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Tuesday, June 16, 2015

Weichsel: Alternative Perspectives On The Proposed Yahoo Spin-Off

WeichselTaxProf Blog op-ed:  Alternative Perspectives on the Proposed Yahoo Spin-Off, by Stuart Weichsel (Kern Augustine Conroy & Schoppmann, New York):

There has been much discussion in the press (e.g., here and here) regarding how Yahoo! will proceed with its proposed tax-free spinoff of its shares is Alibaba (worth about $40 billion) and its shares in Yahoo Japan (worth about $7 billion), each valuation before any US corporate income tax is paid.

If Alibaba is dropped into a Spinco and distributed in a purported tax-free  distribution like TripAdvisors and Liberty Broadband, Yahoo is running a $14 billion federal tax risk.   Distributing Yahoo Japan would also run a $2.5 billion tax risk. 

There are two alternative transactions that run much less tax risk.

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June 16, 2015 in Tax | Permalink | Comments (0)

IFA International Tax Student Writing Competition

IFA Logo (2015)The International Fiscal Association is sponsoring the IFA USA Branch 2015 Writing Competition (rules here):

  • Subject:  Any topic relating to U.S. taxation of income from international activities, including taxation under U.S. tax treaties.
  • Open to:  All full or part-time students during the 2014-15 academic year pursuing a graduate degree.
  • Submission Deadline:  September 30, 2015.
  • Prize:  $2,000 cash, plus expenses-paid invitation to IFA USA Branch Annual Meeting on February 25-26, 2016 in Miami.

Here are the recent winners:

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June 16, 2015 in Legal Education, Tax | Permalink | Comments (0)

Community Groups Allege Wal-Mart Used Charitable Foundation To Boost Expansion

Walmart Logo (2013)Washington Post, Groups Allege Wal-Mart Used Charitable Foundation to Boost Expansion:

More than a dozen community groups filed a complaint with the Internal Revenue Service Monday alleging that the Walmart Foundation violated its tax-exempt status by using charitable funds to advance the retailer’s entrance into urban markets including Washington.

The 22-page complaint, addressed to IRS Commissioner John Koskinen, details the retailer’s marketing and lobbying activities as it sought approval to open stores in New York City, Boston, Chicago, Los Angeles and other cities.

The groups allege that the foundation is completely controlled by the company and that it “appears to target its donations and influence its grantees primarily to assist Walmart to achieve those expansion goals, ultimately providing Walmart more than an incidental benefit. Walmart Foundation’s activities are impermissible under the Code.”

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June 16, 2015 in Tax | Permalink | Comments (3)


SketchyLaw, Law School Review:

Our video library of narrated lectures present legal concepts in more memorable spaces, allowing you to create your own visual memory palace with each scene. 

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June 16, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 768

IRS Logo 2Daily Caller, IRS Finds 6,400 New Lois Lerner Emails…Gives DUMBEST EXCUSE YET For Not Releasing Them:

The Internal Revenue Service found 6,400 more Lois Lerner emails — but they’re not handing them over in court.

The IRS’ latest excuses are nothing short of infuriating.

Department of Justice lawyers Geoffrey J. Klimas and Stephanie Sasarak, acting as counsel for the IRS, submitted a U.S. District Court filing June 12 in the case Judicial Watch v. Internal Revenue Service. The court filing, provided to The Daily Caller, claims the IRS received new Lerner emails from the Treasury Department’s inspector general (TIGTA) but can’t fork over the emails to Judicial Watch, a nonprofit group suing to get the emails. Why? Because the IRS is busy making sure that none of the emails are duplicates  – you know, so as not to waste anyone’s time.

However, the inspector general already made sure that none of the emails were duplicates, so the IRS’ latest excuse falls flat.

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June 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Monday, June 15, 2015

Call For Review Essays: ABA Tax Section NewsQuarterly

ABA News QuarterlyFrom Linda Beale (Wayne State):

The ABA Tax Section’s NewsQuarterly is transitioning to an all-digital format. One new feature to be introduced in connection with the move to digital is reviews of books and articles on topics of interest to tax practitioners. Reviews serve the purpose of informing readers of recent publications pertaining to tax policy and emerging issues, as well as broader concerns about the interrelationship between tax policies and economic growth. Reviews may be of single books or articles or they may be review essays that discuss and compare two or more books and articles addressing the same topic, similar to such review essays in the New York Review of Books. Reviews will be considered for publication in each quarterly issue, with the first review appearing in the Winter 2016 issue.

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June 15, 2015 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Jeff Harrison's Restyled Legal Education Blog

NY Times: Tax And Estate Planning Implications Of A Supreme Court Decision Legalizing Same-Sex Marriage

Same-SexNew York Times, The Same-Sex Marriage Decision: What’s at Stake for Couples:

If the Supreme Court legalizes same-sex marriage nationwide, married gay couples will gain all the financial and legal rights and responsibilities of being married, regardless of which state they call home.

The highest court’s landmark decision in 2013, United States v. Windsor, already established that married same-sex couples were entitled to federal benefits. But two major federal agencies, Social Security and Veterans Affairs, must still look to the states to determine marital status, so couples living in nonrecognition states are generally cut off from receiving those benefits. Same-sex couples are not entitled to many state-conferred benefits either.

A pro-marriage ruling, however, would put same-sex couples on even ground with the rest of the married population in several significant ways:

Taxes.  Married same-sex couples would be able to file joint returns at both the federal and state levels. Without the ruling, couples living in states that do not recognize their unions may have to continue to prepare two sets of tax returns: a joint one for the federal government and individual ones for states.

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June 15, 2015 in Tax | Permalink | Comments (0)

U.S. PIRG Seeks To Hire A Tax & Budget National Campaign Director

PIRG 2U.S. PIRG is seeking to hire a Tax & Budget National Campaign Director:

U.S. PIRG is hiring a National Campaign Director to lead our national Tax & Budget campaigns. We’re looking for an experienced political advocate who will be directing campaign strategy, influencing stakeholders, political organizing, coalition-building, evaluating policy choices, fundraising, and developing staff. ...

Qualifications:  Candidates must have at least 8 years of relevant professional experience. Advanced degrees like a JD or a master’s degree are preferred, but not required. Qualified candidates will have a demonstrated commitment to citizen-based social change, as well as a track record of leadership. We're looking for people who are goal-driven and results-oriented, who have excellent verbal, writing and analytical skills, the ability to speak persuasively in a charged atmosphere, and enthusiasm for the work. Experience with related policy issues and how Washington, DC or statehouses work preferred. ...

Application:  Please apply using our online application @ Direct your application to Andre Delattre, Executive Director of U.S. PIRG.

(Hat Tip: David Cay Johnston.)

June 15, 2015 in Tax, Tax Prof Jobs | Permalink | Comments (0)

Student Loan News

June 15, 2015 in Legal Education | Permalink | Comments (0)

Zelinsky: Preliminary Thoughts About The Enigma Of Wynne

ZelinskyTaxProf Blog op-ed:  Preliminary Thoughts About The Enigma of Wynne, by Edward Zelinsky (Cardozo):

Maryland’s county income tax does not grant a credit to Maryland residents for the out-of-state income taxes such residents pay on the income they earn outside of Maryland. In Comptroller of the Treasury of Maryland v. Wynne, the U.S. Supreme Court held that this failure causes the Maryland county income tax to violate the dormant Commerce Clause of the U.S. Constitution.

Wynne perpetuates an inherent problem of the Court’s dormant Commerce Clause doctrine: The Court declares some, ill-defined taxes such as the Maryland county income tax unconstitutionally discriminatory while other, economically equivalent taxes and government programs are apparently acceptable under the dormant Commerce Clause. A decision as enigmatic as it is important, Wynne raises as many questions as it answers. Among these are the continuing viability (or not) of external consistency and apportionment, concepts which have been central to the Court’s formulation of the dormant Commerce Clause. Wynne also undermines the Supreme Court’s traditional tolerance of the double state income taxation of dual residents.

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June 15, 2015 in New Cases, Scholarship, Tax | Permalink | Comments (5)

Bentley University Seeks To Hire A Tenure-Track Tax Prof

Bentley 2Bentley University, located in the suburbs of Boston, Massachusetts, is seeking to hire a full-time tenure-track Assistant Professor of Law and Taxation to start July 2016:

The chosen candidate will teach both undergraduate and graduate law courses with a business focus, and on occasion, as needed, graduate tax courses. The standard teaching load for the tenure-track years is 2-2 (two courses per semester). The chosen candidate will be expected to publish high quality and impactful scholarship in respected academic and/or practitioner journals. ...

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June 15, 2015 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

IRS Releases Final Estate Tax Portability Regulations

Estate Tax LogoThe IRS on Friday released T.D. 9725, Portability of a Deceased Spousal Unused Exclusion Amount:

This document contains final regulations that provide guidance under sections 2010 and 2505 of the Internal Revenue Code on the estate and gift tax applicable exclusion amount, in general, as well as on the applicable requirements for electing portability of a deceased spousal unused exclusion (DSUE) amount to the surviving spouse and on the applicable rules for the surviving spouse’s use of this DSUE amount.

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June 15, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 767

IRS Logo, Rove’s ‘New’ Group Isn’t New, and That Could Be the Point:

Karl Rove and his colleagues at the dark money behemoth Crossroads GPS have a “new” 501(c)(4), and according to reports, they’re going to use it in much the same way they have used GPS itself — as a conduit for anonymous, political money in the 2016 elections.

But the group, One Nation, isn’t “new,” and that’s probably the point.

Virginia state incorporation records show that the operatives who run Crossroads simply took over an existing 501(c)(4), and they likely did so because the group had the one thing that has been elusive to Crossroads since its founding in 2010: An approved application for tax exemption from the IRS.

Grasping that fact is central to understanding why Crossroads would need to form a new 501(c)(4) to do what it — the largest of all politically active nonprofits — has done for nearly five years. Obtaining the more durable shield of IRS recognition likely has as much to do with this move by Crossroads as its reported aim of keeping the Crossroads brand relevant in a crowded field of GOP groups trying to influence the 2016 elections.

Over the last two weeks, media outlets have talked up One Nation as the “new nonprofit group” that will be spending millions on television and radio ads aimed at softening up voters in three states where Senate Republicans are vulnerable. This “new” group will work in tandem with a super PAC called Senate Leadership Fund to help the GOP hold its majority in the Senate. Essentially, Crossroads is taking a page out the playbook developed by Harry Reid and the Democratic operatives behind liberal dark money group Patriot Majority USA and its sister super PAC Senate Majority PAC.

But One Nation is as “new” as a 2010 Camry with $2 million in the trunk, a fresh coat of paint and a different driver behind the wheel. That’s because One Nation was, until recently, Alliance for America’s Future, a five-year-old 501(c)(4) social welfare organization formed by the GOP consultants that made up the “BK” in BKM Strategies — Barry Bennett and Kara Ahern, respectively. Mary Cheney was the “M” in the firm, and the Alliance for America’s Future had other ties to the Cheney network. But the group hasn’t made independent expenditures since the 2010 cycle, when it spent more than $700,000; it also spent heavily that cycle for ads promoting Nevada GOP gubernatorial candidate Brian Sandoval.

While Crossroads GPS has been waiting for the IRS to approve its application for exempt status since Miley Cyrus was Hannah Montana, Alliance for America’s Future — which is represented by the same law firm and applied for an exemption the same month as GPS — was given the IRS seal of approval within weeks, in July 2010. Now, by taking the reins at Alliance for America’s Future, the folks at Crossroads are at the controls of a group that comes pre-packaged with an IRS exemption. And there’s already a link between the organizations: Crossroads helped fund the Republican Governors Public Policy Committee in 2010, a year when the governors’ group provided more than half the money spent by the Alliance for America’s Future — which Nevada courts found out when they forced AAF to disclose three years later.

Marcus Owens, a nonprofit tax lawyer at Loeb & Loeb and former head of the IRS Tax Exempt Division, agrees that the exemption could play a role in the decision by Crossroads operatives to take over the Alliance — particularly given the level of uncertainty that surrounds the Crossroads application for exemption.

“Having an already exempt fallback organization makes sense as a way to continue activities,” Owens said.

Lloyd Hitoshi Mayer, professor of nonprofit tax law at Notre Dame, calls the move “a well-known strategy in such situations,” going back at least to the Christian Coalition’s decision in 1999 to shift its operations to its Texas chapter, which already had exempt status, and rename it the Christian Coalition of America.

With One Nation under its wing, Crossroads GPS could engage in a similar shift. If it is denied status by the IRS — or if it decides to withdraw its application altogether — its operations can move seamlessly under the umbrella of another 501(c)(4) that already has the IRS’s seal of approval and whose legal gymnastics are already choreographed by the same law firm.

Owens and Mayer stressed that such a move doesn’t mean that the Crossroads operatives are free to engage in politics when they’re at the helm of One Nation; it just shifts oversight to the much less watchful eye of the agency’s auditors. “Such a shift doesn’t escape the possibility of IRS scrutiny,” Owens told OpenSecrets Blog, “but it moves the matter from the application context to the audit context, where the IRS capabilities are spread much more thinly.”

Thin indeed: a 2014 report by the Center for Public Integrity cited statistics showing that the IRS only audited 7 out of every 1,000 yearly returns in 2013. Compare that to the application process, which requires each 501(c) application to be approved or denied by an actual person, and it becomes clear why circumventing that process is such a boon to the operatives who run Crossroads.

The icing on the cake is that this move gives Crossroads a way to slide out from under its languishing application without being forced to pay the corporate income taxes it would have to pay if it received a denial from the IRS — a liability that already got smaller when the statute of limitations on its earliest activities ran out in April. Crossroads could withdraw its application and terminate, potentially without the repercussions of negative determination by the IRS.

This wouldn’t be a risk-free strategy on Crossroad’s part. As Owens points out, this kind of move from an active organization “has historically been an audit trigger.” Mayer says that “in theory the IRS could retroactively attempt to force the organization into 527 status for earlier years and require disclosure of contributors to the organization during those years,” but he doesn’t know of an instance where that has happened.

But while such a scenario poses uncertain risks for Crossroads GPS, those risks are not transferred to One Nation, because it is a separate organization, not technically affiliated with Crossroads.

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June 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

TaxProf Blog Weekend Roundup

Sunday, June 14, 2015

Is The Case Western Dean Search A New Model: Co-Deans Selected From Among Internal Candidates With No Faculty Vote?

Case Logo (2014)Following the resignation of former dean Lawrence Mitchell amidst a tawdry sexual harassment scandal and resulting lawsuit (and settlement), Case Western's President and Provost have constituted a dean search committee. The parameters of the search are interesting in three respects:

  1. Only internal candidates will be considered.
  2. The committee will recommend finalists to the president and provost, with no faculty vote.
  3. The president and provost "are open to a model that includes co-deans; while the practice is not common, it has been implemented within both academia and the corporate sector. Our goal is to provide the school the best possible leadership at this moment in its history."

With Jessica Berg and Michael Scharf serving as Acting (Nov. 2013 -  Mar. 2014) and now Interim (Mar. 2014 -) co-deans, the search may result in their appointment as permanent co-deans.

June 14, 2015 in Legal Education | Permalink | Comments (6)

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 new paper debuting on the list at #2:

  1. [335 Downloads]  Taxation of E-Commerce, by Orkhan Abdulkarimli (Baku State)
  2. [175 Downloads]  Trust Decanting: A Sale Without Gain Realization, by Jason Kleinman (Herrick, New York)
  3. [171 Downloads]  Reducing Inequality With A Retrospective Tax On Capital, by James Kwak (Connecticut)
  4. [152 Downloads]  Citizenship Taxation, by Ruth Mason (Virginia)
  5. [135 Downloads]  What Does Voluntary Tax Compliance Mean?: A Government Perspective, by J. T. Manhire (U.S. Treasury Department)

June 14, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Former University of Georgia President Michael Adams Named Pepperdine Chancellor

AdamsPress Release:

Michael F. Adams, who served as president of the University of Georgia from 1997 to 2013, has been named chancellor of Pepperdine University. Adams is an award-winning educator, political communication specialist, and former vice president for university affairs at Pepperdine University (1982-1988). He will assume his duties on August 1, 2015. ...

As chancellor, Adams will focus on cultivating existing relationships and developing new partnerships to extend Pepperdine’s reach throughout Southern California and around the globe. Following the recent success of the Campaign for Pepperdine, the chancellor will take a leadership role on major initiatives and help strengthen the University’s endowment. ...

Adams most recently held the titles President Emeritus and Regents’ Professor at the University of Georgia. Under his leadership, from 1997 to 2013, the university was recognized as one of the nation’s top 20 public research universities for eight out of 10 years by U.S. News & World Report. During his tenure, the university also attained its highest rankings ever, became the most selective in its history, and grew from an estimated 29,000 students to almost 35,000 students today. Prior to his term at the University of Georgia, he served as president of Centre College in Danville, Kentucky, one of America’s top 40 liberal arts colleges, from 1989 to 1997. ...

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June 14, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 766

IRS Logo 2IRS, Response to Notice (No. 1:13-cv-1559-EGS, June 12, 2015):

In accordance with the Court's June 4, 2015, Order, the Internal Revenue Service ("Service") responds to Judicial Watch, Inc.'s Notice dated June 2, 2015:

15. On April 23, 2015, TIGTA provided approximately 6,400 forensically-recovered emails to the Service. 1 Certain of the emails forensically recovered by TIGTA were not readable, or not entirely readable, as initially provided to the Service. TIGTA subsequently provided some of these documents to the Service in readable form on May 8 and June 1, 2015. To date, TIGTA has not provided any other recovered emails to the Service.

16. Prior to providing the Service with the approximately 6,400 forensically-recovered emails, TIGTA identified and removed emails which appear to be duplicates of those which the Service has already produced to the Congressional Committees or were duplicates of other recovered emails. Such emails are also duplicates of those the Service has already retrieved in connection with responding to the FOIA requests at issue in this case. The Service is in the process of conducting further manual deduplication of the 6,400 forensically-recovered emails to supplement the automated deduplication conducted by TIGTA. TIGTA also is further reviewing the 6,400 emails to verify that they were not already produced to the Congressional Committees by the Service.

17. The Service expects to begin processing and reviewing the recovered emails immediately following its review and production of Lerner communications which were not forensically recovered. At this time, the Service is unable to estimate when it will finish processing and reviewing the forensically-recovered emails. 

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June 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, June 13, 2015

This Week's Ten Most Popular TaxProf Blog Posts

America’s Law School Applications And Enrollment Just Keep Falling

Quartz, America’s Law School Applications Just Keep Falling:

The great law school exodus continues, propelled by a weak job market for lawyers and securer, better paid opportunities in other professions. According to updated data from the US Law School Admissions Council (LSAC), as of June 5 the number of applicants to accredited American law schools are down 2.5% from the same point last year. ...

Where are people going instead? Engineering school, where graduates see some of the highest salary increases from investing in the degree. The numbers below somewhat understate the overall decline in law school enrollment, as they only include the subset of prestigious schools ranked by US News. Lower-tier law schools, which have much shakier career outcomes, have been the hardest hit by enrollment declines:

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June 13, 2015 in Legal Education | Permalink | Comments (1)

Preschool Tax

The IRS Scandal, Day 765

IRS Logo 2Judicial Watch Press Release, JW Beats IRS in Court (June 12, 2015):

Calling all conservative activists, citizens and groups who were silenced and harassed by the Obama Internal Revenue Service in the run-up to the 2012 elections and beyond — you should know that we have moved a few steps closer to holding the Obama administration accountable for its criminal misuse of the federal tax-collecting agency.

We are pleased to announce that Judge Emmet Sullivan of the U.S. District Court for the District of Columbia granted a Judicial Watch request to issue an order requiring the IRS to provide answers by June 12, 2015, on the status of the Lois Lerner emails the IRS had previously declared lost. Judicial Watch raised questions about the IRS’ handling of the missing emails issue in a June 2 court filing, demanding answers about Lois Lerner’s emails, which had been recovered from backup tapes. Judge Sullivan issued the court order on June 4, 2015. ...

The IRS response is due today. Typically, the Obama administration waits until late in the day, especially on Fridays, to release material that makes it look bad. I’ll report back to you next week on the IRS filing. In the meantime, you may want to ask your congressmen and senators why, for the most part, they sit on their hands on the Obama IRS abuses and cover-up while Judicial Watch does all the hard work.

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June 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, June 12, 2015

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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June 12, 2015 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

IRS, Tax Preparation Firms Join Forces To Fight Tax Fraud

ID TheftIR-2015-87 (June 11, 2015), IRS, Industry, States Take New Steps Together to Fight Identity Theft, Protect Taxpayers:

The Internal Revenue Service joined today with representatives of tax preparation and software firms, payroll and tax financial product processors and state tax administrators to announce a sweeping new collaborative effort to combat identity theft refund fraud and protect the nation's taxpayers.

The agreement — reached after the project was originally announced March 19 — includes identifying new steps to validate taxpayer and tax return information at the time of filing. The effort will increase information sharing between industry and governments. There will be standardized sharing of suspected identity fraud information and analytics from the tax industry to identify fraud schemes and locate indicators of fraud patterns. And there will be continued collaborative efforts going forward.

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June 12, 2015 in IRS News, Tax | Permalink | Comments (0)

Will Congress Throw A Wrench In BEPS?

BEPSForbes:  Will U.S. Congress Throw A Wrench In BEPS?, by Joe Harpaz:

No sooner did the Organization for Economic Cooperation and Development (OECD) publish its hotly anticipated guidelines for country-by-country reporting, and the U.S. is already signaling that it may not be in a hurry to jump on the bandwagon.

The OECD guidelines, as I’ve written about before, are part of the agency’s Action Plan on Base Erosion and Profit Shifting (BEPS). BEPS lays out a series of actions designed to realign contemporary tax policy with the realities of the global economy. The most significant of these suggests that companies should file detailed tax reports in every country where they do business.

In theory, this country-by-country reporting requirement would stop companies from using aggressive transfer pricing strategies to route their profits through low-tax regimes so they can avoid heavier taxation in regions with higher corporate taxes, like the U.S. ...

Exactly one day after the OECD implementation package was released, Sen. Orrin Hatch (R-UT) and Rep. Paul Ryan (R-WI), leaders of the Senate Finance Committee and House Ways & Means Committee, respectively, requested that the Treasury Department and IRS provide a memorandum detailing the legal authority for requesting and collecting country-by-country information from U.S. multinational corporations

Setting a clear tone of Congress’ intentions to insert itself into the BEPS discussion from its opening lines, the letter states:

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June 12, 2015 in Tax | Permalink | Comments (0)

Watchdog: Report Of Favoritism In University Of Texas Law School Admissions Whitewashed Evidence Of LSAT Scores Of Admittees In The 130s And 140s

Texas Law School, Whitewash: Kroll Left Dozens of Bad LSATs Out of UT Report:

An investigation into the corruption of admissions standards at the University of Texas School of Law confirmed Watchdog’s reports that dozens of applicants had been admitted to UT Law despite atrocious test scores.

Nonetheless, Kroll Associates made no mention in its final report of the dozens of inadequate Law School Admission Test scores it found in researching applicant data from 2004 to 2014.

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June 12, 2015 in Legal Education | Permalink | Comments (1)

Call for Papers: University of North Carolina Tax Symposium

North Carolina Tax SymposiumThe University of North Carolina Kenan-Flagler School of Business has issued a call for papers for its Nineteenth Annual Tax Symposium to be held March 18-19, 2016. The symposium "is designed to bring together leading tax scholars from economics, accounting, finance, law, political science, and related fields." The deadline for the call for papers is December 15, 2015:

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June 12, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Republican Governors Start Learning To Like Tax Hikes

Bloomberg, Republican Governors Start Learning to Like Tax Hikes:

Republican leaders who control U.S. states are confronting the consequences of no-new-tax pledges as they face shortfalls and try to preserve education and infrastructure.

Nevada, Kansas and Alabama have enacted or are debating increases in taxes on sales, tobacco, corporate income and other items, and six others have passed higher fuel levies despite a small-government dogma. In Louisiana, Republican lawmakers and Governor Bobby Jindal are engaged in a near-theological debate about what constitutes a tax increase as they seek to close a $1.6 billion budget gap.

Across the nation, 21 states have yet to pass budgets for fiscal 2016, which begins July 1 in most states. After years of post-recession spending cuts and tepid revenue growth, states that came under Republican control with the Tea Party’s rise have reached the limits of austerity. Some Republicans are even willing to violate a pledge backed by anti-tax crusader Grover Norquist to oppose all increases. ...

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June 12, 2015 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 764

IRS Logo 2World, New Details Emerge in IRS Targeting Scandal:

It’s been a little more than two years since a Treasury Department Inspector General report found the Internal Revenue Service used “inappropriate criteria” to target conservative nonprofit groups for extra scrutiny.

“It’s inexcusable, and Americans are right to be angry about it, and I’m angry about it,” said President Barack Obama in a statement issued May 15, 2013, the day after the report. “I’ll do everything in my power to make sure that nothing like this ever happens again.”

The investigation into what happened and who is responsible has unfolded slowly, but lost amid ISIS, presidential campaigns, and international crises, congressional probes continue to uncover new information. This week, during a House Oversight and Government Reform Committee hearing, Republican lawmakers honed in on an IRS official’s disclosure that the agency established a “special project team” to handle all information requests related to the targeting issue.  

Republicans were instantly suspicious because the arrangement apparently involved the IRS chief counsel and acting commissioner—the only two political appointees at the agency. Mary Howard, IRS director of privacy, governmental liaison, and disclosure, said the team included hundreds of attorneys assigned to gather information for both congressional and public inquiries. ...

Rep. Jim Jordan, R-Ohio, who has taken a lead on investigating the targeting, said it could be just as Howard said, but “obviously I’m suspicious based on the track record. “ ...  Jordan said Howard’s testimony raised many new questions the committee decided to formally ask the IRS in a letter sent today.  ...

The two-year-old controversy involves conservative groups who were singled out for extra scrutiny when they applied for 501(c)4 nonprofit status. The Government Accountability Office is currently studying whether the IRS also singled out existing conservative nonprofit groups through the auditing process. Jordan said lawmakers anticipate a report in the near future.

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June 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, June 11, 2015

ABA Seeks Comments On Six Proposed Revisions To Law School Accreditation Standards

ABA Logo 2Following up on Tuesday's post, ABA Approves Paid Externships, 10% LSAT-Free Classes For Notice And Comment:  the ABA Section of Legal Education and Admission to the Bar today released  this memorandum:

At its meeting held on June 5-6, 2015, the Council of the Section of Legal Education and Admissions to the Bar approved for Notice and Comment the following proposed revisions to the ABA Standards and Rules of Procedure for Approval of Law Schools:

  • Standard 105 and Rule 29(a)
  • Standard 305(e)(6) and Interpretation 305-3
  • Interpretation 305-2
  • Interpretation 311-4
  • Standard 503
  • Rule 29(b-f)nbsp;

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June 11, 2015 in Legal Education | Permalink | Comments (1)

Stiglitz: New Theoretical Perspectives On The Distribution Of Income And Wealth

Joseph E. Stiglitz (Columbia), New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals:

June 11, 2015 in Scholarship, Tax | Permalink | Comments (1)

WSJ: Tech Companies Woo Investors With Unconventional Financial Metrics, Inflating Their Valuations

Wall Street Journal, Tech Startups Woo Investors With Unconventional Financial Metrics — But Do Numbers Add Up? Critics Say the Practice Is Inflating Some Companies’ Valuations:

Hortonworks Inc. Chief Executive Rob Bearden forecast in March 2014 that the software firm would have a “strong $100 million run rate” by year-end. But the number looked a lot smaller after Hortonworks went public and then reported financial results: just $46 million in revenue last year.

It turns out that Mr. Bearden wasn’t talking about revenue, though he didn’t say so at the time. The Santa Clara, Calif., company now says the $100 million target was for “billings,” a gauge of future business that isn’t part of generally accepted accounting principles. Mr. Bearden declines to comment.

As young technology companies jostle for investors who will pour money into the firms as they try to make it big and strike it rich, some companies are using unconventional financial terms.

Instead of revenue, these privately held firms tout “bookings,” “annual recurring revenue” or other numbers that often far exceed actual revenue.


The practice is perfectly legal and doesn’t violate securities rules because the companies haven’t sold shares in an initial public offering. Public companies can use “non-GAAP” financial terms but must explain them and disclose how they differ from measurements that follow strict accounting rules. ...

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June 11, 2015 in Tax | Permalink | Comments (1)

The New 1L: First-Year Lawyering With Clients

1LThe New 1L: First-Year Lawyering with Clients (Eduardo R.C. Capulong (Montana), Michael A. Millemann (Maryland), Sara Rankin (Seattle) & Nantiya Ruan (Denver), eds. Carolina Academic Press 2015):

In The New 1L, leading teachers in the field describe how, in the first year of legal education, they teach students to act, as well as think, like lawyers. In their courses, clients are central not extraneous. Working under a lawyer’s supervision, students interview clients, conduct factual investigations, draft pleadings, and write memoranda and briefs. The authors argue that, in isolation, theory and practice are incomplete, and first-year educators must integrate the two. They discuss the benefits and challenges of this new 1L approach, and also provide a range of successful models for any teacher who wants to adopt this pedagogy to a first-year course.  What they say is particularly relevant today, when many are criticizing law schools for their over-reliance on the Langdellian teaching method and failure to produce practice-ready graduates.

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June 11, 2015 in Book Club, Legal Education | Permalink | Comments (0)

Mintz & Venkatachalam:The Low-Tax Backlash

Jack Mintz (Calgary) & Ven Venkatachalam (Calgary), The Problem with the Low-Tax Backlash: Rethinking Corporate Tax Policies to Adjust for Uneven Reputational Risks:

When a major corporation is found to be paying little or no taxes, public backlash and media furor over the issue may ensue. Some governments may well be just fine with it, while others like U.S. may take steps to ensure companies pay more tax. Sometimes, companies being in a non-taxpaying position properly reflects appropriate tax policy. That explanation, however, does not sell lattés, which is why in 2012, after the British public grew outraged over the discovery that Starbucks was paying no corporate taxes in the U.K., the coffee retailer actually volunteered to just write a cheque to the government. The reputational damage to Starbucks’ brand, the company calculated, was not worth the money it was saving in avoiding taxes, even if it was doing so perfectly legally.The fear of this kind of reputational damage can foil the very taxation policies that governments design specifically as a means to tax corporations fairly, efficiently and competitively. It may be good tax policy to allow corporations various deductions, or the ability to carry forward or carry back losses, but it can be politically vexatious. U.S. President Barack Obama demonstrated that explicitly when he suggested certain American companies using so-called tax inversions to relocate their headquarters to low-tax jurisdictions, were failing in their “economic patriotism.”Yet more multinationals than ever are legally and quite appropriately using tax strategies to minimize their taxes in various jurisdictions to the point where they are paying little to no corporate tax. For some corporations, the risk of public backlash is greater than it is for others: Starbucks and Facebook, being consumer-facing companies with a great deal of brand goodwill, have a lot more at risk than do Pfizer and Oracle. This risk makes the playing field for taxation less level, jeopardizing the fundamental tax principle of horizontal equity — that those of similar means should pay similar taxes. If Starbucks feels pressured to pay extra taxes, then the tax system is not functioning optimally.This emerging reputational risk is a new dimension governments are going to have to take into account when designing tax policy. Understanding that there is more to consider than the financial implications of a tax policy should and will have an effect on the way policies are designed. One important approach that governments should take is to avoid the practice of targeted tax incentives, such as tax holidays or accelerated depreciation. The reputational risk will see some companies willing to take the government up on tax breaks, but others may prefer to pass. Better to focus on more general corporate tax reductions, which will be less distortive and unfair to those companies at greater risk of reputational damage.

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June 11, 2015 in Scholarship, Tax | Permalink | Comments (0)

CRS: Reform of U.S. International Taxation

CRS LogoCongressional Research Service:  Reform of U.S. International Taxation: Alternatives, by Jane G. Gravelle:

A striking feature of the modern U.S. economy is its growing openness—its increased integration with the rest of the world. The attention of tax policy makers has recently been focused on the growing participation of U.S. firms in the international economy and the increased pressure that engagement places on the U.S. system for taxing overseas business. Is the current U.S. system for taxing U.S. international business the appropriate one for the modern era of globalized business operations, or should its basic structure be reformed?

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June 11, 2015 in Congressional News, Tax | Permalink | Comments (0)

Why I'm Glad I Gave Up My Dream Of Going To Law School

LegallyThe Week:  Why I'm Glad I Gave Up My Dream of Going to Law School, by Stephanie Talmadge:

For years, I was dead-set on going to law school. And not just any law school — Harvard. But midway through college, I was forced to confront this plan I had for myself. I asked myself why I really wanted it, and how much I was willing to sacrifice for it.

I realized I wasn't willing to sacrifice much, and that my dream may have been a convenient aspiration — one that ultimately hindered my pursuing less conventional career paths that would have better suited me.

Why did I want to be a lawyer in the first place? I'm not particularly proud of this, but I blame Legally Blonde. Elle Woods was spunky, smart, and accomplished, and when I was 10 years old, I wanted to be just like her. ...

Finally, something in me snapped. Part of it was finally confronting the terrifying reality of taking out massive six-figure loans to finance law school. But more than that, it was the anecdotes from my jaded ex-lawyer professors, who described what daily life as a lawyer would actually be like. They described miserable 60-hour work weeks in huge firms where no one cares about you. They warned us that being a lawyer isn't all sweeping Atticus Finch speeches. There are countless thankless, painstaking tasks, grueling research, and all kinds of things that sounded pretty terrible to me when I actually stopped to think about them.

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June 11, 2015 in Legal Education | Permalink | Comments (10)

Why Is Obamacare Constitutional While DOMA Was Not?

John R. Dorocak (California State University, San Bernardino), Why is Obamacare Constitutional While DOMA Was Not? How Libertarian Is the Constitution?, 14 Conn. Pub. Int. L.J. 1 (2014):

Despite the Supreme Court's holding in NFIB, that the individual mandate of Obamacare was constitutional as a tax, Obamacare's tax may be unconstitutional under the Direct Tax Clause, the Uniformity Clause, and the Origination Clause of the U.S. Constitution. The conclusion, that Obamacare's tax and individual mandate are unconstitutional even as a tax, may seem far afield from the unconstitutionality of Obamacare as violating liberty rights, the focus of this article. However, the Obamacare legislation may now appear unconstitutional under various constitutional analyses, including as a denial of liberty rights, as a tax, as an exercise of the Commerce Clause, and as an exercise beyond the enumerated powers. Such a conclusion indicates that the various constitutional analyses are in harmony, or that the Constitution is holistic. And, more specifically, a conclusion, that the Obamacare legislation is unconstitutional under a liberty rights analysis as advanced by Justice Kennedy in Windsor and Lawrence, which suggests that the the Constitution is not only holistic but libertarian.

June 11, 2015 in Scholarship, Tax | Permalink | Comments (1)

Hastert Faces Uphill Legal Battle

HastertFollowing up on Sunday's post, NY Times: The Tax Consequences Of Dennis Hastert's Payments To Alleged Child Abuse Victim:  NBC News, Dennis Hastert Could Face Uphill Legal Battle for Allegedly Lying About Hush Money:

Dennis Hastert spoke in a whisper in a packed federal courthouse Tuesday — his first public appearance since authorities charged him last month with illegally evading banking rules and lying about it to the FBI.

But the former House speaker from Illinois — now embroiled in a sexual misconduct scandal tied to his days as a high school wrestling coach — will have to come in loud and clear to bat away the allegations.

That's because Hastert is in the middle of a legal minefield with charges that are held up not only by an apparent paper trail, but by the 73-year-old former congressman's own mouth, legal experts told NBC News.

"The paper trail is not his biggest problem," said Paul Caron, a professor at Pepperdine University School of Law. "The biggest problem is that he ran his mouth when first questioned by the FBI (last year), which opened himself up to these charges."

"Had he just shut up when questioned, the government would have a much more difficult time proving the (evading) charge," Caron added. "And the lying charge would disappear." ...

"I think the government may see the (bank withdrawal) structuring charge as a way to punish Hastert for the crime that can no longer be prosecuted," said Stephen Gillers, a law professor at New York University.

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June 11, 2015 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 763

IRS Logo 2Wall Street Journal editorial, Return of the Speech Police:

You won’t read much about it in the Beltway press corps, but a behind-the-scenes effort is under way to lobby the Federal Election Commission and Justice Department to stifle free political speech the way the Internal Revenue Service did in 2012. Don’t be surprised if the subpoenas hit Republican candidates at crucial political moments. ...

Criticism of the FEC is part of the left’s strategy to turn the commission into its agent to intimidate conservative groups and limit their political speech. The letter writing campaigns use the same accusations about “dark money” that the groups used to lobby the IRS in the 2012 election cycle.

In September 2011, Democracy 21 and the Campaign Legal Center wrote to then IRS Commissioner Douglas Shulman and Exempt Organizations Director Lois Lerner requesting an IRS probe into whether “certain organizations are ineligible for tax exempt status under section 501(c)(4).” Around the same time, the IRS created its process that targeted conservative groups. The same outfits are back at it, filling the FEC’s docket with complaints that target Republicans or GOP-leaning organizations 75% or more of the time.

If these liberal outfits don’t like Super PACs, they should look in the mirror. Super PACs are the inevitable reaction to campaign-finance limits on candidates. Instead of unleashing another round of political targeting, this time corrupting the Justice Department, true liberals should deregulate politics.

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June 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, June 10, 2015

Vatican Signs On To FATCA To Help U.S. Track Down Tax Evaders

FATCA PopeWashington Post, Vatican and the U.S. Sign Historic Agreement to Go After Tax Evaders:

The United States on Wednesday signed an agreement with the Vatican to trace American taxpayers hiding assets within the walls of the city-state, the latest step in the Holy See’s push for greater financial transparency.

The U.S. ambassador to the Holy See, Kenneth F. Hackett, signed the intergovernmental agreement with Archbishop Paul Gallagher, the Vatican’s foreign minister, bringing to an end two years of negotiations.

The deal sees the Vatican become the latest of approximately 62 countries to sign on to the U.S. Foreign Account Tax Compliance Act, a 2010 law that allows financial information to be directly reported to authorities in the U.S.

It applies only to U.S. citizens and permanent residents, not organizations, and aims to identify people who are not annually declaring all of their foreign assets to the U.S. Internal Revenue Service.

The information the Holy See is due to hand over under the law should have already been sent to the IRS by individuals, some of whom have already been warned of the new agreement.

U.S. officials would not say how many American individuals hold money at the Vatican, but the number is believed to be rather small, perhaps in the dozens, according to the Vatican Insider.

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June 10, 2015 in IRS News, Tax | Permalink | Comments (1)

Republicans Chop IRS Budget Again, Setting Up Clash With Obama

IRS Logo 2Bloomberg, Republicans Chop IRS Budget Again, Setting Up Clash With Obama:

U.S. House Republicans are proposing a 7.7 percent cut to the IRS budget, setting the boundaries for a budget standoff over the next few months.

With a $10.1 billion budget for the Internal Revenue Service, Republicans rejected President Barack Obama’s call for an 18 percent increase that would allow the beleaguered agency to end a hiring freeze and answer more phone calls from taxpayers.

The parties are now $2.8 billion apart on IRS funding -- a rounding error for the federal budget but an enormous gulf on a politically sensitive topic. ...

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June 10, 2015 in IRS News, Tax | Permalink | Comments (5)

Chronicle Of Higher Education: The Fight Over Charleston Law School

Charleston LogoChronicle of Higher Education, Terminations, Accusations, Threats: The Fight Over a Law School’s Planned Sale Gets Muddier:

These are trying times for the nation’s law schools, but few have experienced the kind of drama that Charleston School of Law has, just in the past five weeks.

On May 6 the for-profit school’s owners threatened to pull the plug on new admissions after faculty members, students, and alumni angrily protested their plan to sell the school to the InfiLaw System, a Florida-based consortium that owns three other law schools.

A few weeks later the owners reversed course, but only after terminating seven tenured faculty members who had publicly opposed the plan and buying out several others.

The American Bar Association, which had been taking a wait-and-see stance on the proposed sale, sent a fact finder to the Charleston, S.C., campus this month to determine whether the school had violated any of the ABA’s accreditation standards.

And despite assurances to critics that a sale to InfiLaw wasn’t in the works, Charleston hired a new interim president who happens to serve on the InfiLaw board.

Critics of a sale say that InfiLaw’s three schools — Arizona Summit Law School, Charlotte School of Law, and Florida Coastal School of Law — have lower standards than the Charleston school’s and that a sale would diminish the value of a Charleston law degree.

Watching all of this unfold has been "incredibly painful," says the school’s founding dean, I. Richard Gershon, who has been law dean at the University of Mississippi since 2010. "We thought we were building something that would last beyond our lifetimes," he says.

The pressures on Charleston School of Law aren’t unique. Nationwide, law schools are reeling from five straight years of declining applications that have forced many to accept fewer students, lay off faculty members, and search for new revenue sources.


But Charleston is one of the few that have come perilously close to closing. ...

Last week the school announced that Joseph D. Harbaugh, a former dean at Nova Southeastern University and the University of Richmond, had been named interim president. He serves on the national policy board of the InfiLaw System, which leads some faculty members and student leaders to believe that the owners haven’t given up on the idea of eventually making a sale.

June 10, 2015 in Legal Education | Permalink | Comments (12)

The State Tax Implications Of Paying Student Athletes

NCAAKathryn Kisska-Schulze (North Carolina A&T) & Adam Epstein (Central Michigan), "Show Me the Money!"—Analyzing the Potential State Tax Implications of Paying Student-athletes, 14 Va. Sports & Ent. L.J. 13 (2014):

On March 26, 2014, the Chicago district (Region 13) of the National Labor Relations Board (NLRB) ruled that Northwestern University football players qualify as employees and can unionize and bargain collectively, a decision which contravenes the National Collegiate Athletic Association’s (NCAA) core principle of amateurism. Shortly after, Northwestern University filed an appeal with the NLRB in Washington, D.C. to quash the prior Region 13 decision. This case has added fuel to the longstanding debate over whether student-athletes should be paid. Amidst arguments both for and against supporting the pay-for-play model from a purely compensatory stance, there has been minimal focus on the realistic implications of paying student-athletes from an income tax perspective.

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June 10, 2015 in Scholarship, Tax | Permalink | Comments (0)

Law School Applications Fall 5%; Al Brophy: We've Hit The Bottom

Wall Street Journal, Law School Applications Keep Falling:

As the cost of law school rises and the number of entry-level legal jobs stagnates, the number of law-school applicants continues to fall.

According to the latest numbers from the Law School Admission Council, 50,269 people submitted applications to nationally accredited law schools as of last week, down 2.5% from the same time last year. Those would-be lawyers applied to an average of more than six schools per person, and the total volume of applications was down 4.6% from 2014. At this point in the year, LSAC says it usually has around 95% of the year’s data collected.


Law schools have adjusted by scaling back entry-level class sizes, boosting financial aid or cutting tuition price, and trimming staff ranks.

Al Brophy (North Carolina) believes that applications have hit the bottom and stabilized after years of declines, with enrollments projected at 36,000 for the incoming class. As a result, he predicts that "things are unlikely to get worse" and that no more than a dozen law schools will close:

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June 10, 2015 in Legal Education | Permalink | Comments (4)

Smith: Challenges To Tax Regulations — The APA And The Anti-Injunction Act

Patrick J. Smith (Ivins, Phillips & Barker, Washington, D.C.), Challenges to Tax Regulations: The APA and the Anti-Injunction Act, 147 Tax Notes 915 (May 25, 2015):

In this report, Smith focuses on post-Mayo tax regulation challenges under the direct review provisions of the Administrative Procedure Act (APA). He examines how those cases overcame the procedural hurdle traditionally presented by the Anti-Injunction Act and argues that in light of the Supreme Court’s recent decision in Direct Marketing Association, the Anti-Injunction Act will likely pose much less of an obstacle to future direct APA challenges to tax regulations. 

June 10, 2015 in Scholarship, Tax | Permalink | Comments (0)

Indiana Tech Law School Denied Provisional ABA Accreditation

Indiana Tech (2014)Indiana Tech Press Release:

Indiana Tech Law School has received notification from the Council of the Section of Legal Education and Admissions to the Bar of the American Bar Association that the Council has not granted provisional accreditation approval to Indiana Tech Law School. Representatives of Indiana Tech Law School appeared at the Council during its meeting on June 5, 2015.

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June 10, 2015 in Legal Education | Permalink | Comments (1)