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Monday, February 10, 2014

What Is the Value of Michael Jackson's Estate? Executor Says $7.2 Million; IRS Says $1.25 Billion  IRS Says Michael Jackson Estate Grossly Undervalued, Owes IRS $702 Million in Taxes:

If you recall, after pop singer Michael Jackson passed away in 2009 his estate executors placed the value of his estate at $7.2 million, including his likeness being valued at $2,105 and his sizable interest in the trust that owns his and The Beatles’ music catalog being worth zero. If those numbers seem a little low to you, you’re not alone. The Internal Revenue Service also believes the estimated valuations to be low — so low actually that they are not only going after hundreds of millions of dollars in back taxes, but they are doubling the additional penalties thanks to the rarely used “gross valuation misstatement penalty.”

According to documents filed with the U.S. Tax Court in Washington and obtained by the L.A. Times, the IRS estimates the value of Michael Jackson’s estate at the time of his death to be slightly more than $7.2 million — try $1.25 BILLION! (Yes, that is correct.)

The $1.178 billion difference equates to $505 million in taxes with an additional $197 million in penalties. (The IRS usually assesses a 20% penalty for underpayment, but as I mentioned above, they implemented the gross valuation misstatement penalty, which doubled the penalties to 40%.)

The IRS lists examples of some of what they have determined to be gross valuation misstatements, including Michael Jackson’s likeness — which they estimate to have been worth $434.264 million, obviously way more than the $2,105 claimed by Jackson’s executors

February 10, 2014 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

WSJ: 8th Circuit to Hear Appeal by Unsuccessful Republican Faculty Candidate Against Iowa Law School Dean

Wagner 2Following up on my previous posts (links below) about Teresa Wagner's federal lawsuit claiming she was denied a faculty position because of her conservative views:  Wall Street Journal op-ed:  A Case of Faculty Discrimination Based on Politics, by Peter Berkowitz (Stanford University, Hoover Institution):

On Feb. 13 in St. Paul, Minn., the Eighth Circuit Court of Appeals will hear arguments in Wagner v. Jones. The appeal is procedurally complex. But the legal question at the heart of the original case has potentially far-reaching implications for public and private legal education. To wit, whether a candidate for a faculty position at a state law school could provide sufficient evidence that, in violation of her constitutional rights, she had been denied employment because of her political beliefs.

In a trial concluded 15 months ago, Teresa Wagner accused the University of Iowa College of Law of violating her First Amendment right of free expression and 14th Amendment right of equal protection under the law when the school's dean, Carolyn Jones, refused to hire her for its legal analysis, writing and research program. ...

Teresa Wagner is a pro-life conservative. Her résumé showed prior employment with the National Right to Life Committee and the Family Research Council, both socially conservative organizations in Washington, D.C.

The University of Iowa's law-school faculty, like most law-school faculties, is overwhelmingly liberal. When Ms. Wagner was considered for the job, the law school had only one Republican on its 50-member faculty, according to party registration records obtained from the Iowa Secretary of State, and he had joined the faculty 25 years earlier.

In deciding whether to hire Ms. Wagner, neither her politics nor those of the law school's faculty should have been relevant. Yet the day after the law-school faculty voted to reject Ms. Wagner, in January 2007, Associate Dean Jon Carlson wrote to Dean Jones in an email, "Frankly, one thing that worries me is that some people may be opposed to Teresa serving any role, in part at least because they so despise her politics (and especially her activism about it). ... Other than by looking to politics, it is difficult to explain the law school's efforts to avoid hiring Ms. Wagner. ...

Hiring decisions should be based on candidates' merits, including their ability to vigorously present in the classroom and criticize conservative as well as progressive views. If the Eighth Circuit protects Teresa Wagner's constitutional rights, the court will also bolster legal education in America by promoting its depoliticization.

Prior TaxProf Blog coverage:

February 10, 2014 in Legal Education | Permalink | Comments (13)

Casey Mulligan: The Economist Who Exposed ObamaCare

Wall Street Journal:  Casey Mulligan: The Economist Who Exposed ObamaCare:

Mr. Mulligan studies how government choices influence the incentives and rewards for work—and many more people may recognize the University of Chicago professor as a serious economist after this week. That's because, more than anyone, Mr. Mulligan is responsible for the still-raging furor over the Congressional Budget Office's conclusion that ObamaCare will, in fact, harm growth and jobs.

Rarely are political tempers so raw over an 11-page appendix to a dense budget projection for the next decade. But then the CBO—Congress's official fiscal scorekeeper, widely revered by Democrats and Republicans alike as the gold standard of economic analysis—reported that by 2024 the equivalent of 2.5 million Americans who were otherwise willing and able to work before ObamaCare will work less or not at all as a result of ObamaCare. ...

The CBO's intellectual conversion is all the more notable for accepting Mr. Mulligan's premise, which is that what economists call "implicit marginal tax rates" in ObamaCare make work less financially valuable for lower-income Americans. Because the insurance subsidies are tied to income and phase out as cash wages rise, some people will have the incentive to remain poorer in order to continue capturing higher benefits. Another way of putting it is that taking away benefits has the same effect as a direct tax, so lower-income workers are discouraged from climbing the income ladder by working harder, logging extra hours, taking a promotion or investing in their future earnings through job training or education. ...

The new finding might have prompted a debate about the marginal tax rates confronting the poor, but—well, it didn't. Instead, liberals have turned to claiming that ObamaCare's missing workers will be a gift to society. Since employers aren't cutting jobs per se through layoffs or hourly take-backs, people are merely choosing rationally to supply less labor. Thanks to ObamaCare, we're told, Americans can finally quit the salt mines and blacking factories and retire early, or spend more time with the children, or become artists.

Mr. Mulligan reserves particular scorn for the economists making this "eliminated from the drudgery of labor market" argument, which he views as a form of trahison des clercs. "I don't know what their intentions are," he says, choosing his words carefully, "but it looks like they're trying to leverage the lack of economic education in their audience by making these sorts of points." ...

The nearby chart tracks marginal tax rates over time for nonelderly household heads and spouses with median earnings. This index is a population-weighted average over various ages, jobs, employment decisions like full-time versus part-time. Basically, the chart shows the extra taxes paid and government benefits foregone as a result of earning an extra dollar of income.

The stimulus caused a spike in marginal rates, but at least it was temporary. ObamaCare will bring them permanently into the 47% range, or seven percentage points higher than in early 2007. Mr. Mulligan says the main response to his calculations is that people "didn't realize the cumulative effect of these things together as a package to discourage work."

Mr. Mulligan is uncomfortable speculating about whether the benefits of this shift outweigh the costs. Perhaps the public was willing to trade market efficiency for more income security after the 2008 crisis. "As an economist I can't argue with that," he says. "The thing that I argue with is the denial that there is a trade-off. I argue with the denial that if you pay unemployed people you're going to get more unemployed people. There are consequences of that. That doesn't mean the consequences aren't worth paying. But you can't deny the consequences for the labor market."


Prior TaxProf Blog coverage:

February 10, 2014 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 277

TaxProf Blog Weekend Roundup

Sunday, February 9, 2014

Harvard to Compensate 11,000 Employees for Tax Error Flagged by Tax Profs Halperin and Warren

Harvard Law School LogoBloomberg: Harvard Pledges Restitution for 11,000 Employees After Tax Error:

Harvard University pledged to ensure restitution for as many as 11,000 employees after two of its faculty pointed out the impact of a tax error by the school.

Harvard erroneously reported that about $20 million worth of payments for life insurance were taxable, resulting in possibly millions of dollars in overpayments for employees beginning in 2009, law professors Alvin Warren and Daniel Halperin, both of whom specialize in tax law, said Feb. 4 in a memo to staff and faculty obtained by Bloomberg.

The university, based in Cambridge, Massachusetts, said Jan. 21 that employees who bought the life insurance plan would have to apply for refunds from the IRS on the overpayments. After Halperin and Warren pointed out that the overpayments were the university’s responsibility and that some were made too long ago to dispute with the IRS, the college said it would either compensate the overbilled employees or assist them in getting refunds. ...

Before 2009, some Harvard employees paid rates for supplemental life insurance that the IRS considered to involve taxable subsidies, the law professors’ e-mail said. When the university changed the insurance rate schedule in 2009, taxes on them should have ceased, the e-mail said.

(Hat Tip:  Eli C. Bortman.)

February 9, 2014 in Legal Education, Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #3 and #5:

  1. [222 Downloads]  Important Developments in Federal Income Taxation, by Edward A. Morse (Creighton)
  2. [217 Downloads]  What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature, by Dhammika Dharmapala (Illinos)
  3. [192 Downloads]  The Economics of Tax Law, by Daniel Shaviro (NYU)
  4. [154 Downloads]  Understanding Income Tax Deferral, by Daniel I. Halperin (Harvard) & Alvin C. Warren (Harvard)
  5. [130 Downloads]  As Certain as Death and Taxes: Consumer Considerations of Bitcoin Transactions for When the IRS Comes Knocking, by Jennifer Isom (New Mexico)

February 9, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Moving Wedding Speech by the Father of the Bride

February 9, 2014 in Legal Education, Tax | Permalink | Comments (1)

The IRS Scandal, Day 276

Saturday, February 8, 2014

Love and Law Conference Today at Pepperdine

Love and Law 2I am delighted to be moderating a panel at today's conference on Love and Law at Pepperdine:

In a provocative essay, philosopher Jeffrie Murphy asks: "What would law be like if we organized it around the value of Christian love [agape]?" Agape love is love that is focused on the good of the other and is distinguished from other forms of love—from friendship, romance, and sexual love. Murphy notes that agape love is not simply concerned with making people's lives more pleasant--it is not "cuddly." If agape is the aim, a polity might "design legal practices and institutions with a view to the moral and spiritual improvement of affected citizens." Other theological and moral traditions also wrestle with the relationship between law and religious concepts of love, including Judaism's hesed and ahava, Islam's rahman, and Hinduism's kama.

The notion of law grounded in love has a rich history. Jesus summarized the Mosaic Law as love of God and neighbor. John Calvin said that all nations' laws "must be in conformity to that perpetual rule of love." Over the centuries groups have sought to ground law in love, to good and ill effect. The idea that law should be a manifestation of love stands in tension with modern and post-modern notions that law should be solely concerned with individual autonomy or efficiency or that law is by nature only a matter of power.

Law might bear several sorts of relationships to love. Love might be the motivation behind the work of lawyers, judges, legislators, police, and politically active citizens. The adoption and enforcement of wise laws can be among the most loving things that someone can do. It may also be that law can teach and encourage love.

The idea of law grounded in love generates numerous big questions which will be addressed throughout this conference by people from the fields of philosophy, political science, law, economics, theology, and literature.

I am moderating the panel today on Love and Law, Violence and Freedom (3:45  - 5:15 p.m.):

  • Jeff Baker (Pepperdine), Trifling Violence: The U.S. Supreme Court, Domestic Violence and a Theory of Love
  • David Dominguez (BYU), Turning Juvenile Detention Hearings into Community Healing: Why Settle for the Minimum of American Law When We Are Called to Fulfill God’s Justice?
  • Jim Gash (Pepperdine), Putting Agape into Action: How the Partnership between Pepperdine Law School and the Ugandan Judiciary Sets Juvenile Prisoners Free

Other speakers include:

February 8, 2014 in Conferences, Legal Education, Tax | Permalink | Comments (0)

NY Times: The Tax Wilderness, Untamed

WildernessNew York Times:  The Tax Wilderness, Untamed, by Jonathan Wesiman:

When Americans of a certain income level sit down to do their taxes this year, they may be in for an unpleasant surprise: The tax code, already byzantine, has grown even more complex — yet the prospects for a major improvement seem to have retreated into the distance.

Major leadership changes to the tax-writing Senate Finance Committee, combined with a reluctance in the House Republican leadership to confront the issue and an Obama administration focused only on the corporate tax code, add up to a consensus in Washington: It’s virtually certain that there will be no comprehensive tax code overhaul this year, regardless of the promises that will surely ring out of the Capitol or the money that may keep flowing to Washington lobbyists promising their corporate clients that the time has finally come. ...

There is widespread agreement in Congress that the tax system needs a major overhaul.

“The fact is, the federal tax code is a dysfunctional, broken mess,” said Senator Ron Wyden, Democrat of Oregon, who has replaced Mr. Baucus at the helm of the Finance Committee. “At a time when we want a tax system that encourages growth and innovation, what we have is this jerry-built creature where there have been thousands and thousands of changes since the last major reform.”

In some circles, Mr. Wyden’s outspoken criticism had led to a degree of optimism for change. For example, Representative Charles Boustany Jr. of Louisiana, the Republican chairman of the House Ways and Means oversight subcommittee, said the transition in the Senate shouldn’t slow the cause of simplifying the tax code, which has been embraced broadly by House Republican backbenchers, though not deeply by the House Republican leadership. Mr. Camp still hopes to unveil a broad rewrite of the tax code in the coming weeks, and many House Republicans are eager to embrace the cause as a vision to take to voters — even if House leaders are reluctant.

(Hat Tip: Mike Talbert.)

February 8, 2014 | Permalink | Comments (0)

How Many 27-Year Olds Are Living in Their Parents' Basements?

AtlanticThe Atlantic:  Highly Educated, Highly Indebted: The Lives of Today's 27-Year-Olds, In Charts, by Jordan Weissmann:

A new study by the Department of Education offers up a statistical picture of young-adult life in the wake of the Great Recession.


February 8, 2014 | Permalink | Comments (0)

The IRS Scandal, Day 275

IRS Logo 2Power Line Blog op-ed:  Inside the IRS, by William Hencke:

I have been an attorney in the IRS Office of Chief Counsel for over 26 years. Over a number of years, I have attempted, largely unsuccessfully, to alert the public to abuse within the IRS. One of my kids suggested that I contact a blog and Power Line has graciously agreed to publish this account.

I do not personally know whether the IRS has targeted conservative groups or individuals, but I do know that the environment within the agency is ripe for such activity and there is nothing to prevent it from occurring. As stated in more detail below, I have personally witnessed improper giveaways of billions of dollars to taxpayers with inside access at the agency, bullying of elderly taxpayers, the cover-up of managerial embezzlement and misappropriation of thousands of dollars in government funds, and a retaliatory audit. I have also heard credible accounts of, among other things, further improper giveaways, blatant sexual harassment, and anti-Semitism. All of these matters have been swept under the rug. ...

I have no direct knowledge of harassment for political reasons. I fear, however, that the ordinary citizens recounting stories of IRS abuse due to their political beliefs are telling the truth. (It is naïve to think that IRS executives would engage in the activities described above, but somehow draw the line at politically motivated harassment.) If these taxpayer accounts are true, then the IRS executives are doing it for a very simple reason: because they can. There is no accountability for IRS misconduct and people within the agency are scared to speak out and also believe, with considerable justification, that such action would be futile.

I have chosen to speak out in part because I have personally experienced the horrific damage that bureaucratic bullies can inflict. I also have tried to live up to the admonition in Romans 12:21: do not be overcome by evil, but overcome evil with good. I could sit around and knock down Jim Beam and complain, or I could try to do something constructive about the situation. I chose the latter option.

Continue reading

February 8, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, February 7, 2014

TPC & USC Conference: Growing Income Inequality: Is Tax Policy the Cause, the Cure or Irrelevant?


The Tax Policy Center and USC Gould School of Law host a conference today on Growing Income Inequality: Is Tax Policy the Cause, the Cure or Irrelevant? (flyer) beginning at 8:30 a.m. PST (free webcast):

Panel #1:  Measuring Inequality

Panel #2:  How The Tax System Fosters Inequality

Luncheon Keynote Address:  Ron Wyden (U.S. Senator, Oregon)

Panel #3:  Tax Policy or Fiscal Policy

Panel #4:  The Income Tax as an Anti-Poverty Tool

February 7, 2014 in Conferences, Tax | Permalink | Comments (0)

Fleischer Presents The Inferiority of Pigouvian Taxes at UCLA

Fleischer Vic (2013)Victor Fleischer (San Diego) presented The Inferiority of Pigouvian Taxes at UCLA yesterday as part of its Tax Policy and Public Finance Colloquium hosted by Jason Oh, Kirk Stark, and Alexander Wu:

Pigouvian (or "corrective") taxes have become the favored policy instrument to address activities that cause negative externalities. There is considerable academic support for Pigouvian taxes on a wide range of products and activities, including carbon, gasoline, fat, high fructose corn syrup, financial transactions, executive pay, excessive zoning, and SUVs. Economists of all political stripes are therefore mystified by our politicians’ collective inability to see the merits of using Pigouvian taxes more frequently to address serious social harms.

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February 7, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Weekly Tax Roundup

Weekly SSRN Tax Roundup

February 7, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

February 7, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

ABA to Vote on Imposing Tighter Bar Exam Passage Rules and Mandatory Clinical Requirement on Law Schools

ABA Logo 2National Law Journal:  Panel Near Decision on Law Schools' Bar Exam Passage Rates, by Karen Sloan:

Following years of deliberation, the panel overhauling the ABA’s law school accreditation standards is near a decision about whether to tighten the rules governing rates of bar-examination passage by graduates.

The ABA’s Standards Review Committee will meet Friday and Saturday to discuss a range of proposals, none of which has proven as controversial as the bar-exam passage standard. Now the committee’s chairman, Saint Louis University School of Law professor Jeffrey Lewis, believes the group will finally reach a consensus. "I think we will make a decision at this next meeting," he said.

The committee has already backed off a suggestion to raise the minimum passage rate from the existing 75 percent within five years of graduation to 80 percent within two years. The National Bar Association—the largest association of black lawyers and judges—and the Society of American Law Professors this summer wrote a joint letter warning that the proposal would have "dire consequences on law schools with racially diverse populations."

Instead, the committee will discuss retaining the 75 percent passage minimum but requiring that threshold be met within two years rather than five—meaning law schools would have less time to get their graduates accredited professionally. ...

The argument is hardly new. The ABA set its specific bar-pass minimum only in 2008. Earlier, it enforced what was known as the 70/10 Rule—70 percent of school's first-time test takers had to pass within the school's home state. Alternatively, the first-time pass rate could be no more than 10 percent below the average for other ABA-accredited schools in that state. The U.S. Department of Education demanded a clearer rule, however. ...

That won’t be the only juicy matter the committee takes up. It will also consider increasing the practical-skills training that law students must complete. Existing rules require only one credit hour of so-called experiential learning, including clinics, externships and simulation-based courses. The committee is considering boosting that requirement to either six or 15 credit hours—the latter option supported by the Clinical Legal Education Association. A number of Yale Law School professors and dean Robert Post have sent the ABA letters opposing the 15 credit hour option.

The committee also will discuss whether to allow students to earn money as well as academic credit for externships—existing standards bar them from receiving both. The ABA’s law student division believes the change would "send a bold message to our nation’s law students that the ABA Section of Legal Education and Admissions to the Bar is committed to addressing some of the financial hurdles law students encounter financing their legal educations," according to a letter from the division’s leadership.

February 7, 2014 in Legal Education | Permalink | Comments (0)

Henderson & Zorn: Lateral Hiring Is Destabilizing Law Firms

American Lawyer LogoThe American Lawyer:  Is Reliance on Lateral Hiring Destabilizing Firms?, by William Henderson (Indiana) & Christopher Zorn (Penn State):

More than ever, firms look to laterals to boost profitability. But the data shows that it's not working.

In the field of evolutionary biology, a phenomenon known as Fisher's runaway provides an interesting nuance to the theory of natural selection. Under natural selection, females of a species are typically drawn to males who offer their offspring the best chance of survival. Yet, in cases of a Fisher's runaway (also known as runaway selection), the attributes that make the male more attractive for mating can, over time, reduce the survival prospects for the species as a whole.

The classic example of a Fisher's runaway is the peacock. Although the female peahen is attracted to the peacock's large, colorful tail, the tail itself offers no advantage for survival. In fact, the opposite is true: The bright colors attract the attention of predators, and the cumbersome size reduces the potential for a successful escape. Thus, to mate on the basis of large, colorful tails is to bring potential ruination to the entire species.

When it comes to the market for lateral partners, it seems a dynamic similar to a Fisher's runaway has taken hold among large U.S. law firms. We've spent hundreds of hours assembling and analyzing data about the lateral market and have yet to find a coherent story in which lateral hiring is, on balance, making most large law firms better off in the long term. Instead, we think a more likely scenario is one analogous to the peacock's tail, where an attraction to what is flashy and attention-grabbing may prove valuable (or, at least, not detrimental) during the peacock's own natural life, but not for those who follow. For the peacock, that is fine. But we suspect that most lawyers would aspire to something more.

February 7, 2014 in Legal Education | Permalink | Comments (1)

CRS: Tax Rates and Economic Growth

CRS LogoCongressional Research Service, Tax Rates and Economic Growth (R42111) (2014):

This report summarizes the evidence on the relationship between tax rates and economic growth, referring in a number of cases to other CRS reports providing more substance and detail. Potentially negative effects of tax rates on economic growth have been an issue in the debates about whether to increase taxes to reduce the deficit and whether to reform taxes by broadening the base to lowering tax rates.

Initially, it is important to make a distinction between the effects of policies aimed at short-term stimulation of an underemployed economy and long-run growth. In the short run, both spending increases and tax cuts are projected to increase employment and output in an underemployed economy. These effects operate through the demand side of the economy. In general, the largest effects are from direct government spending and transfers to lower-income individuals, whereas the smallest effects are from cutting taxes of high-income individuals or businesses.

Long-run growth is a supply-side phenomenon. In the long run, the availability of jobs is not an issue as an economy naturally creates jobs. Output can grow through increases in labor participation and hours, increases in capital, and changes such as education and technological advances that enhance the productivity of these inputs.

Historical data on labor participation rates and average hours worked compared to tax rates indicate little relationship with either top marginal rates or average marginal rates on labor income. Relationships between tax rates and savings appear positively correlated (that is, lower savings are consistent with lower, not higher, tax rates), although this relationship may not be causal. Similarly, during historical periods, slower growth periods have generally been associated with lower, not higher, tax rates.

A review of statistical evidence suggests that both labor supply and savings and investment are relatively insensitive to tax rates. Small effects arise in part because of offsetting income and substitution effects (which make the direction of effects uncertain) and in part because each of these individual responses appears small. Institutional constraints may also have an effect. Offsetting income and substitution effects also affect savings. Capital gains taxes are often singled out as determinants of growth, but their effects on the cost of capital are quite small. International capital flows also appear to have a small effect. Most expenditures that affect the productivity of labor and capital inputs (research and development, education, or infrastructure) are already tax favored or provided by the government. Small business taxes are also sometimes emphasized as important to growth, but the evidence suggests a modest and uncertain effect on entrepreneurship.

Claims that the cost of tax reductions are significantly reduced by feedback effects do not appear to be justified by the evidence, where feedback effects are in the range of 3% to 10% and can, in some cases, be negative. Because of the estimated realizations response, capital gains tax cuts have in the past been estimated to have a large revenue offset (about 60%), but more recent empirical estimates suggest one of about 20%. In general, for stand-alone rate reductions the additions to the deficit would cause tax cuts to have a larger cost both because of debt service and because of crowding out of investment, which would swamp most behavioral effects.

(Hat Tip:  Bruce Bartlett.)  Prior TaxProf Blog posts:

February 7, 2014 in Congressional News, Tax | Permalink | Comments (1)

ABA Tax Section Publishes Winter 2014 Issue of News Quarterly

ABA News QuarterlyThe ABA Tax Section has published 33 News Quarterly No. 2 (Winter 2014):

February 7, 2014 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 274

IRS Logo 2Wall Street Journal editorial:  Obama's IRS 'Confusion': New Evidence Undercuts White House Claims About IRS Motivation:

House committees are still digging into the IRS political targeting scandal, and based on a hearing Wednesday there's more to learn. The day produced more evidence blowing apart President Obama's claims that there was "not even a smidgen of corruption" or political motivation in the IRS handling of groups applying for tax-exempt status.

Mr. Obama wants Americans to believe that the targeting resulted from the confusing tax law governing nonprofits, which he says was "difficult" to interpret and resulted in mere "bureaucratic" mistakes. This is also the Administration's justification for issuing new regulations governing 501(c)(4)s that would effectively silence White House opponents this election year. Published in the Federal Register in November, the new rules cite the "lack of a clear and concise" regulation as reason for the rewrite.

House Ways and Means Chairman Dave Camp blew up this fairy tale at Wednesday's hearing with new IRS Commissioner John Koskinen. Mr. Camp unveiled a June 14, 2012 email from Treasury career attorney Ruth Madrigal to key IRS officials in the tax-exempt department, including former director Lois Lerner.

Bloomberg:  Republicans Tell IRS to Scrap Rule on Election Spending:

A proposed rule that may limit groups’ spending on elections “is an affront to free speech” and should be scrapped, congressional Republicans wrote in a letter to Internal Revenue Service Commissioner John Koskinen.

The rule, which hasn’t been finalized, could limit spending from outside groups officially classified as non-profit social welfare organizations.

The groups spent more than $310 million over the two-year 2012 election cycle, according to the Center for Responsive Politics that tracks campaign finance. Some $265 million of that -- about 85 percent -- was from organizations that align with Republicans, according to the watchdog group.

“It is our view that finalizing this proposed rule would make intimidation and harassment of the administration’s political opponents the official policy of the IRS,” said the letter released today. It was signed by House Speaker John Boehner, Senate Minority Leader Mitch McConnell and the top Republicans on committees with jurisdiction over the IRS.

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February 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, February 6, 2014

Number of Americans Who Renounced U.S. Citizenship Increased 221% in 2013, to All-Time High (68% Over Previous Record)

The Treasury Department today released its quarterly list of Americans who renounced their U.S. Citizenship or terminated their long-term U.S. residency.  Andrew Mitchell, 2013 Expatriations Increase by 221%:

The number of published expatriates for the quarter was 630, bringing the total number of published expatriates in 2013 to 2,999.  The total for the year shatters the previous record high of 1,781 set in 2011 and is a 221% increase over the 2012 total of 932.



February 6, 2014 in Tax | Permalink | Comments (5)

Universities Need Three Tenure Tracks: Research, Teaching, Both

New York Times op-ed:  A Solution for Bad Teaching, by Adam Grant (Wharton School, University of Pennsylvania):

It's no secret that tenured professors cause problems in universities. Some choose to rest on their laurels, allowing their productivity to dwindle. Others develop tunnel vision about research, inflicting misery on students who suffer through their classes.

Despite these costs, tenure may be a necessary evil: It offers job security and intellectual freedom in exchange for lower pay than other occupations that require advanced degrees.

Instead of abolishing tenure, what if we restructured it? The heart of the problem is that we’ve combined two separate skill sets into a single job. We ask researchers to teach, and teachers to do research, even though these two capabilities have surprisingly little to do with each other. In a comprehensive analysis of data on more than half a million professors, the education experts John Hattie and Herbert Marsh found that “the relationship between teaching and research is zero.” In all fields and all kinds of colleges, there was little connection between research productivity and teaching ratings by students and peers.

Currently, research universities base tenure decisions primarily on research productivity and quality. Teaching matters only after you have cleared the research bar: It is a bonus to teach well.

In my field of organizational psychology, there is a rich body of evidence on designing jobs to promote motivation and productivity. The design of the professor job violates one of the core principles: Tasks should be grouped together based on the skill sets of the individuals who hold them.

If we created three kinds of tenure rather than one, we might see net gains in both research and teaching.

A research-only tenure track would be for professors who have the passion and talent for discovering knowledge, but lack the motivation or ability to teach well. ...

A teaching-only tenure track would be for professors who excel in communicating knowledge. Granting tenure on the basis of exemplary teaching would be a radical step for research universities but it might improve student learning. In a recent landmark study at Northwestern, students learned more from professors who weren’t on the tenure track. When students took their first course in a subject with a professor who didn’t do research, they got significantly better grades in their next class in that subject. ...

The third tenure track would be for research and teaching. Professors who succeed in both could maintain this dual role, whereas those who struggle in research could eventually shift to the teaching track, and vice versa. ...

I have watched skilled researchers burn out after failing in the classroom and gifted teachers lose their positions because university policies limited the number of courses that adjunct professors could teach. Dividing tenure tracks may be what economists call a Pareto improvement: It benefits one group without hurting another. Let’s reserve teaching for professors with the relevant passion and skill — and reward it. Sharing knowledge with students should be a privilege of tenure, not an obligation.

From Professor Grant's Wharton faculty web page:

Adam Grant is an award-winning teacher, researcher, and tenured management professor at Wharton. He is the author of Give and Take: A Revolutionary Approach to Success, New York Times and Wall Street Journal bestselling book that is being translated into more than two dozen languages and has been named one of Amazon's best books of 2013, one of Fortune's five must-read business books, one of the Financial Times books of the year, one of Oprah's riveting reads, and one of the Washington Post's books every leader should read. Malcolm Gladwell recently identified Adam as one of his favorite social science writers, calling his work “brilliant.”

Adam received his Ph.D. and M.S. from the University of Michigan in organizational psychology and his B.A. from Harvard University, magna cum laude with highest honors, Phi Beta Kappa honors, and the John Harvard Scholarship for highest academic achievement.

Adam has been recognized as the single highest-rated professor in the Wharton MBA program, one of BusinessWeek's favorite professors, and one of the world's top 40 business professors under 40. His speaking and consulting clients include Google, the NFL, Merck, Pixar, Goldman Sachs, the World Economic Forum, the United Nations, the U.S. Department of State, Facebook, Estée Lauder, Apple, MTV, Johnson & Johnson, Microsoft, JP Morgan, the Royal Bank of Scotland, Nickelodeon, and the U.S. Air Force, Army, and Navy. At Wharton, he has been honored with the Excellence in Teaching Award for all of his classes and earned the Goes Above and Beyond the Call of Duty MBA Teaching Award. He has designed several experiential learning activities based on The Apprentice in which students have raised over $175,000 for the Make-A-Wish Foundation while developing leadership, influence, networking and collaboration skills.

February 6, 2014 in Legal Education | Permalink | Comments (1)

TRAC: IRS Criminal Prosecutions Up 23.4% in Obama Administration

TRAC-IRS The Transactional Records Access Clearinghouse at Syracuse University has released a report, IRS Criminal Prosecutions Rise Under Obama:

The number of criminal prosecutions referred each year by the IRS has risen by nearly a quarter — 23.4% — during the Obama administration when compared with the Bush years. Convictions are also drawing slightly longer average prison terms — 27 months under Obama versus 25 months under Bush (see Table 1).

For both administrations, the odds have been roughly 50-50 that federal prosecutors will accept an IRS referral for criminal prosecution. However, a surge in IRS criminal investigations referred under Obama has fueled an increase in the number of cases prosecuted. This has occurred even though the number of IRS fulltime criminal investigators has not grown: the average of 2,758 IRS criminal investigators during the Bush years has shrunk to 2,705 (a 2% drop) during the Obama administration.

The comparisons of the number of individuals referred to federal prosecutors by the IRS, as well as IRS staffing, are based on case-by-case information obtained by TRAC under the Freedom of Information Act from the Executive Office for United States Attorneys and the Office of Personnel Management.

Last year was a banner year for criminal prosecutions referred by the IRS. During FY 2013 the government reported 2,010 new prosecutions, a jump of 30.6 percent over the past fiscal year when the number of prosecutions totaled 1,539.



February 6, 2014 in IRS News, Tax | Permalink | Comments (0)

Taxing Privacy

Hayes R. Holderness (McDermott Will & Emery, New York), Taxing Privacy, 21 Geo. J. Poverty Law and Policy 1 (2014):

In the United States, many low-income citizens are being held to a harsher standard than wealthier citizens—these low-income citizens are being asked to relinquish their privacy in order to obtain the public assistance they need, whereas wealthier individuals are not subjected to similar levels of public scrutiny for government benefits that they claim. Giving up privacy can have devastating effects on individuals’ lives—they may suffer various dignitary harms, may experience repressed abilities to express themselves, and may even be coerced into important life decisions by the government. This situation presents a unique problem to the neediest in our society: they can either give up their privacy in order to receive benefits they are otherwise eligible for, or they can retain their private lives and suffer an economic burden in the amount of the foregone benefits.

This choice may not seem outrageous to many in the United States, but it presents a serious issue for our society. Under the current system of public benefits administration, we ask a vulnerable segment of our citizenry to surrender significantly more information about themselves to their communities and to the government than we ask of any other segment, and it is not clear that valid justifications for this system exist. Many have researched the effects of various procedural requirements for receiving various forms of public assistance. This Article follows that research and contrasts the economic effects of those requirements on eligible individuals who forego their benefits with the privacy harms created by those requirements for those who submit to them. Government actors must consider this balance to ensure that the burden we put on those receiving public assistance is fair and efficient. By considering that balance differently—through the lens of taxation—this Article hopes to shed light on a disturbing situation and to help frame the discussion for potential reform.

February 6, 2014 in Scholarship, Tax | Permalink | Comments (0)

Law Schools With the Biggest Full-Time J.D. Enrollment Declines in 2013

Matt Leichter, Which Law Schools Saw the Biggest Full-Time Enrollment Drops in 2013?:

... Is the question of the day. The bigger question is, enrollment drop since when? Most of the time media outlets will report law schools’ cumulative percent declines since the overall enrollment peak in 2010, but those aren’t necessarily descriptive. It might be more valuable to measure enrollment declines since previous trough years. For the mean average law school, those would be 2007 and 1999. ... [H]ere’s a table of cumulative law school enrollment declines [at the 179 law schools accredited prior to 2000] that’s sorted by the average of law schools’ 1999 and 2007 declines [2013 enrollment data here]:

  1. Catholic
  2. Tulsa
  3. Seton Hall
  4. Iowa
  5. Case Western
  6. Hamline
  7. Western New England
  8. Cleveland State
  9. Wayne STate
  10. Golden Gate
  11. New Hampshire
  12. Kansas
  13. Dayton
  14. Widener
  15. Capital
  16. McGeorge
  17. Samford
  18. Florida
  19. Regent
  20. Texas
  21. Thomas Cooley
  22. Temple
  23. Wisconsin
  24. Quinnipiac
  25. Toledo

February 6, 2014 in Law School Rankings, Legal Education | Permalink | Comments (2)

Careers in Tax Law: Perspectives on the Tax Profession

Careers in Tax Law The ABA Tax Section has published Careers in Tax Law: Perspectives on the Tax Profession and What It Holds for You, by John Gamino, Robb A. Longman & Matthew R. Sontag:

Designed for those considering or beginning a career in tax law, this informative guide presents a series of offerings -- autobiographies in miniature -- by a broad cross section of working tax professionals. Each contribution stands as a unique story of paths taken, choices made, and lessons learned. Each adds to a composite portrait of the profession and its possibilities for the next generation of tax lawyers. In essays divided thematically into the following chapters, over 75 tax professionals share their unique perspectives, knowledge, and experiences. Nowhere else will you find such an honest and entertaining portrayal of the tax profession and what it holds for you.

See the Forward and Table of Contents.  Contributions from Tax Profs include:

  • Edward D. Kleinbard (USC), Private Clients, Public Good, p. 124
  • George K. Yin (Virginia), Lawyer, Teacher, Public Servant, p. 127
  • Leandra Lederman (Indiana-Bloomington), It’s Not Just Teaching, p. 133
  • Alice G. Abreu (Temple), The Best Job in the World, p. 136
  • Mona L. Hymel (Arizona), The Impossible Dream?, p. 140
  • Francine J. Lipman (Chapman), The Gift That Keeps on Giving, p. 143

February 6, 2014 in Book Club, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Georgia, Florida Win 2013 ABA Law Student Tax Challenge

ABAThe ABA Tax Section has released the list of winners of the 2013 Law Student Tax Challenge:

J.D. Division:

  • 1st Place:  Georgia: Morgan L. Klinzing & Benjamin Newell (Faculty Coach: Camilla Watson)
  • 2nd Place:  Florida International: Sam Gonas & Alexander Martini
  • 3rd Place:  Washburn: Steven Iverson & Kerrilyn Russ (Faculty Coach: Lori McMillan)
  • Best Written Submission:  Pittsburgh: Yelena Cheskidova & Eduardo Santaolalla (Faculty Coach: Anthony Infanti)

LL.M. Division:

  • 1st Place:  Florida: Julie Ickes & Sara Heuer (Faculty Coach: Charlene Luke)
  • 2nd Place:  Northwestern: Hanna Lee & Thai Duong Nguyen (Faculty Coach: Herbert Beller)
  • Best Written Submission:  Northwestern: Justin Du Mouchel & Alexander Dobyan (Faculty Coach: Robert Wootton)

February 6, 2014 in ABA Tax Section, Legal Education, Tax | Permalink | Comments (0)

Slemrod & Gillitzer: Tax Systems

Tax SystemsJoel Slemrod (Michigan) & Christian Gillitzer (Ph.D. 2013, Michigan), Tax Systems (MIT Press, 2014):

Despite its theoretical elegance, the standard optimal tax model has significant limitations. In this book, Joel Slemrod and Christian Gillitzer argue that tax analysis must move beyond the emphasis on optimal tax rates and bases to consider such aspects of taxation as administration, compliance, and remittance. 

Slemrod and Gillitzer explore what they term a tax-systems approach, which takes tax evasion seriously; revisits the issue of remittance, or who writes the check to cover tax liability (employer or employee, retailer or consumer); incorporates administrative and compliance costs; recognizes a range of behavioral responses to tax rates; considers nonstandard instruments, including tax base breadth and enforcement effort; and acknowledges that tighter enforcement is sometimes a more socially desirable way to raise revenue than an increase in statutory tax rates. Policy makers, Slemrod and Gillitzer argue, would be well advised to recognize the interrelationship of tax rates, bases, enforcement, and administration, and acknowledge that tax policy is really tax-systems policy.

Avoidance, evasion, compliance, and administration are 50 percent of the real action but only 5 percent of academic research on taxation. Joel Slemrod has been dominant in rectifying this imbalance. Tax Systems consolidates his and others’ work and leads the way forward.
—Louis Kaplow, Finn M. W. Caspersen and Household International Professor of Law and Economics, Harvard Law School

Research on tax design often overlooks essential issues of policy implementation. Tax Systems addresses this important oversight, providing insightful analysis on topics including compliance, complexity, remittance, and the design of information reports. Researchers and policy-makers will find this volume a compelling demonstration of how economic analysis can inform the key questions of tax administration.
—James Poterba, Mitsui Professor of Economics, MIT, and President, National Bureau of Economic Research

February 6, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

After Raising Tuition 175% Over Past Decade, UC-Davis Law School Gives Students Voice in Budget Decisions

UC-Davis LogoNational Jurist op-ed:  Bringing Students Into the Budgeting Process, by Brett C. Burns (Senior Assistant Dean for Administration, UC-Davis) & William F. Stanger (J.D. 2014, UC-Davis):

In 2003, attending the University of California, Davis, School of Law cost $17,195 per year. This academic year, students are paying $47,286.

Like many law schools in recent years, UC Davis has invested heavily in its academic reputation and student services. The School of Law has funded building renovations, classroom technology, Career Services and Academic Success programs, and hired outstanding, high-profile faculty in an effort to remain competitive among top law schools. The great majority of the revenue that finances these efforts comes from student fees and tuition. (Other revenues come from philanthropic giving and a shrinking state appropriation.)

Law students are raising their voices and objecting to the prospect of future fee increases. UC Davis School of Law, known for its collegial and collaborative environment, is addressing budget concerns in a manner true to its reputation. Last fall, after impassioned town-hall meetings between administrators and concerned students, Dean Kevin R. Johnson encouraged students to create the Student Budget Advisory Committee.

The Committee consolidates students’ voices and formalizes student participation in the budget process, providing feedback on Law School revenues and expenditures. ... While the formation of the Student Budget Advisory Committee is not a magic bullet for the rapidly rising cost of legal education, it is a respectable and appropriate step in keeping students engaged in the budget process at UC Davis School of Law.

February 6, 2014 in Legal Education | Permalink | Comments (0)

Avi-Yonah Posts Tax Papers on SSRN

The IRS Scandal, Day 273

Continue reading

February 6, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, February 5, 2014

Avi-Yonah Presents Taxation, Inequality, and a Federal VAT Today at Penn

Avi-YonahReuven Avi-Yonah (Michigan) presents Taxation and Inequality and Designing a Federal VAT: Summary and Recommendations at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Taxation and Inequality:
The United States currently has one of the highest levels of inequality in the OECD, as measured by the Gini coefficient before taxes and transfers. In addition, numerous scholars have shown that social mobility in the United States is significantly lower than it was in the period between 1945 and 1970, when inequality was also declining. The combination of these trends is dangerous because it risks transforming the US into a society where small elites capture most of the gains, a pattern in which growth cannot be sustained over time (Acemoglu and Robinson 2012, Zingales 2013). The level of inequality in the US after taxes and transfers are taken into account is much lower, but it is still higher than in most OECD countries and the trend is still for inequality to increase. This paper explores how the US tax system can be used to counter these trends and concludes that the key is not to increase taxes on the rich (although some reforms in this direction can be adopted), but instead to adequately fund and even strengthen the social safety net. The only way to do this in the medium to longer term is to adopt a VAT.

Designing a Federal VAT:
Part I of the article explains why the US needs a federal VAT. Part II summarizes the articles dealing with design features of the federal VAT, and Part III addresses coordination issues. Part IV concludes by offering specific recommendations.

February 5, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Hines Presents Delegating Tax Today at Duke

Hines 3James R. Hines, Jr. (Michigan) presents Delegating Tax (with Kyle D. Logue (Michigan) at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Congress delegates extensive and growing lawmaking authority to federal administrative agencies in areas other than taxation, but tightly limits the scope of IRS and Treasury regulatory discretion in the tax area, specifically not permitting these agencies to select or adjust tax rates. This Article questions why tax policy does and should differ from other policy areas in this respect, noting some of the potential policy benefits of delegation. Greater delegation of tax lawmaking authority would permit policies to benefit from the expertise of administrative agencies, and afford timely adjustment to changing economic circumstances. Furthermore, delegation of the tax reform process to an independent commission or agency offers the prospect of Congress commiting itself to rational reform and long-run budget sustainability in a way that is more apt to succeed than are piecemeal legislative efforts. The Article concludes with an analysis of the constitutionality of tax delegation, noting the applicability of recent Supreme Court interpretations that Congress has broad discretion to delegate rulemaking authority to federal agencies, and that tax policy is of a kind with other federal policies.

February 5, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

NY Times: Welcome Relief for Homeowners, Until the Tax Bill Arrives

NY Times Dealbook (2013)New York Times:  Welcome Relief for Homeowners, Until the Tax Bill Arrives, by Shaila Dewan:

Come tax time, JPMorgan Chase will be able to write off the $1.5 billion in debt relief it must give homeowners to satisfy the terms of a recent settlement.

But the homeowners who receive the help will have to treat it as taxable income, resulting in whopping tax bills for many families who have just lost their homes or only narrowly managed to keep them.

They are not alone. A tax exemption for mortgage debt forgiveness, put in place when the economy began to falter in 2007, was allowed to expire on Dec. 31, leaving hundreds of thousands of struggling homeowners in financial limbo even as the Obama administration has tried to encourage such debt write-downs.

Congress routinely allows tax breaks to expire and then reinstates them, usually retroactively, as it did last year. But the stakes are high for families dealing with large declines in their home values, and reinstatement of the tax breaks is more uncertain because of a movement in Congress to broadly overhaul the tax code, which, despite its long-shot prospects in an election year, could end up eclipsing smaller tax issues. ...

The tax exemption was intended to help homeowners who are underwater — that is, who owe more on their mortgages than their homes are worth. According to the real estate data service CoreLogic, there are still more than 6.4 million households underwater.

Typically, if someone lends you money and later says you do not have to pay it back, the I.R.S. counts the amount forgiven as income, except in cases of bankruptcy or insolvency. Short sales, in which a bank agrees to let homeowners sell their homes for less than they owe (a common way of avoiding outright foreclosure), are a form of canceled debt, as are loan modifications that reduce the amount owed.


(Hat Tip: Mike Talbert.)

February 5, 2014 in Tax | Permalink | Comments (2)

Obama's Tax Rhetoric on Offshore Profits Does Not Match His Actions

Bloomberg:  Obama Tax Rhetoric on Offshore Profit Falls Shy of Action, by Richard Rubin & Jesse Drucker:

As President Barack Obama renewed his criticism of tax laws that “reward companies that keep profits abroad,” the government he leads is taking a more subtle approach -- one that’s helping some of those companies.

The U.S. is working with other major economies to curb corporate tax avoidance, an issue that has become a popular political cause in the U.K. and France. The Obama administration wants to prevent U.S. companies from being singled out by European regulators and to ensure that the U.S. doesn’t miss out on any taxes its companies start paying.

Obama’s efforts to win congressional backing for his tax proposals have stalled. That stalemate has turned the attention of companies and countries to the Organization for Economic Cooperation and Development, a government-funded group in Paris seeking to combat what’s known as base erosion and profit shifting, or the movement of income to low-tax jurisdictions.

“We feel like Treasury has been doing a good job in representing U.S. interests,” said Catherine Schultz, vice president for tax policy at the National Foreign Trade Council, whose board of directors includes Google Inc. and Pfizer Inc. “We also feel like they’ve been doing a good job in making sure that the international tax norms are not turned upside down.”

In his sixth year in office, Obama can claim relatively few accomplishments on international taxation -- an issue he used as a populist applause line during his campaigns and as recently as his Jan. 28 State of the Union address.

February 5, 2014 in Tax | Permalink | Comments (1)

University of North Carolina 17th Annual Tax Symposium

UNC 2University of North Carolina Kenan-Flagler School of Business Seventeenth Annual Tax Symposium (Jan. 17-18, 2014):

February 5, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Albany Law School Offers Buyouts to Eight Tenured Faculty

Albany logoFollowing up on my prior post, Tenured Faculty Layoffs Coming at Albany Law School?:  New York Law Journal, Albany Law Offers Buyouts to Offset Lower Enrollment:

Albany Law School and some of its professors are at odds over plans to reduce faculty size due to declining enrollment, giving rise to a broader question of whether the institution should lower its standards to save jobs.

The school on Monday offered buyouts to up to eight longer-tenured and higher-salaried professors. At the same time, the Board of Trustees, in a statement, and the law school's dean, in an interview, flatly rejected an idea, apparently promoted by some faculty, to lower admissions standards.

"A review of our declining bar passage statistics (we are now the second lowest law school in New York State for bar passage), combined with the extremely difficult employment market for our graduates, compels us to believe that we must focus on quality of applicants, not quantity," the board said in a memo Monday to faculty. "To admit students in order to increase revenues due to projected operating deficits would be both unethical and in violation of ABA standards."

Penelope Andrews, dean and president of Albany Law School, said in an interview that any discussion of lowering standards is off the table.

"We have a commitment to the people who come into the building to prepare them to practice law," Andrews said. "We have to ensure that they can succeed in our program and also pass the bar. We will not increase the number of people we admit just to fill our class. It is an ethical issue, and we will accept only students who can succeed in law school." ...

One Albany Law professor said a "small but vocal minority" of faculty want the school to lower its standards to boost its tuition revenues and lessen the chances of layoffs. "It is a very selfish, selfish endeavor," the professor said. "They are really trying to save their jobs, but they've ginned this up to make it look like we are denying academic rights."

February 5, 2014 in Legal Education | Permalink | Comments (10)

Two Tax Profs Are Among Four Florida Dean Finalists

Florida Logo (GIF)Following up on my prior posts:  two Tax Profs are among four finalists to replace outgoing dean Robert Jerry:

Donaldson said he didn’t agree with the prevailing opinion that the profession was changing that dramatically, saying it could even correct itself by 2016. “I don’t subscribe to that, but it is a good opportunity for law schools to look at their curriculum,” he said.

Update:  Gainesville Sun:  Emails in UF Law Dean Search Become Bone of Contention:

A University of Florida law school professor and member of the committee searching for a new dean for the Levin College of Law has sent an email to law school faculty warning them that their communications could be made public, reassuring them that most of their emails had been deleted “as they came in.”

“Very few of you have sent me emails, and I mostly deleted your emails as they came in,” Lyrissa Lidsky, associate dean for International Programs at UF Law, said in an email sent Sunday to law school faculty after a public records request was made for emails related to the search. “Nonetheless, I thought you might appreciate a reminder that all emails you send the search committee may be subject to being turned over to the press or public.” ...

The email raises an underlying subtext, along with other comments from faculty over the past few weeks, that faculty are concerned about discussing the candidates without reprisal.

“I actually don’t think it matters much who becomes dean but am shocked by the clamming up of the faculty,” said Jeffrey Harrison, the Stephen C. O’Connell Chair at UF Law.

Harrison also said he was disappointed by Lidsky’s cautionary note. He told her in an emailed reply, “Now, I take it you too are reminding us of how to preserve deniability. I am not sure that is becoming of someone engaged in a public search.” ...

University executive searches are a touchy topic in Florida, where state law requires the names of all applicants to be public from beginning to end. Officials have said repeatedly that having the search in the sunshine limits the number of top-tier candidates who apply, some of whom might fear reprisal from their current employers. ...

One faculty member, after discussing the search process with a reporter in a coffee shop, ran after the reporter to make sure he wasn’t going to put the faculty member’s name in the newspaper. “I don’t have tenure,” the faculty member said.

February 5, 2014 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Gamage & Shanske: The Affordable Care Act Authorizes Tax Credits on the Federal Exchanges

Tax Analysys Logo (2013)David Gamage (UC-Berkeley) & Darien Shanske (UC-Davis), Why the Affordable Care Act Authorizes Tax Credits on the Federal Exchanges, 71 State Tax Notes 229 (Jan. 27, 2014):

This Essay refutes Adler’s and Cannon’s argument that the Affordable Care Act (“Obamacare”) does not authorize premium tax credits for insurance policies purchased from the federal healthcare Exchanges. Adler’s and Cannon’s argument is the basis of challenges in a number of ongoing lawsuits, including Oklahoma ex rel. Pruitt v. Sebelius and Halbig v. Sebelius. This Essay conducts a textual analysis of the Affordable Care Act and concludes that the text clearly authorizes premium tax credits for insurance policies purchased from the federal healthcare Exchanges.

February 5, 2014 in Scholarship, Tax | Permalink | Comments (1)

Muller: The Growth of Non-JD Enrollment

The IRS Scandal, Day 272

IRS Logo 2Wall Street Journal editorial:  Taking the IRS Fifth: If Everything Was Kosher, Why Won't Lois Lerner Talk to Congress?:

Liberals are celebrating President Obama's claim that "not even a smidgen of corruption" occurred when the IRS targeted conservative groups for additional scrutiny in an election season. Less enthused must be Lois Lerner, the former director of tax-exempt organizations who invoked her Fifth Amendment right not to testify before a House committee last May. ...

The President's clairvoyance is extraordinary, since neither the Justice Department nor Congress has finished investigations. ... But hey, if the President says it's all kosher and the FBI doesn't intend to pursue criminal charges in its probe of the selective IRS screening procedures, why should Ms. Lerner take the Fifth?

Continue reading

February 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, February 4, 2014

Staudt Presents The Supercharged IPO Today at NYU

StaudtNancy Staudt (USC) presents The Supercharged IPO (with Victor Fleischer (San Diego)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

A new innovation on the IPO landscape has emerged in the last two decades, allowing owner-founders to extract billions of dollars from newly-public companies. These IPOs--labeled supercharged IPOs--have been the subject of widespread debate and controversy: lawyers, financial experts, journalists, and Members of Congress have all weighed in on the topic. Some have argued that supercharged IPOs are "brilliant, just brilliant," while others have argued they are "underhanded" and "bizarre. "

In this article, we explore the supercharged IPO and explain how and why this new deal structure differs from the more traditional IPO. We then outline various theories of financial innovation and note that the extant literature provides useful explanations for why supercharged IPOs emerged and spread so quickly across industries and geographic areas. Theory provides support for both legitimate and opportunistic uses of the supercharged IPO.

With the help of a large-N quantitative study--the first of its kind--we investigate the adoption and diffusion of this new innovation. We find that the reason parties have begun to supercharge their IPO is not linked to a desire to steal from naive investors, but rather for tax planning purposes. Supercharged IPOs enable both owner-founders and public investors to save substantial amounts of money in federal and state taxes. We conclude our study by demonstrating how our empirical findings can be used to 1) advance the literature on innovation, 2) assist firms going public in the future, and 3) shape legal reform.

Update:  Dan Shaviro blogs the workshop here.

February 4, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Syverud: There Is No Law School Crisis, Just a Management Challenge

New York Law Journal, No Easy Answers for Challenges Facing Law Schools:

SyverudSyracuse University's new chancellor offered a hopeful assessment Wednesday for the future of law schools, despite the sinking applications, enrollments and revenues that have cast a pall on many institutions.

"We do not have a crisis in legal education," Kent Syverud told more than 400 lawyers attending the presidential summit at the New York State Bar Association's annual meeting at the New York Hilton Midtown in Manhattan.

Rather, Syverud said law schools experiencing a 20 percent average increase in expenses versus revenues face what he called a "management challenge" that should be embraced as an chance to produce better and more practice-ready graduates.

"It is not even an unusual management challenge," said Syverud, who was dean of Washington University School of Law before recently taking over at Syracuse last month. "The fact that it's unusual for American law schools to see this great a swing is interesting, but in almost every other sector of our economy, including legal services, it's a management challenge that's quite familiar."

He said many schools are "embracing" their financial troubles as an "opportunity to get better" and to take on "calcified practices" that have been hard to change in the past. "Those that don't adjust are going to fail," he said. "That's a good thing, too. This is America. There is no constitutional right for you institution to continue forever without changing or evolving."

February 4, 2014 in Legal Education | Permalink | Comments (2)

IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide

IBM 2Bloomberg:  IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide, by Jesse Drucker:

IBM has reduced its tax rate to a two-decade low with help from a tax strategy that sends profits through a Dutch subsidiary. The approach, which involves routing almost all sales in Europe, the Middle East, Africa, Asia and some of the Americas through the Netherlands unit, helped IBM as it gradually reduced its tax rate over 20 years at the same time pretax income quadrupled. Then last year, the rate slid to the lowest level since at least 1994, lifting earnings above analysts’ estimates.  ...

Attracted by the Netherlands’ policies and extensive network of tax treaties, IBM joins companies such as Yahoo! Inc., Google Inc. and Cisco Systems Inc. that have used Dutch subsidiaries to cut taxes.

Offshore tax strategies like the one used by IBM are coming under increased scrutiny. In the past year, the tax-avoidance techniques of companies including Apple Inc., Google and Inc. have been the subject of U.S. Senate and U.K. Parliament hearings. Meanwhile, the Organization for Economic Cooperation and Development, a government-funded think tank, is developing a plan to fight so-called profit-shifting at the direction of the Group of 20 nations.

(Hat Tip: Bruce Bartlett.)

February 4, 2014 in Tax | Permalink | Comments (0)

IRS Releases Smartphone App IRS2Go Version 4.0

IRS App IR-2014-11 (Feb. 4, 2014), IRS Smartphone App IRS2Go Version 4.0 Now Available:

The IRS today announced the release of IRS2Go 4.0, an update to its smartphone application featuring new added features available in both English and Spanish. The redesigned IRS2Go provides new features for taxpayers to access the latest information to help them in the preparation of their tax returns. ...

There have been about 3.5 million downloads of IRS2Go since its inception in 2011. iPhone and iPod Touch users can update or download the free IRS2Go application by visiting the iTunes App Store. Android users can visit Google Play to download the free IRS2Go app. The newest version of the free mobile app offers a number of safe and secure ways for taxpayers to access other popular tools and the most up-to-date tax information, including: 

  • Refund Status
  • Free Tax Prep Providers
  • Tax Records
  • Stay Connected (Twitter, YouTube, Email)

For more information on IRS2Go, products and services through social media channels and other media products, visit

February 4, 2014 in IRS News, Tax | Permalink | Comments (0)

Survival Strategies for 'Ordinary' Law Schools

David Barnhizer (Cleveland State), Survival Strategies for "Ordinary" Law Schools:

This analysis is focused on approaches and actions that involve “ordinary” American law schools located in the middle range of competition that are not insulated from the worst of the trends. It is important to understand that for those “ordinary” law schools there is no single choice that could be effective in their struggle to adapt to the changing environment. The specific conditions for creating and implementing effective strategies vary depending on the particular law school, and the applicant and employment markets to which the school has access. These are further influenced positively or negatively by reputational and programmatic realities and opportunities, by sources and scope of funding and by the degree of competition with other law schools in the specific markets served by the law school.

Continue reading

February 4, 2014 in Legal Education | Permalink | Comments (4)

Northeastern Seeks to Hire a Tax VAP

NortheasternNortheastern seeks to hire a tax VAP:

Northeastern University School of Law is seeking applicants for a two-year appointment as visiting assistant professor in the tax area. We are seeking candidates who would teach introductory tax and corporate tax, as well as an additional course in the tax field. We are interested in candidates who will be working on a scholarly agenda and who will participate actively in the intellectual life of the law school, including presenting a paper to a faculty colloquium at some point during the visit. Interested candidates should submit a letter of interest and a cv to Professor Peter Enrich.

February 4, 2014 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)