TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, February 23, 2016

Black Georgetown Law Students 'Shaken And Angry' At Conservatives’ Response To Scalia’s Death: #WhitePeopleProblems Of Scalia Mourners

Fraley:  Luck, Taxation And Appalachia

Jill Fraley (Washington & Lee), The Political Rhetoric of Property and Natural Resource Ownership: A Meditation on Luck, Taxation and Appalachia:

While our legal system embraces a myriad of forms of property, our political rhetoric of property narrowly speaks of individual ownership and control, fostering a strong dichotomy between public and private property. This rhetoric has also led us to embrace a "luck system" division of our natural resource wealth and to refrain from significantly taxing these resources. I compare alternative methods of natural resource ownership in democracies and suggest that poverty in natural resource rich areas such as Appalachia can only be addressed by changes in taxation of natural resource wealth.

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February 23, 2016 in Scholarship, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1020

IRS Logo 2Albuquerque Journal editorial, IRS Forces Local Tea Party to Continue Limbo Dance:

It is an abuse-of-power dance nobody wants to get asked to. But in 2009 the Internal Revenue Service held out a bamboo pole and forced the Albuquerque Tea Party to limbo. Over the next six years that pole has continued dropping, forcing the group to limbo lower now as it continues to do without the tax-free money 501(c)(4) status conveys.

Meanwhile, when the supposedly nonpartisan IRS operates as it should, an application for tax-exempt status usually takes three to six months.

Sure, there are questions about the tea party’s qualifications as a “social welfare” organization that by law is required to spend less than half its time and money on political activity. Those same questions should be applied to its counterparts on the left that couch electioneering as “education” – yet they have not. The IRS has admitted it did not give the same scrutiny to groups with a liberal or progressive bent that it has given to groups with “tea party” or similar terms in their applications.

And of course, this is the same IRS that “lost” thousands of emails by Lois Lerner, the ex-division chief in the Obama Administration who oversaw tax-exempt applications. And Lerner, a feckless bureaucratic weasel, has repeatedly pleaded the Fifth when called before Congress.

So rather than deliver a ruling after the Albuquerque Tea Party applied in 2009, the IRS has instead requested additional documents, fought lawsuits by it and other targeted groups, refused to explain itself to members of Congress, including New Mexico Republican Steve Pearce, and declined to comment even on the status of the application. In other words, the more things change, the more they stay the same.

Six years after seeking tax-exempt status the Albuquerque Tea Party remains in limbo. Neither able to move forward after approval nor appeal a negative decision. Had an audited taxpayer kept the IRS waiting that long, he or she would have been hounded, assessed interest, even locked up.

Yet the IRS forces the Albuquerque Tea Party to dance to its tune year after year without accountability to anyone for its own inaction.

The Obama administration has allowed the IRS to play its partisan music for years. The next administration must put away the limbo poles and return the agency to its mission, which in part says the IRS will “enforce the law with integrity and fairness to all.”

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February 23, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, February 22, 2016

Brooks Presents Quasi-Public Spending Today At Pepperdine, UC-Irvine

Brooks (John)John R. Brooks (Georgetown) presents Quasi-Public Spending, 104 Geo. L.J. ___ (2016), today at Pepperdine (as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine) and UC-Irvine (as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian):

The United States has increasingly designed certain public spending programs not as traditional tax-financed programs, but rather as mixtures of private expenditures, subsidies, and limited taxes. Thus part of what could have gone to the government as a tax is instead used to purchase the good or service directly, with only incremental taxes and subsidies to manage distributional goals. This Article terms this “quasi-public spending,” and argues that it is descriptive of our evolving approaches to both health care and higher education.

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February 22, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Shay Presents Inversions And Protecting A Legacy Corporate Tax Today At Minnesota

Shay (2014)Stephen E. Shay (Harvard) presents Inversions And Protecting a Legacy Corporate Tax today at Minnesota as part of its Perspectives on Taxation Lecture Series hosted by Kristin Hickman:

Tax-motivated corporate expatriations—so-called inversion transactions—are a hot topic in the world of corporate taxation. Congress has declined to respond to calls for legislative action. Treasury has stepped into the void with a pair of notices foreshadowing proposed regulations to be applied retroactively to the notice date. Mr. Shay’s presentation will cover:

  • the principal tax benefits companies seek when pursuing inversion transactions,
  • the Treasury Department's ability to respond using currently-effective regulations, and
  • available regulatory alternatives that could powerfully affect the incentive to expatriate

February 22, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NYU Tax Law Review Publishes New Issue

NYU Law (2014)The Tax Law Review has published a new issue (Vol. 68, No. 4 (Summer 2015)):

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February 22, 2016 in Scholarship, Tax | Permalink | Comments (0)

Chodorow & Hackney:  Post-Graduate Legal Training — The Case For Tax-Exempt Programs

ASUAdam Chodorow (Arizona State) & Philip Hackney (LSU), Post-Graduate Legal Training: The Case for Tax-Exempt Programs, 65 J. Legal Educ. 463 (2016):

The challenging job market for recent law school graduates has highlighted a fact well known to those familiar with legal education: A significant gap exists between what students learn in law school and what they need to be practice-ready lawyers. Legal employers historically assumed the task of providing real-world training, but they have become much less willing to do so. At the same time, a large numbers of Americans — and not just those living at or below the poverty line — are simply unable to afford lawyers. In this Article, we argue that post-graduate legal training, similar to post-graduate medical training, is a good way to address these market failures and reduce the gap in both skills and legal services.

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February 22, 2016 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

NY Times:  Owner Of Small Coffee Shop Pays More Taxes Than Facebook

FacebookNew York Times, Welsh Town Leads a British Revolt Against the Tax System and Corporations:

Fifty small businesses line the cobbled streets of Crickhowell. There is a bookstore and a bakery, a salmon smokery and a pub.

Then there is Steven Lewis’s coffee shop, Number 18 Cafe & Brasserie, which, like a lot of the other mom-and-pop operations in Crickhowell, houses a grievance that resonates far beyond the town’s borders.

Mr. Lewis, 63, a broad-chested former military man, has helped turn Crickhowell into ground zero for a revolt by small-business owners in Britain against a tax system they see as rigged against them in favor of multinational corporations like Facebook, Google and Starbucks. The town, population 2,063, has become famous for being one of Britain’s last holdouts against the encroachment of big retail chains.

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February 22, 2016 in Tax | Permalink | Comments (1)

WSJ:  Preparers Work To Make Taxes Cool, Sexy

BrassWall Street Journal, Easing the Pain of Doing Your Taxes:

Shane Mason and Lizzie Falkner sat laughing in a cozy leather booth in the back of Yours Sincerely, a dimly lit cocktail bar in Brooklyn’s Bushwick neighborhood. He was sporting shaggy blond hair and artsy spectacles; she wore a tank top and striped leggings. It looked like a date—except for the pile of W-2s stacked beside Mr. Mason’s laptop. He was doing her taxes. ...

This tax season, local accountants who get creative with their marketing—if not their deduction strategies—are coming up with ways to make filing taxes a little more fun. Or at least palatable to folks who might otherwise try to blunder through a Schedule C on their own.

Mr. Mason is a CPA with a day job preparing taxes for high-net-worth clients. But three nights a week, he sets up shop at the bar accompanied by an antique brass lamp and a little framed sign: “Resident Accountant—Get Your Taxes Done.” Consultations, starting at $135, include a free cocktail.

It sounds a bit gimmicky, but clients say it transforms a tedious chore into a bit of a lark. “I’m doing my taxes, and I’m in a bar, and I’m doing it in February,” said Ms. Falkner, who manages a yoga studio. “I’ve never done my taxes this early.” ...

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February 22, 2016 | Permalink | Comments (0)

Georgetown Conference On Taxation And European Union State Aid Law

Georgetown (2016)Georgetown is sponsoring a conference today on Taxation and European Union State Aid Law: The European Commission’s Investigation Into Whether Certain Tax Rulings Constitute State Aid (agenda) at Jones Day (Washington, D.C.):

In 2013, in response to concerns that certain EU Member States were issuing favorable tax rulings to multinationals in order to attract foreign direct investment in violation of EU competition rules, the European Commission commenced State Aid investigations. In the meantime, the Commission has concluded that a Dutch ruling, a Luxembourg ruling and Belgian rulings obtained by at least 35 companies constitute illegal State Aid, while investigations on tax rulings involving other large U.S. multinationals are ongoing and the Commission is reportedly reviewing an additional 300 rulings. These developments demonstrate the continued relevance of State Aid control in the EU action against purported harmful tax competition and corporate tax avoidance.

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February 22, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NY Times:  Contaminated Property Makes For Costly Inheritance

New York Times, Contaminated Property Makes for Costly Inheritance:

Vicki Temkin, a lawyer in suburban Los Angeles, inherited a few pieces of property when her mother died in 1999. But she was also left with the responsibility to clean up several acres of land that had been polluted by tenants over the decades.

She spent the better part of the last decade and about $1 million in cleanup fees, and that does not count the additional $1 million or more in lost rent.

“No one was happy about having to clean it up,” said Ms. Temkin, who, with her sister, inherited half of the property. (The other half went to the children of her father’s business partner.)

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February 22, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1019

IRS Logo 2The Blaze, ‘Strong Legal Limits on the IRS’: Spending Bill Takes Aim at Targeting Scandal:

After a two-year investigation, there has been little accountability in the wake of the Internal Revenue Service scandal in which many conservative groups were targeted by the taxing agency. ...

“The IRS has failed the American people by targeting individuals and organizations based on their political beliefs,” House Majority Leader Kevin McCarthy (R-Calif.) said in a statement. “That is unacceptable. The House has succeeded in putting strong legal limits on the IRS so that our government is accountable to the people.” ...

The bill will prohibit the IRS from suppressing participation in nonprofit 501(c)4 organizations. Provisions in the spending bill further prohibit money for the IRS from targeting individuals exercising their First Amendment rights to political speech.

It further prohibits money for bonuses or hiring former employees without considering that person’s employee conduct or federal tax compliance, and requires extensive reporting on IRS spending and official time.

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February 22, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, February 21, 2016

Wright Presents The Unfair Application Of Tax Penalties At Seattle

WrightDel Wright Jr. (Valparaiso) presented Improperly Burdened: The Uncertain and Sometimes Unfair Application of Tax Penalties at Seattle yesterday as part of its Poverty Law: Academic Activism conference (program):

A discussion of how the IRS, with the Tax Court’s tacit approval, has unfairly penalized mostly lowincome taxpayers by ignoring or misinterpreting two penalty protection provisions: section 6751(b)— which requires IRS supervisors to approve, in writing, all discretionary penalties, and section 7491(c)—which requires the IRS to bear the burden of the production with respect to tax penalties.

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February 21, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NY Times Special Tax Report

Harvard Prepares Students To Thrive In A Disrupted Legal Profession

Harvard Law School Logo (2014)Harvard Law Bulletin (Fall 2015), The Laws of Adaptation:

Change is coming to the legal profession—whether attorneys like it or not—and HLS is at the forefront of efforts to anticipate it, and prepare students.

The warning bells have been ringing for at least two decades: The legal profession as we’ve known it is doomed, and lawyers must adapt—or face extinction. For the most part, these dire predictions have been ignored, even as globalization and technology have revolutionized markets, affecting everything from airline travel to taxicabs. Yes, law firms have been outsourcing legal research to India, and electronic discovery is taking over some basic tasks. But lawyers have tended to see themselves as immune: a guild of highly educated advisers whose wisdom, savvy and deep understanding of a complex series of laws are irreplaceable.

Then a computer named Watson beat a human on “Jeopardy!” Now all bets are off.

Watson’s victory showed that artificial intelligence can master what was considered a uniquely human realm: using judgment to select best options after sorting through huge amounts of complex information communicated in real language. Cancer doctors from the nation’s top research institutions were among the first to recognize the broad implications. Today, they are working with the IBM Watson project to sort through massive amounts of data to try to find new ways to diagnose and cure the disease. If a computer can displace doctors—or at least, significant aspects of what doctors do—who’s next?

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February 21, 2016 in Legal Education | Permalink | Comments (8)

Google Isn’t Paying The ‘Google Tax’

GoogleBloomberg:  Google Isn’t Paying the ‘Google Tax’, by Jesse Drucker:

Close to four years ago, Europe began to notice that some of the world’s biggest technology companies were paying minimal tax on the billions of dollars they earned across the continent. Among those the U.K. and other governments criticized was Google. Despite the years of debate since, analysis of the search giant’s newly available securities filings shows that over the past three years, the effective tax rate on its non-U.S. profits has remained in the single digits—about 7 percent.

In a Feb. 11 hearing with Parliament’s public accounts committee, Google tax chief Tom Hutchinson and Matt Brittin, head of European operations, argued that Google shouldn’t be coughing up more than the $185 million in back taxes it agreed to pay following a six-year government audit. Hutchinson said his company pays close to the 20 percent corporate income tax Britain requires, which is true if you look only at the tiny sliver of profits recorded in the U.K. “We are paying the right amount,” he said. He got laughs. ...

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February 21, 2016 in Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list, with some reshuffling of the order within the Top 5:

  1. [381 Downloads]  Conservation Easements and the Valuation Conundrum, by Nancy McLaughlin (Utah)
  2. [344 Downloads]  The Taxation of Crowdfunding: Income Tax Uncertainties and a Safe Harbor Test to Claim Gift Tax Exclusion, by Paul Battista
  3. [329 Downloads]  Uncle Sam Wants … Who? A Global Perspective on Citizenship Taxation, by Allison Christians (McGill)
  4. [325 Downloads]  What Now? A Boomer's Baedeker for the Distribution Phase of Defined Contribution Retirement Plans, by Richard Kaplan (Illinois)
  5. [235 Downloads]  Profit Shifting Of U.S. Multinationals, by Tim Dowd (Joint Committee on Taxation), Paul Landefeld (Joint Committee on Taxation) & Anne Moore (Joint Committee on Taxation)

February 21, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1018

IRS Logo 2Peter J. Reilly (Forbes), IRS Rules Bingo Is For Charities Not A Charity In Itself:

[Y]ou cannot qualify an organization for exempt status if what it does is mostly run bingo games.  That was more or less the essence of Private Letter Ruling 201603039. ...

The portion of the IRS that concerns itself with exempt organizations is reeling from the fallout of the interminable scandal.  It has come in for criticism from the other side now for its granting of exempt status to Karl Rove’s Crossroads GPS, which was pretty explicitly started to avoid spending disclosure for poltical activity.  And here we have the IRS worrying about what organizations can run bingo.  Paul Streckfus has been following it in great detail in his EO Tax Journal and is advocating getting the IRS out of these matters entirely.

With its surrender to Crossroads GPS, I believe the argument for getting EO regulation out of the IRS has just been made stronger. The IRS as an institution has now demonstrated repeatedly that it is totally incapable of providing meaningful regulation of the EO sector. I recognize that Congress is partly responsible for these repeated IRS failures, but that excuse only goes so far.

I think he is right.

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February 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, February 20, 2016

This Week's Ten Most Popular TaxProf Blog Posts

A New Frontier In Tax Planning: Personal Inversions

InversionNew York Times:  Just Send the Tax Bill to My Personal Irish Subsidiary, by John Schwartz:

I want to lower my taxes. It’s one of my dreams, along with becoming taller. And younger. And much, much richer.

I can’t do anything about most of that list. I do know one way to pay less to Uncle Sam, but the only surefire method I have ever come up with is to make less money. I’ve been there. Didn’t like it.

So I’ve decided to try something more sophisticated. I’ll invert myself. ... I’d like to borrow a nifty trick from the business world, where it is called a corporate tax inversion.

It works like this: Using merger magic, American companies move their headquarters to a country with lower rates. They escape the high American corporate tax rate, and also our taxation of a company’s worldwide income. (Many other countries tax just profits within their borders.)

The beauty is that a corporation doesn’t actually have to move much of anything, except its supposed tax headquarters: Top executives can stay stateside. ...

I want to act like a corporation and enjoy the good life. How hard could it be?

I called Adam Chodorow, who teaches tax law at the Sandra Day O’Connor College of Law at Arizona State University. Professor Chodorow has expertise in many areas of tax law, with respected scholarship in his field. He also wrote a law review article, Death and Taxes and Zombies, which examined how estate and income tax laws might apply to the undead. This, my friends, is the kind of out-of-the-box thinking I was seeking. ...

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February 20, 2016 in Tax | Permalink | Comments (1)

WSJ Calls On Trump To Release His Tax Returns

TrumpWall Street Journal editorial, Donald Trump’s Tax Obligation:

One of Donald Trump’s claims to presidential competence is his business and financial success, and so he should want voters to see the proof beyond the gilded staircases. He could enhance his credibility on the point by releasing his tax returns. ...

Mr. Trump should release his returns going back at least a decade before Super Tuesday on March 1 so Republican voters can know what they’re voting for. In addition to showing how much he’s paid in taxes, the records would help clarify how much money he’s made or lost from his various businesses. Are his real-estate ventures as profitable as he purports?

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February 20, 2016 in Political News, Tax | Permalink | Comments (3)

The IRS Scandal, Day 1017

IRS Logo 2Joe Kristan (Tax Update Blog), President’s Day. Bah. Humbug.:

Today is President’s Day. ... It seems as good a day as any to ponder a well-buried scandal of the current presidency, the Tea Party scandal. It came to light with a staged admission by Lois Lerner that Tea Party groups had been singled out for "special treatment” by the IRS. The admission was intended to get in front of an Inspector General report exposing the partisan mistreatment. ...

It was never realistic to think the scandal would bring down the administration, considering how carefully the media cheerleaders avoided the subject. But the lack of presidential involvement only leads to a more disturbing conclusion, one I discussed way back when the scandal was only in single digits:

I doubt the White House left fingerprints on IRS efforts to harass political opponents (though it didn’t lift a finger to stop it).   That leads to an even more depressing possibility: that the IRS went out its way to beat up on the President’s opponents on its own.  Nobody blew the whistle.  That means IRS management is so corrupt and political that it would go after the administration’s political opponents with only a wink and a nudge.  And anybody who doesn’t think this was politically-motivated is kidding themselves.

James Taranto puts it well:

And the IRS scandal was a subversion of democracy on a massive scale. The most fearsome and coercive arm of the administrative state embarked on a systematic effort to suppress citizen dissent against the party in power. Thomas Friedman is famous for musing that he wishes America could  be China for a day. It turns out we’ve been China for a while.

The self-weaponization of the bureaucracy against its political opponents is hugely depressing. The government workforce is overwhelmingly on the side of the political party that favors an ever-larger state. There are plenty of Lois Lerners in the IRS and throughout the Leviathan. The Tea Party scandal, and the complete lack of accountability for its perpetrators, gives no reason to hope those who don’t share that worldview can expect a fair shake. That’s especially true when the sitting president shows no interest in discouraging such behavior.

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February 20, 2016 in IRS News, IRS Scandal | Permalink | Comments (1)

Friday, February 19, 2016

Pasquale:  The Unity Of Faculty Research, Service, And Teaching In Legal Education

Frank A. Pasquale III (Maryland), Synergy and Tradition: The Unity of Research, Service, and Teaching in Legal Education, 40 J. Legal Prof. 25 (2015):

Most non-profit law schools generate public goods of enormous value: important research, service to disadvantaged communities, and instruction that both educates students about present legal practice and encourages them to improve it. Each of these missions informs and enriches the others. However, technocratic management practices menace law schools’ traditional missions of balancing theory and practice, advocacy and scholarly reflection, study of and service to communities. This article defends the unity and complementarity of law schools’ research, service, and teaching roles. (For those short on time, the chart on pages 45-46 encapsulates the conflicting critiques of law schools which this article responds to.)

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February 19, 2016 in Legal Education, Scholarship | Permalink | Comments (12)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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February 19, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Cooley Craters:  Enrollment, Faculty Down 60%, Tuition Up 40%

Thomas Cooley Logo (2014)Lansing State Journal, Enrollment Up, Scores Down at Cooley:

After five years of declining enrollment, Western Michigan University Cooley Law School brought in more first-year students last year than it did the year before, according to American Bar Association data.

But only by three students.

And halting the slide seems to have come at the expense of selectivity.

Cooley has long been one of the least selective law schools in the country, but the average GPA and LSAT scores of its most recent entering class are the lower than any class at Cooley in at least a decade.

The median GPA and LSAT scores for new Cooley students last year were 2.85 and 141, respectively. Students in the 25th percentile had an average LSAT score of 138. LSAT scores range from 120 to 180. A score of 138 falls in the bottom 11 percent of scores from recent years.

Thomas Cooley

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February 19, 2016 in Legal Education | Permalink | Comments (7)

Tax Consequences Of Employee Recognition Gifts: Playstation, Elton John Concert Tickets, Dalmatian Puppy

EmployeeSan Diego Union-Tribune, Agency Funds Tent, Puppy, Playstation For Workers:

As they pay their rising water bills, customers in the Fallbrook Public Utility District have funded some interesting employee recognition gifts — a Playstation 4, an Elton John concert ticket, even a Dalmatian puppy.

The district’s “employees of the quarter” were reimbursed $100 toward their purchase of each of those perks (the puppy cost $1,430).

Other employees got entire purchases covered, according to district records. When one engineering technician hit 25 years of service last year, he bought himself a Big Agnes Copper Spur Tent for $499.95 from REI, and the utility district covered the whole expense — and threw in a nickel for an even $500. ...

The gifts are part of the district’s Employee Recognition Program, which rewards workers for a variety of achievements, including outstanding performance, and for serving the district and meeting safety goals for specified lengths of time.

According to district policy, the awards range from $25 to $500. Some are cash awards subject to income tax, some gift certificates, and some are “gifts” paid for by the employee and reimbursed by the district. Because the gifts are treated like business expenses, the reimbursements are not reported as income to the IRS. ...

The gifts may have tax implications as well. Four professors of tax law interviewed by the Union-Tribune said the program raises some interesting questions. None would agree to be quoted, but all agreed on certain rules that come into play here.

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February 19, 2016 in Tax | Permalink | Comments (1)

IRS Fails To Follow Basic Web Security Procedures, Increases Risk Of Taxpayer Identity Theft

Justice Scalia's Death Exposes Deep Divisions On Georgetown Law School Faculty

Scalia 2Washington Post, Georgetown Law Professors Argue Over How, and Whether, to Mourn Scalia:

U.S. Supreme Court Justice Antonin Scalia was polarizing in life, with his conservative views both lionized and reviled. And the response to a memorial announcement following his death this weekend was striking: It touched off a sweeping debate within Georgetown University Law School that has been both scathing and eloquent, intimate and dismissive — one that questioned not only Scalia’s legacy but whether academia had tilted so far to the left politically that norms of civil discourse had been upended.

One professor argued against the very idea of the campus community mourning Scalia’s death.

“I imagine many other faculty, students and staff, particularly people of color, women and sexual minorities, cringed at headline and at the unmitigated praise with which the press release described a jurist that many of us believe was a defender of privilege, oppression and bigotry, one whose intellectual positions were not brilliant but simplistic and formalistic,” Prof. Gary Peller, a graduate of Harvard Law School, wrote to the campus community.

That prompted a response from two professors who admired Scalia; they reacted with shock to the email, which they characterized as saying, “in effect, your hero was a stupid bigot and we are not sad that he is dead.”

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February 19, 2016 in Legal Education | Permalink | Comments (14)

The IRS Scandal, Day 1016

IRS Logo 2Watchdog.org, EPA Cleared of Bias in Alaska Mine Controversy Despite Lost Emails:

Despite acknowledging it could not obtain more than two years of emails from a key employee, the Environmental Protection Agency’s Office of Inspector General on Wednesday effectively cleared the EPA of allegations of bias in its quest to preemptively kill a proposed mine in southwest Alaska.

The troubling details of the missing emails raise charges of an EPA whitewashing, a scenario and an allegation all-too-familiar in the Obama administration. ...

More than 20 different Obama administration officials have lost or destroyed email communications. Arguably the most egregious example was the lost emails of Lois Lerner, the former IRS agent who led the office accused of targeting nonprofit conservative groups.

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February 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, February 18, 2016

Aprill Presents The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation Today At Northwestern

AprillEllen P. Aprill (Loyola-L.A.) presents The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation, 13 Pitt. Tax Rev. 43 (2015), at Northwestern today as part of its Advanced Topics in Taxation  Workshop Series hosted by Herbert Beller, Charlotte CraneDavid Cameron, Philip Postlewaite, Jeffrey Sheffield, and Robert Wootton:

As is well known, on May 10, 2013, at a session of the American Bar Association Tax Section meeting in Washington, D.C., Lois Lerner, at the time the director of the Exempt Organization Division of the Internal Revenue Service (IRS or Service), apologized for IRS mishandling of applications by Tea Party groups for exemption as social welfare groups under section 501(c)(4) of the Internal Revenue Code. A few days later, the Department of the Treasury (Treasury) Inspector General released a report (TIGTA Report) concluding that the “IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention.”

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February 18, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Lindert Presents Fiscal Redistribution In Latin America Since The 19th Century Today At UCLA

LindertPeter Lindert (UC-Davis) presents Economics Fiscal Redistribution in Latin America Since the Nineteenth Century (with Leticia Arroyo Abad (Middlebury College)) at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh and Eric Zolt:

This paper presents the first multi-country history of how Latin American government spending and taxes have reshaped the distribution of income in the long run. We combine our new historical time series for six countries with impressive recent studies of their fiscal redistribution patterns in the 21st century. The rising share of social spending has not been directed strongly toward the poor. The swings in fiscal redistribution in Chilean and Argentine history have been particularly dramatic. Latin America as a whole stands out as a region with a low rate of investment in education and infrastructure, redistributing away from future generations toward pensioners. Pension commitments have locked the region’s governments into prolonged pension deficits, a strong case of historical path dependence.

February 18, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Leff Presents Taxing Governmental Marijuana Sales Today At Indiana

LeffBenjamin Leff (American) presents Taxing Governmental Marijuana Sales at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This Article is the first to address whether independent governmental affiliates that sell marijuana are exempt from federal income tax under section 115 of the Internal Revenue Code. In the first section, I discuss the three legal requirements for tax exemption under section 115, and how these three requirements are likely to apply to a public development authority like the Cannabis Corner. In the second section, I discuss whether a government affiliate that sold marijuana might be denied tax-exempt status even if it met all the requirements of section 115 under the so-called “public policy” or “illegality” doctrine. In both these sections, I argue that it should be relatively easy for a public development authority or other governmental affiliate to sell marijuana exempt from federal taxes.

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February 18, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oei Presents The Tax Lives Of Uber Drivers Today At Duke

OeiShuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their online interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine (1) the substantive tax concerns facing forum participants, (2) how taxes affect their driving and profitability decisions, and (3) the degree of user sophistication, accuracy of legal advising, and other cultural features of the forums.

We find that while forum participants displayed generally accurate understandings of tax filing and income inclusion obligations, their approaches to expenses and deductions were less accurate and more varied in sophistication and willingness to comply with tax law. Forum participants also frequently discussed whether driving was profitable and exhibited a range of awareness concerning how taxes affected profitability. Finally, while the forums contained a surprising degree of sophisticated and accurate tax and legal advice, they also contained many examples of inaccurate or confusing information. It is thus uncertain whether readers can successfully distinguish between accurate and inaccurate advice dispensed in the forums.

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February 18, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lawsky Presents Definitional Scope In The Internal Revenue Code Today At Colorado

LawskySarah Lawsky (UC-Irvine) presents Definitional Scope in the Internal Revenue Code at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

The Internal Revenue Code is notoriously complex, both substantively and structurally. This article examines one source of structural complexity in the Internal Revenue Code: dependency among sections that stems from defined terms. In particular, the article examines what it describes as the problem of “definitional scope”: when the structure of the Code leaves unclear to what a term refers. The article provides examples of problematic definitional scope and then suggests a general solution: that those who draft tax legislation should “formalize” the proposed statutory language—translate it into logical terms—prior to its enactment. To illustrate this proposal, the article provides formalizations of two provisions of the Internal Revenue Code.

February 18, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Manhire Presents Why Lawyers (And Law Professors) Eat Last: A Workshop On Selfless Service Today At Texas A&M

A&MFollowing up on my previous post, Law School Leadership In A Time Of CrisisJack Manhire (Texas A&M) presents Why Lawyers Eat Last: A Workshop on Selfless Service and Lawyers as Leaders at Texas A&M today as part of its Professionalism & Leadership Program:

As a lawyer you’ll always be a leader. In this workshop we’ll examine some of the servant leadership principals outlined by Simon Sinek in his book, Why Leaders Eat Last, followed by a vibrant discussion on what lessons we can glean from this perspective of leading by putting others first…both as attorneys and human beings.

Simon Sinek, Leaders Eat Last: Why Some Teams Pull Together and Others Don’t (2014):

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February 18, 2016 in Book Club, Colloquia, Legal Education | Permalink | Comments (2)

NALP:  Law Students Enjoy More Robust Law Firm Recruiting

NALPNALP Press Release, Recent Recruiting Cycle Yields Highest Offer Rate - Trend Outlook Points to More Robust Recruiting:

The National Association for Law Placement (NALP) today released its annual Perspectives on 2015 Law Student Recruiting report, painting an encouraging view of law firm recruiting trends this cycle and pointing to signs of recovery in recruiting following the 2008-2009 recession and its aftermath. The data ... reveal this recent recruiting cycle to be the most robust summer associate recruiting and new associate hiring cycle since the recession.

In the last six years following the economic recession, law firms have slowly continued to increase their entry-level recruiting activity. While the size of the graduating class has gotten smaller, the average size of law firm programs has nearly recovered to pre-recession levels. Smaller graduating classes may be one factor driving law firm competition in on-campus recruiting, and new pre-OCI trends are emerging. With vigorous competition for top candidates, law firms reported an increase in the number of summer associate offers made this year, compared to last year. They also reported a staggering 95.3% offer rate from summer programs for entry-level associate positions - the highest NALP has recorded in over two decades. These findings, among other data described in the report, offer evidence that legal recruiting and hiring activity over the last two years has intensified, offering a bright outlook for 2016.

NALP, Entry-level Law Firm Recruiting Activity Again Becomes Brisk:

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February 18, 2016 in Legal Education | Permalink | Comments (4)

Treasury Department Releases New 2016 Model Income Tax Treaty

Treasury Department (2016)Treasury Department Press Release (Feb. 17, 2016), Treasury Announces Release of 2016 U.S. Model Income Tax Treaty:

Today, the Treasury Department issued a newly revised U.S. Model Income Tax Convention (the “2016 Model”), which is the baseline text the Treasury Department uses when it negotiates tax treaties.  The U.S. Model Income Tax Convention was last updated in 2006.

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February 18, 2016 in IRS News, Tax | Permalink | Comments (0)

Harvard Law Students Occupy Wasserstein Hall To Protest Lack Of Inclusiveness

The IRS Scandal, Day 1015

IRS Logo 2Albuquerque Journal, Six Years and Counting: ABQ Tea Party Still Waiting on IRS:

Six years and still counting.

That’s how long the Albuquerque Tea Party has been waiting for a ruling from the IRS on its request for tax-exempt status.

“Most people, when they file a 501(c)(4), wait three to six months and then get approval or get denied, and if they get denied they can appeal,” said Rick Harbaugh, a past president and former secretary of the board of the Albuquerque Tea Party.

“The ATP filed their request in December 2009. Several months later the IRS demanded more documentation concerning the activities of the ATP since that application date. This was done. Then several months later, the IRS again asked for an update on all activity,” including board minutes, brochures, newsletters and correspondences, Harbaugh said. “All the information we sent them was well over 1,000 pages.”

The importance of getting tax-exempt status, he explained, is that the Albuquerque Tea Party, which has about 2,500 supporters, would then be able to transfer money to and receive money from other tax-exempt entities without paying taxes on those funds. “We have been prevented from getting (tax-free) money for six years,” Harbaugh said.

In 2012, the American Center for Law and Justice, on behalf of the Albuquerque Tea Party, as well as a host of other conservative groups, filed a lawsuit against the IRS, Harbaugh said. ...

Last year, New Mexico’s sole Republican congressman, Rep. Steve Pearce, made an inquiry on behalf of the Albuquerque Tea Party concerning the organization’s request for tax exempt status.

“He was told that because of our lawsuit, they would not release any information,” Harbaugh said.

Bill Brunson, who is responsible for IRS media inquiries from New Mexico, declined to comment on the status of the Albuquerque Tea Party application for tax-exempt status.

Jay Sekulow, chief counsel for the American Center for Law and Justice, on Monday told the Journal in a written statement that although the IRS scandal is no longer in the headlines, “the unlawful and unconstitutional treatment against conservative and Tea Party organizations continues.”

The ACLJ litigation against the IRS is ongoing in federal court, and of the 38 clients the organization represents, several, including the Albuquerque Tea Party, remain in a holding pattern while the IRS delays its response to their request for tax exempt status, he said.

Sekulow called that wait of more than six years “outrageous” and said it “underscores what we have contended from the very start – the IRS is arrogant, corrupt, and incapable of self-correction.”

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February 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, February 17, 2016

Raskolnikov Presents From Deterrence to Compliance: Legal Uncertainty Reexamined Today At Penn

Raskolnikov (2015)Alex Raskolnikov (Columbia) presents From Deterrence to Compliance: Legal Uncertainty Reexamined at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

Law is imperfect. It is full of standards that are neither clear nor socially optimal. How do rational actors respond to these standards? How should we evaluate these responses? What happens when legal advisors tackle legal uncertainty? These questions have few answers in law and economics. This article investigates a model of rational decisionmaking under uncertain law from the perspective of legal compliance rather than optimal deterrence. It does so by combining economic analysis with a practical understanding of the market for legal advice. Some of the results are unsurprising from both theoretical and practical perspectives; others are unexpected.

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February 17, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

LoPucki:  Dawn Of The Discipline-Based Law Faculty

Lynn M. LoPucki (UCLA), Dawn of the Discipline-Based Law Faculty, 65 J. Legal Educ. 506 (2016):

This Article reports on an empirical study of the prevalence of Ph.D.s on law faculties, the rate at which J.D.-Ph.D.s are being hired by those faculties, the impact of that hiring on faculties’ legal experience levels, and the likely resulting future composition of law faculties. Approximately 29% of the tenure-track faculties of the top twenty-six law schools currently hold Ph.D.s, and 67% of those schools’ entry level hires in 2014 and 2015 are J.D.-Ph.D.s. Recent hiring has separated into two tracks. On the growing J.D.-Ph.D. track, both legal experience and preparation time is declining. On the fading J.D.-only track, legal experience and preparation time are increasing. Preparation time for a law teaching job is now slightly lower on the J.D.-Ph.D. track. If current hiring trends continue, a majority of the members of top twenty-six law faculties will hold Ph.D.s by 2028, and a large majority of them will have no experience in law practice. Although Ph.D.-hiring is strongly correlated with school rank, this transformation to discipline-based law faculties will not be confined to the top schools. Already, 11% of tenure-track faculty hires in the bottom quartile of law schools have Ph.D.s. When this transformation is complete, the disciplines will effectively control the scholarly agendas of American law schools.

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February 17, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

Fleischer:  How Is The Opera Like A Soup Kitchen?

Miranda Perry Fleischer (San Diego), How is the Opera Like a Soup Kitchen?, in The Philosophical Foundations of Tax Law (Oxford University Press, 2016):

The charitable tax subsidies are, at heart, redistributive. Some individuals (the recipients of charitable goods and services, such as students, museum-goers, and soup kitchen patrons) receive benefits. Other individuals pay for these benefits, both voluntarily (through donations) and involuntarily (in the form of higher taxes or reduced benefits). At first glance, it appears that the redistribution effectuated by the subsidies violates commonly-held notions of distributive justice. After all, the subsidies treat charities that serve the wealthy (like the opera) the same as charities that aid the poor (such as the soup kitchen). How can spending public funds on the wealthy in this manner be considered just? As this Chapter shows, so doing is just under expansive interpretations of resource egalitarianism and left-libertarianism that account for expensive tastes and talent-pooling. These understandings argue that individuals with expensive tastes deserve compensation to put them on equal footing with individuals with ordinary tastes when pursuing their visions of the good life – just as individuals who lack financial resources deserve compensation to put them on equal footing with the financially-advantaged when pursuing their life plans. Subsidizing not only the soup kitchen but also the opera thus helps a variety of individuals who are disadvantaged in their ability to pursue their visions of a good life to achieve those visions.

February 17, 2016 in Scholarship, Tax | Permalink | Comments (1)

Kahn & Bromberg:  The Deduction For Illegal Expenses

Florida Tax ReviewDouglas A. Kahn (Michigan) & Howard Bromberg (Michigan), The Tax Provisions Denying a Deduction for Illegal Expenses and Expenses of an Illegal Business Should Be Repealed, 18 Fla. Tax Rev. 207 (2016):

The federal income tax law denies a deduction for illegal expenses, for any expense (legal or otherwise) of an illegal business that is trafficking in controlled substances, for losses incurred by an unlawful business, and for bribes, kickbacks and rebates connected with the Medicare or Medicaid program. In this article, the authors first describe the current treatment of those items by the tax law. The authors explain that the current treatment constitutes a penalty for the taxpayer whose deduction is denied, and then explain why that penalty is a bad policy and conflicts with the traditional purposes and goals of punishing wrongful behavior.

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February 17, 2016 in Scholarship, Tax | Permalink | Comments (2)

Harrison:  Top Down v. Bottom Up Law School Leadership

LogoJeffrey Harrison (Florida), Top Down or Bottom Up:

When it comes to management that is the question, right? When should management take over and determine the ends and means for the organization. Conversely, when should those decisions be made by the workers. Under which regime are stakeholders (students, tax payers, alums) better off.  In the world of so-called faculty governance (or, more often, lack of governance) the issue gets very sticky.

When the top does not have courage, ideas, personality or anything else that would make the School better for stakeholders the default position is  bottom up.  If you add to that a lack of shared aspirations something akin to white collar looting occurs. Faculty charge into the School and take what they want. The  School's shareholders? -- screw them!

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February 17, 2016 in Legal Education | Permalink | Comments (1)

Simkovic:  The Knowledge Tax

Michael Simkovic (Seton Hall), The Knowledge Tax, 82 U. Chi. L. Rev. 1981 (2015):

Government subsidies to higher education have recently become a hot-button political issue. But what if the federal government does not actually subsidize higher education, but taxes it? Labor economists struggle to explain why the rates of return to higher education have remained much higher than the rates of return to other investments. This Article proposes a novel explanation: distortionary taxation.

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February 17, 2016 in Scholarship, Tax | Permalink | Comments (1)

ABA Standards Review Committee Approves Tougher Bar Exam Accreditation Requirement:  75% Pass Within Two Years Of Graduation

ABAABA Journal, ABA Committee Recommends Tougher, Simpler Bar Passage Accreditation Standard:

An ABA committee has voted to recommend the adoption of a tougher but simpler bar passage requirement in the law school accreditation standards.

Under the proposed new standard (PDF), approved Friday by the Section of Legal Education and Admission to the Bar’s Standards Review Committee, a law school would have to show that at least 75 percent of its graduates who took a bar exam within two years of their graduation passed.

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February 17, 2016 in Legal Education | Permalink | Comments (5)