely. The IRS told groups they could surrender a portion of their rights to which they are legally entitled and the IRS would allow them to retain the remaining portion of their free-speech rights. This is the behavior of an organized crime syndicate, not a governmental institution of a free country. It is extortionate, deeply immoral, and a permanent stain on the agency and the politicians who enabled it.

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March 2, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, March 1, 2015

McGinnis: Law Schools Must Respond to Technological Change

Law TechJohn O. McGinnis (Northwestern), Law Schools Must Respond to Technological Change:

My last post suggested that the decline in law students was due in large part to a technological shock that has decreased demand for lawyers, at least at the price point law schools are producing them. Law schools need to respond. They must shape a curriculum that will prepare their students for the world of growing machine intelligence that was responsible for the shock.  They also need to generate income from other programs to replace the law students who will not be returning.

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March 1, 2015 in Legal Education | Permalink | Comments (3)

The 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 paper returning to the list at #5:

  1. [285 Downloads]  Why Corporate Tax Reform Can Happen, by Edward Kleinbard (USC)
  2. [193 Downloads]  David Foster Wallace on Tax Policy, How to Be an Adult, and Other Mysteries of the Universe, by Arthur J. Cockfield (Queen's University)
  3. [163 Downloads]  Fiscally Transparent Entities: Eligibility for Tax Treaty Benefits, by Sumeet Khurana & Ashish Karundia
  4. [143 Downloads]  Taxation and Surveillance -- An Agenda, by Michael Hatfield (University of Washington)
  5. [132 Downloads]  Tax Regulation, Transportation Innovation, and the Sharing Economy, by Jordan M. Barry (San Diego) & Paul L. Caron (Pepperdine)

March 1, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The Godliest (Utah) and Godless (Vermont) States

The IRS Scandal, Day 661

IRS Logo 2Press Release, Judicial Watch Sues IRS for Records on Destroyed Hard Drives of Lois Lerner, Other IRS Officials:

Judicial Watch announced today that on February 18, 2015, it filed a Freedom of Information Act (FOIA) lawsuit against the U.S. Internal Revenue Service (IRS) seeking “any and all records related to the destruction of damaged hard drives from IRS employee computers from January 1, 2010, to the present.” The suit was filed in U.S. District Court for the District of Columbia (Judicial Watch v Internal Revenue Service (No 1:15-cv-00237)). The lawsuit is part of an investigation into the Obama IRS’ claim that the emails of Lois Lerner and other IRS officials, who are being investigated for abuses of Obama’s political opponents, were contained on hard drives that were subsequently damaged and destroyed.

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March 1, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, February 28, 2015

McGinnis: Will Law School Applicants Return?

John O. McGinnis (Northwestern), Will Law School Applicants Return?:

ApplicantsLaw schools have suffered a precipitous drop in applications in the last six years—the largest decline in decades. To assess whether this decline will continue and to determine the response, legal educators must first figure out the causes of the decline. Here are the three most plausible causes in ascending order of the threat that they pose to incumbents in legal education. The first is the Great Recession: law schools have declined because of a decrease in the demand for legal services caused by the Great Recession. The second is the existence of a lawyer bubble: law schools previously produced too many lawyers and there is overhang of supply that makes new lawyers less necessary. The third is structural: law has faced a technological shock, which has depressed the demand for lawyers and/or their income. [Chart: Inside the Law School Scam.]

Applicants 2It seems quite clear now that Great Recession cannot be assigned a primary role. ... The bursting of a bubble in lawyers is an inherently somewhat less plausible explanation than a housing bubble for a persistent oversupply. ... The most important cause of the decline in demand for legal services is technological shock.

Technological change has reduced the demand for lawyers, at least at the price point law schools were delivering it. The technological shock has been of two kinds.

First, machine intelligence is beginning to substitute for lawyers, particularly at the low end of the legal profession. Document discovery is moving from human to machines. Legalzoom and similar services are encroaching on the production of simple documents, like many wills and trusts. And once machines get into an area, they dominate over time.

Second, machine intelligence is reducing the agency costs from which lawyers have benefited, General counsel, for instance, can keep better track of exactly what their outside counsel are doing, cutting down on slack. The information age reduces the information asymmetry between lawyers and many of their clients. [Chart: The Law School Tuition Bubble.]

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February 28, 2015 in Legal Education | Permalink | Comments (11)

Pepperdine Hosts Conference on Wisdom Law and Lawyers

WisdomI had the honor today of participating in the annual Nootbaar Institute on Law, Religion, and Ethics conference at Pepperdine on Wisdom Law and Lawyers (program) organized by Robert F. Cochran and Michael Helfand:

At a time when law is seen by many as purely a matter of power politics and the lawyer's role as purely a matter of pursuing client economic interests, we want to consider how wisdom should influence deliberations in legislative chambers, courts, and lawyers' offices. Both theoretical wisdom and practical wisdom have much to say about law. We hope to learn from many traditions, both religious and secular.

The conference will be organized around three general themes:

1. The Nature of Wisdom – What do our traditions teach about the nature of wisdom? Speakers are likely to address the conference topics from Greek, Jewish, Christian, Islamic, Buddhist, and Confucian perspectives.

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February 28, 2015 in Conferences, Legal Education | Permalink | Comments (0)

AALS President & GW Dean Blake Morant: 'There's Never Been a Better Time to Consider Getting a Legal Education'

Chronicle of Education Video, On Leadership: What the State of Law Schools Can Teach the Rest of Higher Ed:

Declining student demand and a weak job market have turned up the pressure on law schools. Blake D. Morant, dean of the George Washington University Law School and president of the Association of American Law Schools, describes some of the things they are doing about it.


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February 28, 2015 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 660

IRS Logo 2Wall Street Journal, GOP Lawmakers Seek to Jump-Start Long-Running IRS Investigation:

The new Republican-controlled Congress is trying to pump fresh life into a long-running probe of alleged targeting of conservative groups by the Internal Revenue Service.

Seeking to jump-start the stalled inquiry, GOP lawmakers raised concerns at a House hearing on Thursday night about possible IRS wrongdoing during the course of the probe.

The hearing by the Oversight and Government Reform Committee revealed few new details, however, and Democrats accused Republicans of airing the allegations prematurely, before all the evidence has been gathered.

Still, the hearing signaled more problems for the beleaguered tax agency, which has faced GOP ire for several years over its treatment of politically-active conservative groups, among other issues.

Witnesses appearing before the committee cited the IRS’s possibly incomplete or incorrect responses to officials’ demands for computer backup tapes containing missing IRS emails. The missing emails belonged to Lois Lerner, a now-retired IRS official who has been a focus of Republican concerns.

Forbes, New IRS Scandal Hearings Reveal 32,000 More Emails, Possible Criminal Activity, by Robert W. Wood:

In new Hearings of the Committee on Oversight & Government Reform on February 26, 2015, J. Russell George, the Treasury Inspector General, said he is investigating possible criminal activity at the IRS. The hearings also revealed the fact that investigators have recovered another 32,000 emails relating to Lois Lerner. However, how many of them are duplicates of those previously recovered is not yet clear.

But in what was the most disturbing revelation, House Member attendees were told that the IRS had not even asked for the backup tapes when the ‘hard drive crash’ excuse was first used. That contradicted the prior testimony of IRS Commissioner John Koskinen. He had testified to the effect that recovery efforts had been thorough, and that the tapes couldn’t be accessed.

It now appears that no one may have asked. Rep. John Mica, R-Fla., said, “It looks like we’ve been lied to, or at least misled.” ... Several Oversight Committee Members questioned how diligent the IRS had been, given how quickly the investigators now were able to find them. Yet an IRS statement repeats the tax agency’s full cooperation. It has not been inexpensive. The IRS claims to have spent $20 million responding to congressional inquiries, producing documents and providing agency officials to testify at hearings.

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February 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, February 27, 2015

How to Tell If You’re a Jerk at Work

The JerkFollowing up on my previous post, Are You a Jerk at Work?:  Wall Street Journal, How to Tell if You’re a Jerk at Work, by  Daniel Ames (Columbia Business School) & Abbie Wazlawek (Columbia Business School):

Self-awareness is crucial in the workplace. It can also be dauntingly hard to get.

Knowing your own strengths and limitations, and how others see you and your behavior, has been linked to a range of positive outcomes. But when it comes to understanding how others see us, many of us are in the dark.

One example comes from our own research where we’ve asked negotiators at the end of a deal-making session to classify themselves as having been underassertive, overassertive or appropriately assertive. We also asked them the same question about their counterparts. When we compare how people categorize themselves with how their counterparts categorize them, the correspondence is disturbingly low—not much better than flipping a coin.


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February 27, 2015 in Legal Education, Tax | Permalink | Comments (1)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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February 27, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Republicans Name Keith Hall CBO Director, Replacing Doug Elmendorf

Hall 2Wall Street Journal, GOP Leaders Name Keith Hall as CBO Director:

Congressional Republican leaders named Keith Hall to a four-year term as the next director of the Congressional Budget Office, the influential nonpartisan budget scorekeeper for Congress.

Mr. Hall, a former White House economist who served as commissioner of the Bureau of Labor Statistics, will replace Doug Elmendorf starting April 1, GOP leaders said Friday.

Mr. Hall, who has served as chief economist of the International Trade Commission since September, headed the BLS, one of the government’s main economic-data-gathering agencies, from 2008 to 2012. He served as the chief economist for the White House Council of Economic Advisers from 2005 to 2008.

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February 27, 2015 in Congressional News, Tax | Permalink | Comments (0)

Six Deans Join Law Deans on Legal Education Blog

LPBN LogoThe Law Professor Blogs Network is thrilled to announce that our Law Deans on Legal Education Blog, ably manned by Rick Bales (Dean, Ohio Northern) and Richard Gershon (Dean, Mississippi), is adding six new Deans:

With the support of our sponsor, Wolters Kluwer Law & Business/Aspen Publishers, the Network is seeking to expand in two ways.

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February 27, 2015 in About This Blog, Legal Education | Permalink | Comments (0)