TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, April 15, 2016

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Continue reading

April 15, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Continue reading

April 15, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Denver Seeks To Hire A Visiting Tax Prof

Denver Logo (2015)The University of Denver Sturm College of Law seeks to hire a Visiting Professor of the Practice (any rank) to teach a full-time load of five tax courses (18 quarter units or equivalent) in the Graduate Tax Program — and possibly the JD program — during the 2016-2017 academic year:

The Visiting Professor will teach mostly required courses in the Graduate Tax Program, such as Corporate Taxation; Civil & Criminal Procedure; Individual Tax Problems; Partnership Taxation; Property Transactions; Tax Accounting; and Tax Principles, Research & Writing. The Visiting Professor may also teach one or more elective courses in the Graduate Tax Program, or tax courses in the Sturm College of Law. Most courses will be taught in the evenings. The position will begin September 1, 2016, or sooner depending on the availability of the successful candidate. This is a faculty appointment with service expectations for all twelve months. This appointment is not on the tenure track, but may be renewable for another year at the discretion of the Sturm College of Law and Graduate Tax Program.

Continue reading

April 15, 2016 in Tax, Tax Prof Jobs | Permalink | Comments (1)

Blank & Osofsky:  Simplexity

Joshua D. Blank (NYU) & Leigh Osofsky (Miami), Simplexity, 65 Emory L.J. ___ (2016):

In recent years, federal government agencies have increasingly attempted to use plain language in written communications with the public. The Plain Writing Act of 2010, for instance, requires agencies to incorporate “clear and simple” explanations of rules and regulations into their official publications. In the tax context, as part of its “customer service” mission, the Internal Revenue Service bears a “duty to explain” the tax law to hundreds of millions of taxpayers who file tax returns each year. Proponents of the plain language movement have heralded this form of communication as leading to simplicity in tax compliance, more equitable access to federal programs and increased open government.

Continue reading

April 15, 2016 in Scholarship, Tax | Permalink | Comments (0)

GAO:  Two-Thirds Of All Active Corporations Paid Zero Federal Income Tax

GAO (2016)Government Accountability Office, Most Large Profitable U.S. Corporations Paid Tax but Effective Tax Rates Differed Significantly from the Statutory Rate (GAO-16-363):

In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability. Larger corporations were more likely to owe tax. Among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012. Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.


Continue reading

April 15, 2016 in Gov't Reports, IRS News, Tax | Permalink | Comments (2)

White House Infographic On Inversions: You Don't Get To Pick Your Tax Rate. Neither Should Corporations.

White House Infographic on Inversions:

Inversions — or tax maneuvers that reward U.S. corporations that declare themselves overseas residents to avoid paying taxes in America — have drawn the ire of many Americans as an example of an unfair corporate tax loophole. The Treasury Department took another step to limit inversions. Get the facts below, and then pass this on.

White House

National Review: White House Puts Out Misleading Infographic on Corporate Inversions, by Veronique de Rugy (George Mason):

This is both a terrible title and a terrible pitch to taxpayers. ... Why can’t I choose my tax rate, Uncle Sam? You think it is okay for me to be trapped in a high tax system? But then there is, of course, the fact is that people actually do make decisions in order to minimize their tax rates such as moving to lower-rate states — ask retirees if there is any tax component to the decision to move to Florida as opposed to staying in New York. ...

Continue reading

April 15, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1072

IRS Logo 2Washington Times, Federal Judge Calls IRS Untrustworthy in Tea Party Case:

A federal judge said the IRS isn’t to be trusted as he and his colleagues tried Thursday to figure out whether the tax agency is still targeting tea party groups for intrusive and illegal scrutiny.

Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit said there is strong evidence that the IRS violated the constitutional rights of the groups when it delayed their nonprofit status applications and asked inappropriate questions about their political beliefs.

The agency’s insistence that it has retrained employees and instructed managers to behave better did not mollify the judges, who said past IRS behavior doesn’t lend itself to the benefit of the doubt.

“It’s hard to find the IRS to be an agency we can trust,” Judge Sentelle said.

Continue reading

April 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, April 14, 2016

Craig Boise Named Dean At Syracuse

Boise (2016)Craig M. Boise, Dean (and Tax Prof) at Cleveland-Marshall, has been named Dean at Syracuse:

Recognized as an innovator in legal education, Craig M. Boise has been named dean of Syracuse University’s College of Law. Boise comes to Syracuse University from Cleveland-Marshall College of Law at Cleveland State University, which under his deanship made significant gains in academic programs, national rankings and fundraising. The Executive Committee of the Board of Trustees approved his appointment earlier today. Boise will assume his new role on July 1, 2016.

“Craig Boise is a dynamic and forward-thinking leader who is equally passionate about quality, access and enhancing the student experience,” says Michele G. Wheatly, vice chancellor and provost-designate. “I am impressed by his record of achievements and know the College of Law will make great strides under his leadership.”

Chancellor Kent Syverud echoed Wheatly’s sentiment, saying Boise will achieve great things as dean of the College of Law. “Craig’s bold vision and commitment to academic excellence have enhanced the student experience, improved student outcomes and positioned graduates for career success,” says Chancellor Syverud. “He is the ideal person to lead the College of Law into a new era, particularly as it seeks to enhance its global reputation and continue its ascent in national rankings.” ...

Continue reading

April 14, 2016 in Legal Education, Tax | Permalink | Comments (0)

Duncan Presents Tax Incidence In The Presence Of Tax Evasion Today At Indiana

DuncanDenvil Duncan (Indiana-Bloomington) presents Tax Incidence in the Presence of Tax Evasion (with Philipp Doerrenberg (ZEW Mannheim and Institute for the Study of Labor (IZA), Germany) at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This paper studies the economic incidence of sales taxes in the presence of tax evasion opportunities. We design a laboratory experiment in which buyers and sellers trade a fictitious good in double auction markets. A per-unit tax is imposed on sellers, and sellers in the treatment group are provided the opportunity to evade the tax whereas sellers in the control group are not. We find that the market equilibrium price in the treatment group is lower than in the control group. This difference is economically and statistically significant, and implies that sellers with access to evasion shift a smaller share of the statutory tax burden onto buyers relative to sellers without tax evasion opportunities.

Continue reading

April 14, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Doran Presents The Puzzle Of Non-Qualified Retirement Pay Today At Colorado

Doran (2015)Michael Doran (Virginia) presents The Puzzle of Non-Qualified Retirement Pay: Optimal Contracting, Managerial Power, and Taxes at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

Pay arrangements for managers of public corporations typically include substantial amounts of compensation deferred through non-qualified retirement plans. As a departure from the familiar baseline of current payment for current services, this presents a longstanding puzzle. The corporate-governance literature offers two explanations for the practice. The “optimal-contracting account” argues that non-qualified retirement pay represents “inside debt” that aligns the interests of managers with the interests of the corporation’s unsecured general creditors. The “managerial-power account” argues that non-qualified retirement pay represents “stealth compensation” that facilitates managers’ extraction of rents from corporate assets. In this paper, I set out a different explanation based on tax considerations.

Continue reading

April 14, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tenured Rutgers Law Prof Suspended From Practice Of Law For Misappropriating Client Funds

RutgersIn the Matter of Aaron Ari Afilalo, 2016 NY Slip Op 02727 (NY App. Div. Apr. 12, 2016):

Respondent, Aaron Ari Afilalo, was admitted to the practice of law in the State of New York by the First Judicial Department on January 23, 1995. ... The Departmental Disciplinary Committee (Committee) seeks an order, pursuant to the Rules of the Appellate Division, First Department (22 NYCRR) § 603.4(e)(1)(iii), immediately suspending respondent from the practice of law until further order of this Court, based upon uncontested evidence, namely, written admissions and bank records, that he, inter alia, misappropriated client funds, which misconduct immediately threatens the public interest.

Continue reading

April 14, 2016 in Legal Education | Permalink | Comments (1)

IRS Admits It Encourages Illegals To Steal Social Security Numbers To Get Tax Refunds

IRS Logo 2Forbes:  IRS Admits It Encourages Illegals To Steal Social Security Numbers For Taxes, by Robert W. Wood:

This isn’t exactly the kind of story the IRS wants buzzing around at tax time. The IRS and Justice Department normally want ‘scared straight’ stories just before Tax Day. Ideally, when an indictment or conviction for tax evasion hits the news, it makes you think twice. Somehow, you think just a bit more about all those deductions, or if you really reported all your income, before you sign your return under penalties of perjury.

Instead, we have the top dog at the IRS, the IRS Commissioner himself, admitting that, well, there’s a problem with illegal immigrants and taxes. In fact, the top IRS official this time wasn’t talking about how the IRS wipes some hard drives or can’t find emails. He wasn’t even asking for a bigger budget to give bonuses to IRS employees.

This time, he was talking about illegal immigrants, and about the IRS turning a blind eye. Or maybe worse. The IRS actually wants illegal immigrants to illegally use Social Security numbers, he suggested.

Continue reading

April 14, 2016 in IRS News, Tax | Permalink | Comments (8)

Clinical Law Prof Questions Indoctrinating Students With Social Justice Morality And Requiring Pro Bono By Students, Not Faculty And Administrators

Wall Street Journal, Law Schools Are ‘Indoctrinating Students with a Social Justice Morality,’ Says Professor:

A typical law school clinic gives students experience doing legal work for a government agency or teaming up with activists in the public-interest arena. Some schools also offer post-graduate “bridge-to-practice” fellowships with nonprofit or public-sector employers. And increasingly, pro bono service has become a graduation requirement.

Such programs teach law students and young graduates legal skills while aiding vulnerable and under-served populations, law schools say. Julie D. Lawton, a clinical professor of law at DePaul University in Chicago, worries they’ve become a form of indoctrination. ...

Ms. Lawton says many of the legal educators emphasizing social justice have a laudable goal: to try to diminish gaps in access to justice. But by dedicating so much resources into social justice programs, she argues, law schools are “imposing their own morality upon students” and limiting exposure to competing ideas. ...

Ms. Lawton doesn’t just criticize law schools for imbalance but also inconsistency.  A further challenge to the imposition of social justice morality by legal educators is the hypocrisy of pro bono requirements for law students, but not for law school faculty and administrations. If legal educators genuinely believe that mandatory pro bono is a necessary part of our collective responsibility, why are educators not arguing for a similar requirement for law school faculty?

Julie D. Lawton (DePaul), The Imposition of Social Justice Morality in Legal Education, 4 Ind. J.L. & Soc. Equality 57 (2016):

Continue reading

April 14, 2016 in Legal Education | Permalink | Comments (11)

Students Who Handwrite Notes Get Better Grades Than Students Who Type Notes On Laptops

Laptop BanFollowing up on my previous post, Princeton/UCLA Study: It Is Time To Ban Laptops In Law School Classrooms:  Wall Street Journal, Can Handwriting Make You Smarter?:

Laptops and organizer apps make pen and paper seem antique, but handwriting appears to focus classroom attention and boost learning in a way that typing notes on a keyboard does not, new studies suggest.

Students who took handwritten notes generally outperformed students who typed their notes via computer, researchers at Princeton University and the University of California at Los Angeles found. Compared with those who type their notes, people who write them out in longhand appear to learn better, retain information longer, and more readily grasp new ideas, according to experiments by other researchers who also compared note-taking techniques.

Continue reading

April 14, 2016 in Legal Education | Permalink | Comments (3)

Pandya & Utz:  Designing The Tax Treatment Of Litigation-Related Costs

Sachin S. Pandya (Connecticut) & Stephen Utz (Connecticut), Designing the Tax Treatment of Litigation-Related Costs:

This paper identifies key tax design issues for how income tax law should treat litigation-related costs paid by defendants, such as attorney fees, court courts, and payments to settle claims or satisfy judgments, fines or penalties. After discussing how US and Germany income tax law treat litigated related costs, the paper identifies four important tax-design issues: (1) how to attribute litigation-related costs to any particular income-producing activity; (2) whether to treat liability insurer payments made on a defendant’s behalf as income to that defendant; (3) whether to coordinate the tax treatment of a payer’s damages payments with the tax treatment of those receipts to the payee; and (4) whether litigation-related costs should be treated as capital expenditures related to the right to receipts established or sought to be established by the litigation itself.

Continue reading

April 14, 2016 in Scholarship, Tax | Permalink | Comments (0)

University Of California To Provide $4.5 Million Annually To Berkeley, Davis, Irvine & UCLA Law Schools For 424 Summer ($4,500) & 58 Post-Graduate ($47,500) Public Interest Fellowships

University of California (2015)Press Release, UC President Announces Public Service Law Fellowships:

Pursuing public service just got a lot easier for University of California law school students.

UC President Janet Napolitano today (April 13) announced a first-of-its-kind fellowship program to help UC law school students pursue careers in public interest law.

The President’s Public Service Law Fellowship program will award $4.5 million annually to promising law students at UC Berkeley, UC Davis, UC Irvine and UCLA. The funding will make postgraduate work and summer positions more accessible for students who want to pursue public interest legal careers but might otherwise – out of financial need – seek private sector jobs. ...

The postgraduate fellowships will provide $45,000 for graduates entering public service, plus an additional $2,500 to help defray bar-related costs. The summer fellowships provide each fellow between $4,000 to $4,500 to subsidize summer public interest law jobs.

In all, the program is expected to provide 424 summer fellowships and 58 postgraduate fellowships for students at the four top-tier law schools....

Continue reading

April 14, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1071

IRS Logo 2Washington Times, IRS Must Publicize Sensitive Tea Party Data Obtained in Targeting, Obama Administration Says:

The IRS says it has stopped targeting the tea party — but three years later, the tax agency is still holding on to the sensitive information it pried from the conservative groups through invasive questions, and officials are even vowing to make the answers public.

Groups caught up in the scandal say that is proof the targeting is continuing, and they want the IRS to expunge the information or, at the very least, to make sure it is never released.

Obama administration officials insist they have stopped targeting but say the groups are at fault for following the misguided IRS requests for information. Now, the administration says, there is nothing the tax agency can do but make the information public as the law requires.

On Thursday, a federal appeals court in Washington will be asked to referee the dispute, just one of the legal problems still plaguing the IRS after its 2013 admission that it inappropriately singled out conservative and tea party groups for intrusive scrutiny.

“They asked for things to which they were not entitled,” said Cleta Mitchell, an attorney for True the Vote, one of the tea party nonprofits that got caught up in the targeting scandal. “This is the fruit of the poisonous tree.”

The IRS acknowledged that the questions it asked were inappropriate and weren’t needed to decide on tea party groups’ applications for nonprofit status.

Questions included such sensitive information as the names of all financial contributors; lists of family members, details of their political affiliations and speculation about their plans to run for office; and details of organization members’ outside jobs.

Groups were even told that they must detail members’ private communications with their local legislators or any contact with reporters.

Tea party groups said the questions trampled on their First Amendment rights to freedom of speech and association.

Some tea party organizations, advised by their attorneys, refused to comply. Others figured that the IRS had the upper hand, so they turned over the information despite misgivings.

The IRS has apologized for the intrusive questions but still holds on to the information it gleaned from dozens of tea party groups from 2010 through 2013.

Continue reading

April 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, April 13, 2016

Senator Warren Introduces Bill To Simplify Tax Filing Endorsed By Dozens Of Tax Profs And Economists

Tax MazePress Release, Senator Warren Introduces Bill to Simplify Tax Filing:

United States Senator Elizabeth Warren (D-Mass.) today introduced the Tax Filing Simplification Act of 2016 to simplify and decrease the costs of the tax filing process for millions of American taxpayers. This year, taxpayers will spend an average of 13 hours preparing and filing their returns, and will pay $200 for tax preparation services — a cost equal to almost 10 percent of the average federal tax refund.

The legislation introduced today would direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that taxpayers can use to prepare and file their taxes directly with the federal government, if they choose to do so, and would prohibit the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services. The Act would give all taxpayers the right to download third-party-reported tax information that the IRS already has, and would provide those with simple tax situations with a return-free option.

In conjunction with the introduction of the Tax Filing Simplification Act, Senator Warren released a staff report [fact sheet] that describes how - for decades - the tax preparation industry has blocked the IRS from implementing laws that would make tax preparation and filing easier for taxpayers. Corporate capture of the filing process means that taxpayers have to absorb billions of dollars in costs and share their personal information with third parties just to file their taxes.

The legislation has been endorsed by dozens of law professors and economists including Austan Goolsbee of the University of Chicago, Emmanuel Saez of the University of California - Berkeley, and Joe Bankman of Stanford University.

Continue reading

April 13, 2016 in Congressional News, Tax | Permalink | Comments (12)

Gentry Presents Capital Gains Taxation And Entrepreneurship Today At Penn

Penn (2016)William Gentry (Williams College) presents Capital Gains Taxation and Entrepreneurship at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

The taxation of capital gains is a perennial issue in tax policy. One critical aspect for understanding the overall effects of capital gains taxation is how these taxes affect entrepreneurs. While many analyses focus on the disincentive effects created by capital gains taxes for investors in large corporations, these disincentives may be even more important for entrepreneurs. This paper discusses several mechanisms through which capital gains taxes can affect entrepreneurs’ decisions. First, capital gains taxes may create an additional level of taxation on successful entrepreneurs. Second, asymmetric taxation of capital gains and losses (in which gains are taxed more heavily than losses) may be an especially important issue for entrepreneurs; the asymmetries in the tax system may discourage entrepreneurs from taking risk. Third, much like the commonly-referenced lock-in effect of capital gains taxes on investments in stock, entrepreneurs may become locked into closely-held businesses; this lock-in effect may distort whether firms are owned by the most efficient manager for the firm. Fourth, capital gains taxes can affect the cost of capital for entrepreneurs.

Continue reading

April 13, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Hickman Presents Treasury's Retroactivity Today At Cambridge

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at Christ's College, Cambridge today at a conference on The Role of Judges in Developing the Content of Tax Law:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code

April 13, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (1)

NY Times:  European Union Calls For Big Companies To Disclose More Tax Data

New York Times, European Union Calls for Big Companies to Disclose More Tax Data:

European Union officials on Tuesday waded into the fight against international tax dodging, calling for the world’s biggest companies to disclose more data about their tax arrangements with the bloc’s member governments and to share information about offshore havens where they shelter money. ...

Continue reading

April 13, 2016 in Tax | Permalink | Comments (0)

To Close $150 Million Deficit, UC-Berkeley To Eliminate 500 Staff, 0 Faculty Jobs

UC-Berkeley (University)San Francisco Chronicle, UC Berkeley to Eliminate 500 Staff Jobs:

Financially troubled UC Berkeley will eliminate 500 staff jobs over two years to help balance its budget by 2019-20, The Chronicle has learned. Chancellor Nicholas Dirks sent a memo to employees Monday informing them of the job reductions and said they will amount to “a modest reduction of 6 percent of our staff workforce.”

Berkeley employs about 8,500 staffers, from custodians to administrators. Faculty members will not be affected. ...

Continue reading

April 13, 2016 in Legal Education | Permalink | Comments (8)

Government's $5 Billion Settlement With Goldman Sachs Will Cost Bank 70% Less, Due To Credits And Deductions To Fund Priorities Like Low Income Housing

GoldmanNew York Times, In Settlement’s Fine Print, Goldman May Save $1 Billion:

State and federal officials said on Monday that Goldman Sachs would pay $5.1 billion to settle accusations of wrongdoing before the financial crisis.

But that is just on paper. Buried in the fine print are provisions that allow Goldman to pay hundreds of millions of dollars less — perhaps as much as $1 billion less — than that headline figure. And that is before the tax benefits of the deal are included.

Continue reading

April 13, 2016 in Tax | Permalink | Comments (0)

Narcissistic Professors Give Higher Grades To Narcissistic Students

NarcInside Higher Ed, New Study Suggests That Narcissistic Business Students Thrive Under Narcissistic Professors:

Much has been written about the effects of toxic leaders in business, but a new study suggests that toxic business professors -- specifically narcissists -- wreak havoc in the classroom, at least for their more modest students. More narcissistic students, meanwhile, may benefit from having similarly self-obsessed instructors. The study’s authors argue that their findings have implications for instruction as a new generation of graduates seeks jobs in industry. [Faculty Narcissism and Student Outcomes in Business and Higher Education: A Student-Faculty Fit Analysis]

Continue reading

April 13, 2016 in Legal Education | Permalink | Comments (1)

The Taxation Of Crowdfunding

CrowdfundingPaul Battista (Law Office of Paul Battista, Manhattan Beach, CA), The Taxation of Crowdfunding: Income Tax Uncertainties and a Safe Harbor Test to Claim Gift Tax Exclusion, 64 U. Kan. L. Rev. 143 (2015):

Crowdfunding is the process of asking a large number of separate third parties for relatively small amounts of money to fund an endeavor. Although the concept of asking for financial “contributions” is not new, seeking funds from others via websites on the internet is relatively new. As with any distinctly new financing vehicle, there are many legal issues raised by crowdfunding that have not been explored or answered. One such issue is the income tax consequences associated with crowdfunding. The academy has not yet widely addressed the issues and the Internal Revenue Service (IRS) has yet to provide any formal guidance which has created a lack of clarity that needs to be addressed.

This article provides an overview of the most popular types of crowdfunding models and addresses the tax aspects of crowdfunding models that raise funds through a tax-exempt entity and that provide loans or equity investments through crowdfunding. The article also explores the tax uncertainties that arise under current income and gift tax laws and shows that the current tax laws do not provide bright-line answers to whether or not a crowdfunding transaction is taxable income or excluded from tax as a “gift.

Continue reading

April 13, 2016 in Scholarship, Tax | Permalink | Comments (0)

Utah Law Dean Runs 100-Mile Race For 100% Bar Passage/100% Professional Employment Program

100%Following up on my previous posts:

National Law Journal, Utah Law Dean Runs 100-Mile Race for 100% Bar-Pass Program:

More than 11 hours into his bid to complete a 100-mile ultramarathon on Friday, the rain began falling on Robert Adler, dean of the University of Utah S.J. Quinney College of Law. The weather worsened as night fell, leaving Adler, 60, and his fellow runners in the Zion 100 Ultramarathon slogging through an increasingly muddy trail in the dark.

Continue reading

April 13, 2016 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1070

IRS Logo 2American Center for Law and Justice, Free Speech Appellate Court’s Blistering Takedown of IRS, DOJ over Targeting Conservatives is Awe-Inspiring:

It’s one of the most stunning judicial opinions I’ve ever read.  It is as clear in its scathing retort of the Obama Administration’s IRS and DOJ as it is precise in its legal acumen.

In what can only be described as a judicial takedown, the Sixth Circuit Court of Appeals unanimously delivers a scorching rejoinder to the IRS and DOJ’s brazen refusal to comply with a federal judge (even calling into question whether the Department of Justice is even seeking to provide “justice”) in one of the ongoing federal lawsuits over the IRS targeting scandal.

What you are about to read (and if you have the time, the entire opinion is well worth reading) is the opening salvo – a line drawn in the sand – by the federal judiciary against the out-of-control, politically corrupt IRS and DOJ:

Among the most serious allegations a federal court can address are that an Executive agency has targeted citizens for mistreatment based on their political views. No citizen—Republican or Democrat, socialist or libertarian—should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so-called tea-party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called “unnecessary information.”

Yet in this lawsuit the IRS has only compounded the conduct that gave rise to it. The plaintiffs seek damages on behalf of themselves and other groups whose applications the IRS treated in the manner described by the Inspector General. The lawsuit has progressed as slowly as the underlying applications themselves: at every turn the IRS has resisted the plaintiffs’ requests for information regarding the IRS’s treatment of the plaintiff class, eventually to the open frustration of the district court. At issue here are IRS “Be On the Lookout” lists of organizations allegedly targeted for unfavorable treatment because of their political beliefs. Those organizations in turn make up the plaintiff class. The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders. Instead the IRS now seeks from this court a writ of mandamus, an extraordinary remedy reserved to correct only the clearest abuses of power by a district court. We deny the petition.

The entire opinion is a blistering exposition of the IRS’s intractable refusal to comply with not only the law but the federal courts as well.

The Sixth Circuit highlights this mind-blowing statement from the federal district judge in this case (and yes what you are about to read is extraordinarily rare from a federal judge):

My impression is the government probably did something wrong in this case. Whether there’s liability or not is a legal question. However, I feel like the government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can, so that by the time there is a result, nobody is going to care except the plaintiffs. . . . I question whether or not the Department of Justice is doing justice.

That statement, from a federal judge no less, cuts directly to the core of the IRS targeting scandal itself.  The Obama Administration’s IRS attempted to shutdown and silence conservative groups.  When it was caught, it attempted to stonewall and drag its heels with Congress.  Now it is trying to evade the reach of the federal courts.  It’s astonishing

But what the IRS did next was even more brazenly astounding.  It filed a writ of mandamus, which is reserved for “‘exceptional circumstances’ involving a ‘judicial usurpation of power’ or a ‘clear abuse of discretion.’”

That’s right, the IRS accused a federal district judge of usurping its power, merely by requiring the IRS to provide simple information about the names of the IRS officials involved in the IRS targeting and a list of the groups targeted – a simple, legally required step in a class action lawsuit.

Continue reading

April 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, April 12, 2016

Shay Presents R&D Tax Incentives: Growth Panacea Or Budget Trojan Horse? Today At Georgetown

Shay (2014)Stephen E. Shay (Harvard) presents Essay on R&D Tax Incentives: Growth Panacea or Budget Trojan Horse? (with J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas)) at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Research and development (R&D) activity has long held a privileged place in the U.S. income tax system and in policy debates. The premises for R&D tax incentives, however, are grounded in theory regarding a market failure for investment in R&D that does not align well with the target of U.S. R&D tax incentives. Moreover, factors contributing to innovation are now understood to include, in addition to R&D, other “knowledge-based capital” (KBC) investment in training and other human capital development, developing organizational processes, computer software, and architectural and engineering designs. The combination of existing R&D tax incentives, income shifting, and deferral of foreign income from U.S. tax, with intellectual property protection for successful R&D, result a poorly designed mix of overlapping benefits only loosely related to fostering innovation. Proposed “innovation box” tax incentives would add to the incoherence of the existing incentives.

Continue reading

April 12, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kahng Presents Who Owns Human Capital? Today At NYU

Kahng (2017)Lily Kahng (Seattle) presents Who Owns Human Capital?, 93 Wash. U. L. Rev. ___ (2016), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers. The Article’s analysis further reveals the tax law’s fundamental capital-labor distinction to be questionable, perhaps even illusory, an insight which has profound implications for the tax law.

April 12, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Harvey, Kleinbard Fact-Check Bernie Sanders's Claim That U.S. Multinationals Owe $620 Billion In U.S. Taxes On Cash Stashed Overseas

UC-Berkeley Sex Harassment Scandal Exposes 'Double Standard' Over Professor Protections

UC-Berkeley (University)Following up on my previous posts:

San Jose Mercury-News, UC Berkeley Sex Harassment Scandal Exposes 'Double Standard' Over Professor Protections:

Along with the embarrassing revelations, UC Berkeley's sexual harassment scandal has exposed what a growing chorus of critics call a double standard: While university staffers were routinely fired or forced to resign, tenured faculty members who committed similar transgressions received lighter sanctions and were allowed to keep their jobs.

Continue reading

April 12, 2016 in Legal Education | Permalink | Comments (1)

Browde:  The Need For Increased Penalties To Deter Tax Identity Theft

Florida Tax Review  (2015)Pippa Browde (Montana), Many Unhappy Returns: The Need for Increased Tax Penalties for Identity Theft-Based Refund Fraud, 18 Fla. Tax Rev. 53 (2015):

The growing problem of fraudulent tax returns being submitted based on stolen identities is a “tsunami of fraud,” and victims, lawmakers, and law enforcement are struggling with how to deal with the fallout. The issues surrounding identity theft-based tax fraud are complex. Current IRS efforts to stem the tide involve pouring resources into assisting victims, updating IRS processes to detect and prevent refund fraud, and increasing the number of criminal investigations and prosecutions it pursues. The IRS’s approach and pending proposed legislation are not enough to address the problems created by identity theft-based tax fraud. This article argues the IRS and Congress must use a holistic approach to attack this specie of tax fraud. To that end, this article supports enhanced criminal penalties and proposes new civil tax penalties aimed specifically at identity theft tax fraud.

This article pursues two goals. First, it documents and explains the problem of identity theft-based refund fraud, highlighting particular issues with respect to tax compliance. In so doing it analyzes existing civil and criminal tax penalties to punish and deter identity thieves, an analysis which reveals that existing criminal penalties are insufficient and that there is no directly applicable existing civil penalty. Second, to address the gaps in existing law, the article proposes standards for Congress to use in crafting a comprehensive penalty scheme to apply to identity theft-based refund fraud.

Continue reading

April 12, 2016 in Scholarship, Tax | Permalink | Comments (1)

McCormack:  Postpartum Taxation

Shannon McCormack (University of Washington), Postpartum Taxation: The Internal Revenue Code and the Opt Out Mom, 104 Geo. L.J. ___ (2016):

Legislation seeking to ensure that women receive equal pay for equal work has been on the books for decades. Nevertheless, the average American woman still receives less than eighty cents for every dollar earned by the average American man. Happily, the gender pay gap between men and childless women is narrowing over time. Meanwhile, the gap between mothers and others continues to widen. Career interruptions contribute significantly to this disturbing trend — nearly half of mothers opt out of the workforce at some point in their lives, most often to care for young children. Faced with too-short (or non-existent) maternity leaves, inflexible work schedules and the soaring costs of childcare in the United States, this opt out phenomenon is hardly surprising. But with the decision to opt out comes grave cost. Over 90% of opt out moms want to return to the workforce several years after off ramping. Unfortunately, many discover that they are unable to do so. A mother that does manage to reenter the workforce will find that even a short off ramp results in a sizeable and disproportionate reduction in her annual earnings that will persist for every year of her remaining life.

Continue reading

April 12, 2016 in Scholarship, Tax | Permalink | Comments (7)

Are Financially Desperate Law Schools Using A ‘Reverse Robin Hood Scheme’ To Stay Afloat By Exploiting Poor And Minority Students?

Robin Hood 2Chronicle of Higher Education op-ed:  Are Financially Desperate Law Schools Using a ‘Reverse Robin Hood Scheme’ to Stay Afloat?, by Aaron Taylor (St. Louis; Director, Law School Survey of Student Engagement):

Plummeting law-school enrollments across the country have made seats in entering classes more accessible than at any time in recent memory. That can be both good news and bad news for black and Latino students aspiring to practice law.

Continue reading

April 12, 2016 in Legal Education | Permalink | Comments (2)

Hasen:  Taxation And Innovation

David Hasen (Colorado), Taxation and Innovation: A Sectorial Approach:

A number of tax rules have been adopted or proposed to promote innovation. The primary justification for these rules is that they can be effective in reducing or eliminating chronic market failure in the innovation sector. This paper argues that special tax rules for innovation generally are inappropriate. The basic circumstance giving rise to market failure in the innovation sector is the positive externality associated with information production. Special tax rules do not correct the externality; they merely compensate for it through other mechanisms that themselves create deadweight loss. In place of special tax rules that promote innovation, policy makers should adopt rules that counteract disproportionately large tax-induced distortions in the innovation sector. Among these distortions is excess risk-taking, a phenomenon attributable to the lognormal nature of returns to risk-bearing.

April 12, 2016 in Scholarship, Tax | Permalink | Comments (0)

Making Better Use Of The First And Last Five Minutes Of Class

SmallJames Lang (Professor of English and Director of Center for Teaching Excellence, Assumption College; ), Small Changes in Teaching (March 2016):

The First Five Minutes of Class:

The opening five minutes offer us a rich opportunity to capture the attention of students and prepare them for learning. They walk into our classes trailing all of the distractions of their complex lives — the many wonders of their smartphones, the arguments with roommates, the question of what to have for lunch. Their bodies may be stuck in a room with us for the required time period, but their minds may be somewhere else entirely.

It seems clear, then, that we should start class with a deliberate effort to bring students’ focus to the subject at hand. Unfortunately, based on my many observations of faculty members in action, the first five minutes of a college class often get frittered away with logistical task. ...

I offer four quick suggestions for the first few minutes of class to focus the attention of students and prepare their brains for learning.

  1. Open with a question or two. ...
  2. What did we learn last time? ...
  3. Reactivate what they learned in previous courses. ...
  4. Write it down. ... Let a writing exercise help you bring focus and engagement to the opening of every class session. Build it into your routine. Class has begun: time to write, time to think.

In writing, as in learning, openings matter. Don’t fritter them away.

The Last Five Minutes of Class:

In my experience — having observed many dozens of college courses over the past two decades — most faculty members eye the final minutes of class as an opportunity to cram in eight more points before students exit, or to say three more things that just occurred to us about the day’s material, or to call out as many reminders as possible about upcoming deadlines, next week’s exam, or tomorrow’s homework.

At the same time, we complain when students start to pack their bags before class ends. But why should we be surprised by that reaction when our class slides messily to a conclusion? We’re still trying to teach while students’ minds — and sometimes their bodies — are headed out the door. We make little or no effort to put a clear stamp on the final minutes of class, which leads to students eyeing the clock and leaving according to the dictates of the minute hand rather than the logic of the class period. ... [L]et us turn to better ways we can make better use of the final five minutes in class.

Continue reading

April 12, 2016 in Book Club, Legal Education, Teaching | Permalink | Comments (0)

The IRS Scandal, Day 1069

IRS Logo 2Politico, The Ghost of Lois Lerner:

Probably the biggest news to come out Sunday was President Barack Obama’s defense of Democratic frontrunner Hillary Clinton’s handling of classified information while secretary of State on “Fox News Sunday” — and his assertion that Clinton won’t get any special treatment from a Justice Department investigation. Well, you probably have a decent idea of how conservative commentators Karl Rove and George Will responded to that notion.

“In the midst of what was supposed to be a Justice Department investigation of Lois Lerner and the IRS, and the president said prejudging the whole process, there is not a smidgeon of evidence of a scandal at the IRS,” Will said. “Now, we know that the Justice Department investigation was a sham. It was part of the cover-up. They gave the investigation to an Obama contributor working in the Justice Department.” (Both Democrats and the Justice Department found that the IRS handled tea party applications incompetently, but without “criminal intent,” as Justice put it.)

Continue reading

April 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, April 11, 2016

Oh Presents How The Rich Drive Progressive Marginal Tax Rates Today At Pepperdine

OhJason S. Oh (UCLA) presents How the Rich Drive Progressive Marginal Tax Rates at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

Why do income tax systems consistently feature progressive marginal rates? The existing literature tells a political story focusing on the preferences of the poor and middle class – high rates at the top of the rate schedule can fund greater redistribution. This Article argues that progressive marginal rates can alternatively be explained by focusing on the preferences of the middle class and the rich regarding the bottom of the rate schedule. Specifically, these groups benefit from inframarginal rate cuts at low levels of income. This alternative explanation of marginal rate progressivity is attractive because it focuses on the rich, a group which intuition and research suggest wields disproportionate political power.

Continue reading

April 11, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Fleischer Presents Alpha: Labor Is The New Capital Today At UC-Irvine

Fleischer (2016)Victor Fleischer (San Diego) presents Alpha: Labor is the New Capital at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

What taxpayers report as capital gains income is often a form of labor income in disguise. This is especially true at the very top of the income distribution, where a large and rising share of national income is derived from partnership allocations of carried interest, the sale of founders’ stock, and the sale of investment services partnership interests. Rich people sometimes say they are lightly taxed because they have investment income. This is not always true. Often, they are lightly taxed because corporate executives, founders of technology companies, and investment fund managers earn income that measures the value of their labor by reference to the value of a capital asset, thus transforming labor income into capital gains. This kind of income—what I call alpha income—accounts for the lion’s share of the recent rise of income inequality in the United States.

Continue reading

April 11, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

2015-16 College Faculty Salaries

Top Private University Faculty Salaries for Full Professors, 2015-16 (Average)

1. Columbia University $236,300
2. University of Chicago $232,400
3. Stanford University $229,600
4. Harvard University $220,200
5. Princeton University $215,900
6. New York University $205,600
7. Yale University $203,500
8. Massachusetts Institute of Technology $202,600
9. University of Pennsylvania $202,000
10. Johns Hopkins University $200,900

Top Public University Faculty Salaries for Full Professors, 2015-16 (Average)

Continue reading

April 11, 2016 in Legal Education | Permalink | Comments (7)

NYU Hosts 7th Annual Tax Movie Night

Hemel:  The Vanguard Case Reconsidered

VanguardDaniel Hemel (Chicago), The Vanguard Case Reconsidered, 150 Tax Notes 1466 (Mar. 21, 2016):

Recent news reports have suggested that the Vanguard Group family of mutual funds may need to quadruple investors’ fees to cover corporate income tax liabilities. Professor Reuven Avi-Yonah has estimated that Vanguard’s federal tax liability for the 2007-2014 period is roughly $34.6 billion. For the more than 20 million investors in Vanguard funds, the potential financial implications of the tax dispute are significant: Vanguard would presumably pass its tax costs along to customers, leading to higher expense ratios and lower returns. For observers of the IRS, the issue is an important one as well: A $34.6 billion recovery from Vanguard would be multiples more than what the IRS has ever recouped from a taxpayer in a transfer pricing case.

Continue reading

April 11, 2016 in Scholarship, Tax | Permalink | Comments (1)

Caron & Soled:  New Prominence Of Tax Basis In Estate Planning

Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers), New Prominence of Tax Basis in Estate Planning, 150 Tax Notes 1569 (Mar. 28, 2016):

In this article, Caron and Soled discuss how section 1014(b)(6) offers a bridge for taxpayers to maximize the tax basis they have in their assets. Whether Congress should retain this anachronistic provision is an open issue. The authors explain the historical background of section 1014(b)(6), demonstrate the potential income tax savings from applying it, and outline several planning strategies to achieve those savings.

April 11, 2016 in Scholarship, Tax | Permalink | Comments (1)

Should Law Schools Give Summer Grants To Faculty For Teaching Projects As Well As For Research?

Summer GrantsMost law schools offer summer research grants.  The latest Society of American Law Teachers survey reports summer research grant awards at 82 law schools (41% of all law schools), ranging from $3,000 at Gonzaga (ranked #132 in U.S. News) to $27,500 at Georgia (#33).  Only one of the Top 25 law schools (Iowa) responded to the SALT survey, and anecdotal evidence suggests that summer research grants are much higher at those schools, often 2/9 of salary. The Best Practices for Legal Education blog "suggests that in addition to research grants, schools consider summer teaching innovation grants":

At Georgia State, like at many schools, our dean has encouraged us to integrate experiential learning throughout the curriculum.  And, he has put his money where his mouth is.

Faculty can compete for  summer teaching innovation grants which are funded at the same level as research grants. Both junior and senior faculty members have taken advantage of the summer grant  opportunities to either revamp existing courses or create new ones.

Continue reading

April 11, 2016 in Legal Education, Scholarship, Teaching | Permalink | Comments (2)

Washington Post:  Law Professors Say Posting ‘All Lives Matter’ Flier Was ‘Incident Of Intolerance'

AUALMFollowing up on my previous posts:

Washington Post, Law School Professors Say Posting ‘All Lives Matter’ Flier Was an ‘Incident of Intolerance’:

Earlier this month, someone left a hand-written flier on the door of a faculty member’s office at American University’s Washington College of Law that read, “All Lives Matter.” It didn’t go unnoticed.

That phrase — to some, code language for a racist rejection of an important cultural wake-up call, for others, an idealistic appeal for a simple, more universal truth — set off a series of reactions.

A large group of faculty were offended, saying the phrase was used by white supremacists. Students held a community forum.

And a couple of professors on a national civil-rights commission asked the dean, incredulously, “What is wrong with your faculty and staff members?”

The variety of responses, and their intensity, illustrated how fraught the topic of race is on campuses across the country, how divisive, and how alert people are to differences. ...

Continue reading

April 11, 2016 in Legal Education | Permalink | Comments (16)

The IRS Scandal, Day 1068

IRS Logo 2Patriot Post, IRS Meets Some Justice:

The Internal Revenue Service long has been exposed in its overtly political and sleazy maneuvering, but little has been done thus far to hold rogue bureaucrats to account. Fortunately, the Sixth Circuit Court of Appeals took a step toward halting the deny-delay-and-destroy tactics of this government agency. ...

For just shy of three years, Barack Obama’s weaponized tax-collecting agency has fought to hide data being sought by conservative groups the IRS targeted in the 2012 election cycle. Specifically, the IRS petitioned for a writ of mandamus to block the discovery efforts of the plaintiffs.

But the Sixth Circuit has ordered that the taxpayer-funded agency immediately turn over requested information about its activity. Writing for the unanimous three-judge appellate panel, Judge Raymond Kethledge noted that mandamus is “an extraordinary remedy reserved to correct only the clearest abuses of power by a district court.” In other words, the offense was greeted with a flat denial of the IRS’s petition.

The Court’s response begins: “Among the most serious allegations a federal court can address are that an executive agency has targeted citizens for mistreatment based on their political views. No citizen — Republican or Democrat, socialist or libertarian — should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration.”

The Cincinnati-based three-judge appeals panel charged with this matter has lost patience with the legal representation of the IRS. And who represents the IRS in this lawsuit that’s clearly being avoided only through the lack of cooperation? None other than the Obama Justice Department.

Judge Kethledge authored the decision and wrote that the Justice Dept. lawyers “have a long and storied tradition of defending the nation’s interests and enforcing its laws — all of them, not just selective ones — in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition. We expect that the IRS will do better going forward.”

Continue reading

April 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, April 10, 2016

2016 Religious Law School Rankings

Firm in the Faith (pre-Law Magazine, Spring 2016):

As gay marriage and other cultural changes sweep the nation, the most devout law schools seek to hold onto their core beliefs.

Religious Law Schools

2014 Religious Law School Rankings:

We compiled a ranking based on the following: percentage and activity of students who belong to the faith; percentage and activity of faculty who belong to the faith; number of religion-focused courses and other ways the school incorporates the faith into the curricula; religion-based journals, centers and clinics; religious services and clergy at the law school; mission of the law school.

Continue reading

April 10, 2016 in Law School Rankings, Legal Education | Permalink | Comments (3)

Bernie Sanders’s False Claim That He Has Released His Full Federal Tax Returns

FalseWashington Post Fact Checker, Bernie Sanders’s False Claim That He Has Released His Full Federal Tax Returns:

Jake Tapper: “Let’s talk about taxes, specifically about your tax returns. I have to say, I’m kind of surprised that you haven’t gone further on transparency. You released the summary page of your 2014 tax returns. Hillary Clinton has posted on her website the last eight years of her personal returns, all of the returns. Before the New York primary, will you match her? Will you post your full returns for the last eight years?”

Bernie Sanders: “You know who does our tax returns? My wife does our tax returns. We’ve been a little bit busy lately. So we will get out as much information as we can. There ain’t going to be very much exciting in that. I get a salary from the United States Senate, you know, there’s not going to be anything new in it that people haven’t seen for the last many years, but we will get it out as soon as we can.”

Tapper: “But nobody has seen them at all, I guess, is the point, and whether or not there’s anything exciting in them –“

Sanders: “No, that is not true. That is not true. Of course, we have released them in the past. Our financial situation, to the best of my knowledge, has not changed very much, but we will get out all of that information as soon as we can.”

Continue reading

April 10, 2016 | Permalink | Comments (2)