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Friday, September 26, 2014

Weekly SSRN Tax Roundup

September 26, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Call For Tax Papers: Summer 2015 SEALS Annual Conference

SEALs Logo (2013)Jennifer Bird-Pollan (Kentucky) has issued a call for tax papers for the 2015 SEALS Annual Conference to be held July 27 - August 2 in Boca Raton, Florida:

Although summer 2015 seems miles away, it is already time to submit proposals for the next SEALS conference, to be held July 27 - August 2, 2015. As I have done in years past, I am happy to organize and submit for consideration panels and discussion sessions on tax topics. For the past several years we have had successful Tax Policy Discussion groups, consisting of 10 to 12 tax scholars presenting for only 5 to 10 minutes each, but then participating as a group in a larger discussion of issues in tax policy, broadly defined. In addition, there have been several tax panels each year, consisting of 4 to 5 panelists discussing a more narrow tax topic. If you are interested in participating in a Tax Policy Discussion Group, or if you have a paper you’d like to present as part of a panel, but are looking for others to join with you, please let me know. Proposals are due at the end of October, so if you could let me know of your potential interest by Friday, October 10, that would be great.

September 26, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Nine Law Schools Offer Online Tax LL.M. Degrees

National JuristAccording to the National Jurist and other sources, nine law schools now offer an online Tax LL.M. degree:

September 26, 2014 in Legal Education, Tax | Permalink | Comments (0)

The U.S. News Law School Rankings and the Rise of Transfer Students

Bruce M. Price (San Francisco) & Sara Star (Miller Starr Regalia, Walnut Creek CA), The Elephant in the Admissions Office: The Influence of U.S. News & World Report on the Rise of Transfer Students in Law Schools and a Modest Proposal for Reform, 49 U.S.F.L. Rev. ___ (2014):

U.S. News (2015)Students who perform well after the first year of law school are increasingly transferring to schools ranked higher by U.S. News to maximize their chances of getting a law firm job immediately following graduation. This phenomena raises two fundamental and understudied issues: how students make the decision to seek to transfer to a higher-ranked and higher-tier law school, and why such law schools are willing to admit transfer students into their second-year class who they were not willing to admit initially. The first issue we explore through interviews with students who transferred as well as those who could have transferred but chose not to. The second issue we explore by highlighting the persuasiveness of U.S. News as a determinant of law school status and the ways in which the magazine has spawned the growth and development of law school competition for transfer students. We conclude that the scale and magnitude of the phenomenon of transfer students is affecting significantly the practices and procedures of all law schools, and that this phenomenon is driven by U.S. News’s failure to account for the LSAT scores and UGPAs of students that both transfer into and out of law schools when determining rankings. We conclude with a modest proposal that the ABA and U.S. News should require law schools to provide the metrics of incoming transfer students and exclude the metrics of departed transfer students.

September 26, 2014 in Law School Rankings, Legal Education | Permalink | Comments (3)

Why is Thomas Piketty's 700-Page Book a Bestseller?

PikettyThe Guardian, Why is Thomas Piketty's 700-Page Book a Bestseller?:

Thomas Piketty is a French economist whose Capital in the Twenty-First Century has swept American discourse. Four experts – Brad DeLong, Tyler Cowen, Stephanie Kelton and Emanuel Derman – take on why that is.

There’s been a bizarre phenomenon this year: a young, little-known French economist has written a 700-page tome about economic inequality – dense with data, historical examples from France, and a few literary references to Jane Austen.

That’s not the strange part. This is: it’s a bestseller.

Somehow, Capital in the Twenty-First Century by Thomas Piketty has become a conversation piece among well-read people. Its graphic red-and-ivory cover is inescapable. Early in its launch, it hit No 1 on Amazon’s bestseller list and the paper version – a doorstop in punishing, heavy hardcover – sold out in major bookstores.

Piketty’s main argument is this: that invested capital – in the stock market, in real estate – will grow faster than income.

The implications of that are deep: to have invested capital, you must have money already. If you rely on income, as most people do, you will likely never catch up to the wealth of people who are already rich. The 1% and the 99% enshrined by Occupy are not an anomaly of our time, Piketty’s research suggests. It’s a structural feature of capitalism. Piketty’s work – which has been in progress for over a decade – is a natural pairing with the Occupy movement, which also questions the premises of capitalism.

You can see the appeal of such an argument, which has driven the book to become a cultural touchpoint. Seattle quoted Piketty in its minimum-wage law. The book has had so many reviews and articles that it’s possible for someone to feel as if they have read it even without cracking the cover.

Which raises the question: why this book? The themes that Piketty brings up have been enshrined in discussion about progressive economists for decades. No fewer than three Nobel Prize winners – Joseph Stiglitz, Paul Krugman and Robert Solow – have all devoted much of their careers to studying inequality. On Friday, 19 September, I moderated a panel at the Washington Center for Equitable Growth that included Solow as well as economists Brad DeLong, Tyler Cowen and Russ Roberts. For 90 minutes, they hammered out the implications of Piketty’s work -- and the discussion ended with much more to say.

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September 26, 2014 in Book Club, Tax | Permalink | Comments (3)

The IRS Scandal, Day 505

IRS Logo 2Washington Free Beacon:  Politico's Epic Fail in Their Lois Lerner Interview, by Larry O'Connor:

Unrepentant political hack Lois Lerner finally broke her 16-month silence by granting Politico an exclusive interview Monday. She was flanked by not one, but two lawyers running interference for any challenging questions from reporter Rachael Bade.

However, if Politico had been more diligent in approaching their “big get” with a reporter who was well versed in the charges against Lerner and the conflicting narratives that have been floated by the IRS, Department of Justice, and the administration since May 2013, they would have had a fantastic interview with a plethora of challenging moments that might have ended with Lerner’s lawyers shutting down the interview before it could end.

Instead, Lerner had the opportunity to tell her story without the benefit of a real challenge on the facts of the case and how they conflict with the carefully crafted narrative told to Ms. Bade during the headline-grabbing exclusive.

Probably the most glaring example of Politico letting Lerner lie about her involvement in the IRS scandal and the subsequent cover-up comes in one of Lerner’s rhetorical tricks involving the mysteriously crashed hard-drives that contained emails related to the scandal.

Lerner is allowed to pose a rhetorical question that Ms. Bade (and apparently her editors at Politico) cannot or refuse to answer for their readers:

“How would I know two years ahead of time that it would be important for me to destroy emails, and if I did know that, why wouldn’t I have destroyed the other ones they keep releasing?”

We, the reader, never hear Ms. Bade’s answer and her editors never research the issue in any real way to inform us of the facts behind Lerner’s supposed “gotcha” moment.

The truth is divulged in a Wall Street Journal analysis of evidence uncovered via a congressional investigation, not a puff piece bit of rah-rah “journalism.” (emphasis mine)

As to Ms. Lerner’s behavior, consider that House Ways & Means Chairman Dave Camp first sent a letter asking if the IRS was engaged in targeting in June, 2011. Ms. Lerner denied it. She engineered a plant in an audience at a tax conference in May 2013 to drop the bombshell news about targeting (maybe hoping nobody would notice?). She has subsequently asserted a Fifth Amendment right to silence in front of the only people actually investigating the affair, Congress. Now we learn that her hard drive supposedly defied modernity and suffered total annihilation about 10 days after the Camp letter arrived.

The answer to Lerner’s suggestion is pretty simple. “Ms. Lerner, there is a letter from Chairman Camp asking you about the tea party group targeting in June of 2011. Your hard drives ‘crashed’ ten days after you received that letter. Why are you pretending you didn’t learn about the targeting until 2013”

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September 26, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, September 25, 2014

Columbia Journal of Tax Law Publishes New Issue

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published  Vol. 5, No. 2:

September 25, 2014 in Scholarship, Tax | Permalink | Comments (0)

Tax Man Uses Drones to Root Out Wealthy Tax Evaders

DroneThe Telegraph, Argentina Uses Drones to Root Out Wealthy Tax Evaders:

The Argentine government has used drones to catch out wealthy tax evaders who had not declared mansions and swimming pools.

Unmanned aircraft were dispatched over an upper class area of Buenos Aires and discovered 200 homes and 100 pools that had not been detailed on returns.

Tax officials said the drones took pictures of luxury houses standing on lots registered as empty.

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September 25, 2014 in Tax | Permalink | Comments (2)

Kahng: Tax, Incest, and Big (Gay) Love

Lily Kahng (Seattle), Next Up, Incest (Jotwell) (reviewing Anthony C. Infanti (Pittsburgh), Big (Gay) Love: Has the IRS Legalized Polygamy?, 92 N.C. L. Rev. Addendum ___ (2014)):

Big LoveGay marriage opponents love to fear monger about the slippery slope of extending marriage beyond the legal union between one man and one woman. They prophesy that if we allow marriage between two men or two women, we will descend into a Gomorrah of incest, adultery, polygamy, and animal love. In his essay, Big (Gay) Love: Has the IRS Legalized Polygamy?, Anthony Infanti makes subversive use of this repugnant meme to advance his view that tax results should not depend on marriage in the first place. ...

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September 25, 2014 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

A Nightmare Future of Higher-Ed

Minding the Campus:  A Nightmare Future of Higher-Ed, by Lee Kottner:

A favorite trope of science fiction dystopias is a classroom of students wearing metallic skull caps wired to a blinking, monolithic computer, and staring vacantly into space while the propaganda and “facts” that pass for knowledge and education are downloaded directly into their brains. That scenario may be coming soon to a college campus near you, if in a somewhat more refined manner.

Consider the state of higher education today. Since the late 1970s, the total of poorly paid untenured and contingent faculty has far outstripped the number of tenured faculty on college campuses all over the world and now accounts for roughly 76 % of faculty in U.S. higher education.

The shrinking number of tenured academics has been paralleled by a growing number of very well-paid administration positions, filled by MBAs or Educational Administration doctorates who have spent little or no time in the actual educational trenches. The current corporate administrative pattern emphasizes a profit model of efficiency, cost control, and knowledge delivery, which is fundamentally different from the academic and pedagogical model of knowledge creation, a messy, individualistic but often life-changing process. This new emphasis is evident in the constant rise of tuition (going to grandiose building projects and bloated administrative salaries mirroring the corporate world), increasing demands for the quantification and standardization of instruction, larger class sizes, and the devaluing of educators’ professionalism, expertise, mentoring, innovative pedagogy, and the kind of student-centered, highly personalized learning opportunities I had at my small liberal arts college in the 1980s.

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September 25, 2014 in Legal Education | Permalink | Comments (0)

McMahon: Rethinking Taxation of Privately Held Businesses

Martin J. McMahon Jr. (Florida), Rethinking Taxation of Privately Held Businesses:

This article proposes the repeal of current Subchapters K and S, as well as the removal from the ambit of Subchapter C of all privately held corporations and the replacement of the current tax regime for privately held business with a new regime under which all privately held businesses (including wholly owned corporations and limited liability companies, and unorganized sole proprietorships) would be taxed at the entity level under a uniform rate schedule, regardless of the form of organization. (All publicly traded companies, and their controlled corporate subsidiaries, would continue to be governed by all of the structural rules of Subchapter C (and any other relevant Code sections outside of Subchapter C.)) Nevertheless, the profits of privately held companies subject to the entity level tax would not be double taxed upon distribution. Rather, a single level tax, at the owners’ tax rates would be achieved by applying the imputation-credit model for corporate tax integration to all distributions (including profits of a sole proprietorship that have not been reinvested) to the equity owners of the entity. As a consequence of the abolition of pass-through taxation and the imposition of an entity-level tax, entity losses no longer could be passed through to the entity’s owners to offset positive income from other sources. This proposal emanates from decades-long problems with the administration of Subchapter K, governing the taxation of partnerships, and the incoherence of having three separate regimes—Subchapter C, Subchapter K, and Subchapter S—apply to closely held businesses depending of the form of organization and available elections. While it does not originate as a refinement of recent proposals to reduce the corporate tax rate and to clean up the base, its adoption would facilitate such a move. Because such a high percentage of U.S. business income is now earned by unincorporated business it would avoid increased distortions in the choice of business entity due solely to tax planning.

September 25, 2014 in Scholarship, Tax | Permalink | Comments (0)

Former AALS President: Thomas Jefferson Is 'The Canary in the Coal Mine of Legal Education,' Expects Six Law Schools to Close

Chronicle of Higher Education, As Law School Struggles to Stay Open, Some See ‘a Canary in the Coal Mine’:

Much has been written about the sky-high debts facing law-school graduates, who face difficult odds in landing jobs that will help pay off their loans. But students at Thomas Jefferson School of Law are among the first who are contemplating the possibility of a get-out-of-debt-free card that no one’s eager to cash in. 

It would apply only if the law school, which is struggling to restructure a $133-million debt, were to close—a prospect the private, stand-alone school in downtown San Diego is determined to avert. After failing to make a June payment, the school was given a reprieve until October 17 but ordered to pay an additional $2-million.  ...

The number of applicants to law schools accredited by the American Bar Association plummeted 45 percent from 2004 to 2014, according to preliminary figures released by the association. By 2013, first-year enrollment had slid about 18 percent, a devastating decline for schools, like Thomas Jefferson, that depend heavily on tuition.

CHE 2
 

As Thomas Jefferson struggles to remain afloat, Michael A. Olivas, a former president of the Association of American Law Schools, suggested it may be "a canary in the coal mine of legal education." The nation has too many law schools, said Mr. Olivas, who is also a professor of law at the University of Houston, and he expects some will close in the next several years. "I believe there will be, in all likelihood, about a half-dozen schools that are on anybody’s watch list," he said.

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September 25, 2014 in Legal Education | Permalink | Comments (8)

U.S. News Jobs Rankings: Lawyers #51 (Down From #33 Last Year)

Best Jobs 2U.S. News & World Report, The 100 Best Jobs:

All jobs aren’t created equal. In fact, some are simply better than the rest. U.S. News 100 Best Jobs of 2014 offer a mosaic of employment opportunity, good salary, manageable work-life balance and job security. Some careers offer just the right mix of these components – for instance, nearly 40 percent of our picks are health care jobs – but the list also includes strong showings from occupations in the social services and business sectors. And for the first time, our No. 1 pick is a technology job. Read more on how we rank the best jobs, and check out our complete list.

Best Jobs 451.  Lawyer (details here).  Consider this: 25 of our U.S. presidents have been lawyers. So it almost goes without saying that working in law holds a particular draw for us Americans. There will be the need for about 74,800 more professionals with Juris Doctor degrees by the year 2022.

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September 25, 2014 in Legal Education | Permalink | Comments (11)

U.S. and International Tax Rates of the S&P 100

Wallet HubWallet Hub, S&P 100 Tax Rate Report:

Concerns over the proper role of taxation lie at the very foundation of United States history. They haven’t gone away either. In fact, matters of tax reform are set to play a central theme in this year’s midterm elections, fueling partisan discussions of economic patriotism as well as debates over whether Main Street or millionaires should foot more or less of the bill.

In the spirit of advancing the discussion, WalletHub analyzed annual reports for the S&P 100 – the largest and most established companies on the stock market – in order to determine the rates at which they pay taxes at the state, federal and international levels as well as how their tax burdens compare to those of American individuals.

WalletHub

Table 2

The complete data on all S&P 100 companies are here.  For Tax Prof commentary on the corporate tax, see:

(Hat Tip: Bruce Bartlett.)

September 25, 2014 in Tax | Permalink | Comments (0)

ABA Announces Plan to Implement New Law School Accreditation Standards

ABA Logo 2ABA Section on Legal Education and Admission to the Bar Standards Review Committee, Implementation of New Standards and Rules for Approval of Law Schools:

At its meeting on Monday, August 11, 2014, in Boston, the ABA House of Delegates concurred in all of the proposed new Standards and Rules of Procedure for Approval of Law Schools with the exception of Interpretation 305-2. The Interpretation, which prohibits law schools from granting credit for field placement programs for which the student receives compensation, was referred back to the Council after the House heard strong testimony for and against the provision. Because the revised Standards proposed to continue the existing rule on this matter, the existing rule remains in place, pending further review by the Council.

In accordance with the Rules of Procedure, a decision by the Council to adopt, review, amend or repeal the Standards, Interpretations or Rules is subject to a maximum of two referrals back to the Council by the House. If the House refers a Council decision back to the Council twice, then the decision of the Council following the second referral will be final and will not be subject to further review by the House.

The revised Standards and Rules are legally effective as of the end of the ABA Annual Meeting on August 12, 2014. However, cognizant that law schools will need time to do the work that some of the changed Standards will require, the Council and the Section have established a transition and implementation plan. The revised Rules do not require a delay for implementation and are effective immediately.

September 25, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 504

IRS Logo 2Daily Caller:  500 Days After IRS Scandal Broke, Reporter Still Refuses To Pay His Taxes, by Patrick Howley:

This week the IRS conservative targeting scandal turned 500 days old. It’s been 500 days since we learned that Lois Lerner’s former agency targeted right-leaning groups applying for nonprofit status and audited ones that already exist. And it has been 500 days since I righteously decided to stop paying my taxes.

500 days later, the IRS still hasn’t produced emails from Lerner and the more than 20 other IRS employees whose computers allegedly crashed, whose Blackberries were thrown away and “upgraded,” and, in Lerner’s case, whose hard drive was “scratched” and destroyed. But we know that Lerner exchanged confidential taxpayer information on conservatives with top White House adviser Jeanne Lambrew during the 2012 election cycle. We know that Lerner and her White House-visiting underling Nikole Flax were involved in a “secret research project” involving conservative donor information that was approved by then-IRS commissioner Steven T. Miller. President Barack Obama first called the whole thing “outrageous.” Then he said there’s “not a smidgen of corruption.”

How much longer will this go on? New IRS chief John Koskinen said that “hard drive crashes continue as we speak.” Lerner is giving softball interviews with Politico about how conservatives (who she once called “assholes”) are trying to ruin her life. The White House has yet to be subpoenaed for the emails it exchanged with Lerner. Same goes for the Department of Justice. ...

500 days ago, we learned that the most powerful tax-collecting agency in the United States has been turned into a political weapon and their enemy is average hardworking American citizens. When people find out such a thing, it tends to lead to feelings of hopelessness. It makes people cynical. Important institutions have been corrupted and there’s nothing we can do about it because they claim that the computers crashed and that’s the end of it? And 500 days later, we still don’t have the emails?

This 500-day mark should be the point where we as Americans decide we’re not going to take it anymore, when we demand answers, when we try to get basic information out of our government so we can have just one tiny fragment of justice and decency and common sense back in our lives. But it doesn’t feel like it. It feels instead like the force of 315 million people shrugging. It feels like a country accepting that we’re circling the drain as a free-market democracy, putting their headphones in and going back to looking down at their not-at-all-private cell phones. 500 days of this. 500 days.

I did not pay my taxes this year. I will not pay my taxes until every single Lois Lerner email is released and the people who planned and carried out this governmental travesty are held accountable. So start watching that clock, John Koskinen, if you think you’re going to get my overdue money, and every day this goes on is another day I’m not giving you a dime (soon it will hit 619 days, one for every hard-earned dollar I “owe.”)

Go ahead and take me to court, federal government. I’m not giving you $619 I need so I can subsidize a fraction of a new salary bonus for some unethical bureaucrat who audited my friends and fellow countrymen. Your corruption cast a hopeless pall over this great but troubled country and its great but jaded people.

I will not pay, IRS. Because America already did.

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September 25, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, September 24, 2014

Columbia Journal of Tax Law's Tax Matters: Tax Inversions

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published a new issue of its Tax Matters feature, with three short pieces by tax practitions responding to a specific cutting-edge tax law issue posed by a tax academic.  This issue's prompt is by Robert Scarborough (Columbia):

United States taxation of worldwide income combined with a high corporate tax rate disadvantages US-headed multinational groups compared with groups with the same income mix but a non-US parent. The disadvantage has become more pronounced in recent years as more countries move to territorial systems and lower rates.

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September 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Michael 'The Situation' Sorrentino Has a Tax Situation

U.S. Department of Justice Press Release, Michael "The Situation" and Marc Sorrentino indicted for Tax Crimes Involving $8.9 Million Income:

The SituationTelevision personality Michael “The Situation” Sorrentino and his brother Marc Sorrentino are expected to appear in federal court this afternoon to face an indictment alleging they did not properly pay taxes on $8.9 million in income Michael Sorrentino received from promotional activities, U.S. Attorney Paul J. Fishman announced.

Michael Sorrentino and his brother Marc Sorrentino are charged with one count of conspiracy to defraud the United States. Marc and Michael Sorrentino also are charged with three and two counts, respectively, of filing false tax returns for 2010 through 2012. Michael Sorrentino faces an additional count for allegedly failing to file a tax return for 2011.

According to the indictment returned today:

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September 24, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

More Commentary on the Treasury Department's Action to Rein in Tax Inversions

Treasury Department SealFollowing up on yesterday's post, Treasury Department Takes Action to Rein in Tax Inversions:

New York Times editorial:  Cracking Down on Corporate Tax Games:

New rules from the Treasury Department are likely to slow the offensive practice that allows American companies to avoid taxes by merging with foreign rivals. Known as corporate inversions, these are complex, modern variations on the practices of yesteryear, when companies dodged their taxes by moving their addresses to post office boxes in the Caribbean. ...

The rules do not stop all abuses, including, for instance, earnings stripping. That is the practice in which a foreign parent deducts the company’s interest payments against the income generated by a United States subsidiary, thus lowering the American tax bill. Buried deep in the new rules is an indication that the Treasury Department plans to devise additional rules to stop the practice. The sooner the better.

Nor can the rules do what only Congress can do — namely pass a law to stop tax-motivated corporate inversions completely. That could be accomplished by simply mandating that any tax-deferred stashes held in foreign accounts become taxable as soon as a company inverts.

Everyday taxpayers face similar “taxable events” routinely. When you withdraw money from a tax-deductible retirement account, for instance, you owe tax. If you don’t withdraw the money, you owe tax when you reach a certain age. The reason corporations don’t face the same kinds of rules is that Congress doesn’t impose them.

New York Times DealBook:  Treasury Takes a Modest Step on Inversions, by Victor Fleischer (San Diego):

The Treasury Department’s notice of proposed regulations to curb so-called inversions is smart and narrowly tailored. The new rules would take away some — but not all — of the reasons that a company might want to give up United States citizenship.

Indeed, most proposed inversions are likely to go forward, especially those that make sense as a business matter above and beyond the tax benefits, some of which the new rules will curtail.

Companies still searching for a suitable foreign merger partner will find it harder make a match. And in some cases, the loss of tax benefits will mean the search is not lucrative enough to be worth the bother. ...

In sum, the proposed regulations will deter future inversions where the primary motivation is tax savings. Where there is a significant business reason for the merger, however, the new rules will most likely not affect the deal. Burger King’s proposed merger with Tim Hortons is a good example.

It is harder to predict what might happen with deals that appear to be mostly motivated by taxes, like Medtronic’s proposed merger with Covidien. The deal documents include an “out” if new rules would treat the inverted company as a United States corporation. But that is not the effect of the new rules. Instead, the rules would reduce the effectiveness of the inversion by denying access to Medtronic’s offshore cash.

Whatever happens with the inversions that have already been proposed, the new rules will help deter new deals that lack a real business purpose.

Wall Street Journal editorial, Can Jack Lew Add? Corporate Tax Revenue Is Rising Nicely Despite Inversions:

WSJMany economists are downgrading their expectations for U.S. growth. So naturally the Obama Treasury this week rolled out a plan to discourage investment in America.

The regulations are ostensibly to prevent so-called corporate inversions, in which U.S. companies acquire foreign firms and then relocate their legal headquarters offshore for tax purposes. But the practical impact will be to make it harder to make money overseas and then bring it back here.

For those who haven't studied this issue, Monday's Treasury announcement clarifies that the point is not to ensure that U.S. business profits will continue to be taxed. Such profits will be taxed under any of the inversion deals that have received so much recent attention. The White House goal is to ensure that the U.S. government can tax the foreign profits of U.S. companies, even though this money has already been taxed by the countries in which it was earned, and even though those countries generally don't tax their own companies on profits earned in the U.S. ...

Speaking of the legislature, even the White House admits that changes in tax law ought to involve Congress. So how does Mr. Lew's Treasury propose to change the rules on its own? Regular readers may be interested to know that the new Treasury plan does not include the so-called Section 385 gimmick we analyzed recently under which Mr. Lew would have magically reclassified debt as equity. But the sections of the law that Treasury cited on Monday in claiming the authority to rewrite business tax rules are still a unilateral diktat designed solely with an election in mind.

Mr. Lew was installed at Treasury as a political cipher, and he has delivered for the White House if not the economy. But outside of Washington we notice that no one is complaining about recent merger announcements involving foreign firms buying U.S. companies. These foreign firms don't suffer the same IRS penalty as U.S. businesses that want to take money earned elsewhere and invest it in the U.S. We're all for foreign investment, but should Washington be punishing U.S. companies that wish to do the same?

Additional press commentary:

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September 24, 2014 in Tax | Permalink | Comments (1)

How Appealing Partners With Above the Law

HAATLHoward Bashman’s wonderful appellate litigation blog, How Appealing, is partnering with Breaking Media's Above the Law, effective October 1, 2014.  For details of the arrangement, see:

Howard does not reveal the traffic numbers for How Appealing, but reports that Above the Law receives "7 million page views per month from over 1.1 million visitors."

(Hat Tip: Greg McNeal.)

September 24, 2014 in Legal Education | Permalink | Comments (0)

Lederman: Restructuring the U.S. Tax Court

Leandra Lederman (Indiana), Restructuring the U.S. Tax Court: A Reply to Stephanie Hoffer & Christopher Walker's 'The Death of Tax Court Exceptionalism', 99 Minn. L. Rev. Headnotes ___ (2014):

Stephanie Hoffer and Christopher Walker’s excellent Minnesota Law Review article, The Death of Tax Court Exceptionalism, analyzes the topical and important question of whether the Administrative Procedure Act (APA) governs the standard and scope of review the Tax Court applies to Internal Revenue Service (IRS) decisions. The APA contains provisions for court review of agency decisions but the Tax Court has repeatedly stated that the APA does not apply to it. As a result, the Tax Court has accorded less across-the-board deference to the IRS than APA standards call for.

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September 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Johnston Reviews Kleinbard's We Are Better Than This

David Cay Johnston (Syracuse), Book Review: Edward D. Kleinbard, We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014), 144 Tax Notes 1465 (Sept. 22, 2014):

KleinbardWe Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014) by Edward D. Kleinbard is a comprehensive, thoughtful, and informed volume on taxation and government spending.

This masterpiece of tax, fiscal, and economic policy is richly endowed with philosophical insights from Adam Smith's Theory of Moral Sentiments and holds the potential to change our often dogmatic and sometimes toxic public debate over how we tax ourselves and spend our tax dollars into a conversation about how to raise more money with less pain and spend in ways that will produce a happier America.

Kleinbard's book is especially useful in proposing a new way to measure capital incomes and a much smarter way to tax corporate profits. ...

The book challenges bedrock tax policy assumptions -- the marginal utility of income theory; the value of progressive taxation; the idea that regressive taxes are bad and should not be used to fund universal services like healthcare, education and infrastructure; the way we tax capital incomes, especially now that most businesses are pass-through entities, which he calls incoherent.

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September 24, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (1)

College Rankings by Billionaire Alumni

One BillionWEALTH-X and UBS Billionaire Census 2014:

Of the top 20 most popular schools for billionaires – in terms of the number of billionaires who have obtained their bachelor’s degree at these institutions – 16 were in the United States.

Rank

School

No. of Billionaires

1

Penn

25

2

Harvard

22

3

Yale

20

4

USC

16

5

Cornell

14

5

Princeton

14

5

Stanford

14

8

UC-Berkeley

12

8

Mumbai

12

10

London School of Econ.

11

10

Moscow State U.

11

12

Dartmouth

10

12

Michigan

10

12

Texas

10

15

Duke

9

15

NYU

9

17

Brown

8

17

Columbia

8

19

MIT

7

20

ETH Zurich

6

September 24, 2014 in Law School Rankings, Legal Education | Permalink | Comments (3)

60 Minutes: Is It Too Easy to Become a Tax Preparer?

(Click here to view video directly on CBS to avoid interruption caused by blog's refresh rate.)

September 24, 2014 in IRS News, Tax | Permalink | Comments (0)

Dramatic Employment Gains at 19 Law Schools

National JuristNational Jurist (Sept/Oct 2014):  Employment Turnarounds: Despite a Tepid Job Market, Some Schools Have Made Dramatic Improvements in the Number of Graduates Finding Jobs:

While the nationwide employment rate for recent graduates has been largely flat during the past few years, some schools have bucked the trend and significantly improved their employment rates. Nineteen law schools improved their employment rate by 10% or more during the past two years, according to a formula created by The National Jurist ... using data from the ABA. ... The National Jurist calculates its employment rate using a formula that tracks full-time bar passage required employment at 100%, full-time-JD preferred employment at 70%, and ten other categories at percents from 60% to as low as 10% for non-professional, full-time positions.

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September 24, 2014 in Law School Rankings, Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 503

IRS Logo 2The Volokh Conspiracy:  Targeting the Constitution, by Nicholas Quinn Rosenkranz (Georgetown):

It is now well known that the IRS targeted tea party organizations. What is less well known, but perhaps even more scandalous, is that the IRS also targeted those who would educate their fellow citizens about the United States Constitution.

According to the inspector general’s report (pp. 30 & 38), this particular IRS targeting commenced on Jan. 25, 2012 — the beginning of the election year for President Obama’s second campaign. On that date: “the BOLO [‘be on the lookout’] criteria were again updated.” The revised criteria included “political action type organizations involved in … educating on the Constitution and Bill of Rights.”

Grass-roots organizations around the country, such as the Linchpins of Liberty (Tennessee), the Spirit of Freedom Institute (Wyoming), and the Constitutional Organization of Liberty (Pennsylvania), allege that they were singled out for special scrutiny at least in part for their work in constitutional education. There may have been many more.

The tea party is viewed with general suspicion in some quarters, and it is not difficult, alas, to imagine the mindset of the officials who decided to target tea party organizations for special scrutiny. But federal officers swear an oath to “support and defend the Constitution of the United States against all enemies, foreign and domestic.” It is chilling to think that these same officials who are suspicious of the tea party are equally suspicious of the Constitution itself.

What is most corrosive about this IRS tripwire is that it is triggered by a particular point of view; it is not, as First Amendment scholars say, viewpoint-neutral. It does not include obfuscating or denigrating the Constitution; only those “involved in … educating on the Constitution” are captured by this criterion. This viewpoint targeting potentially skews every national debate about politics or government. And the skew in not strictly liberal; indeed, it should trouble liberals as much as conservatives. The ultimate checks on executive power are to be found in the United States Constitution. Insidiously, then, suppressing those “involved in … educating on the Constitution” actually skews national debate in favor of unchecked executive power. ...

“We the People” do not yet know who first decided to target “political action type organizations involved in … educating on the Constitution and Bill of Rights.” But there is at least one person who does know. Ironically, though, Lois Lerner, former director of the Exempt Organizations Division of the IRS, is making full use of her own constitutional education: “I have been advised by my counsel to assert my constitutional right not to testify …. One of the basic functions of the Fifth Amendment is to protect innocent individuals, and that is the protection I’m invoking today.”

Five years ago, Obama, our constitutional law professor-in-chief, presented his first, ringing Constitution Day proclamation: “To succeed, the democracy established in our Constitution requires the active participation of its citizenry. Each of us has a responsibility to learn about our Constitution and teach younger generations about its contents and history.” Quite so. Perhaps this year, Obama could explain why his IRS would target those who answered this call.

Legal Inusrrection:  Imperial Bureaucrat: Lois Lerner Denies Everything; Media Savvy Lerner Speaks to Politico, But Not Congress, by William Jacobson (Cornell):

The Politico article has been excoriated as a puff piece, and that it is. But it’s more. It’s a reflection of how savvy Lerner is, how she is able to manipulate not just tax exempt approvals, but also the congressional oversight system.

Lerner knows that to a large extent congressional oversight and findings of contempt are empty threats. So Lerner feels comfortable reading a statement professing her innocence while refusing to “testify,” and to spreading her word via Politico while never subjecting herself to proper cross-examination.

Lerner is the Imperial Bureaucrat, secure in the knowledge that she is all but untouchable in the warm embrace of a Democratic administration which sees not a smidgen of corruption despite the facts the administration itself has admitted or produced. ...

It’s said that in jest there is truth. Lerner joked how she hoped for a D.C. office job with a pro-Obama organizing group. ...

Why isn’t Lois Lerner worried now? Why is there no contrition? Why does she feel safe talking to Politico?

Because Lerner knows that the Imperial Bureaucracy will protect one of its Imperial Bureaucrats.

And that there will be a job out there for Lerner with Democratic operative groups once this has all blown over. After all, she has years of experience acting as a Democratic operative.

Reason:  Lois Lerner Claims the IRS Did Nothing Wrong. The Data Say Otherwise.:

Reason

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September 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, September 23, 2014

Schön Presents International Taxation of Risk Today at Columbia

SchoenWolfgang Schön (Max Planck Institute for Tax Law and Public Finance) presents International Taxation of Risk at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex Raskolnikov, David Schizer, and Wojciech Kopczuk:

The allocation of risk and of the income from risky investment and activities belongs to the central topics of international tax policy today. This fact is highlighted by the current BEPS initiative of G20 and OECD which casts doubt on the recognition of contractual risk allocation within multinational groups and its impact on profit allocation between separate entities within these groups. It is largely felt that “risk shifting” provides the basis for “profit shifting” by multinationals to the detriment of states and domestic competitors.

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September 23, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Columbia Journal of Tax Law's Tax Matters: FATCA

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published a new issue of its Tax Matters feature, with three short pieces by tax practitions responding to a specific cutting-edge tax law issue posed by a tax academic.  This issue's prompt is by Itai Grinberg (Georgetown):

In 2010 the United States Congress enacted sections 1471 to 1474 of the Internal Revenue Code, commonly known as “FATCA”.  Under FATCA, foreign financial institutions (“FFIs”) are generally required to report information on financial accounts of U.S. persons and foreign entities with significant U.S. ownership (“U.S. accounts”) to the IRS beginning in 2015, or be subject to a withholding tax on the gross amount of certain payments from U.S. sources and the proceeds from the disposition of certain U.S. investments. Compliance under FATCA regulations is complex and raises a series of conflict of law issues. To mitigate these conflict of law issues and facilitate FATCA implementation, the Treasury has held discussions with dozens of countries and entered into a series of intergovernmental agreements (“IGAs”).  So-called “Model I IGAs” allow the agreeing government to adopt its own rules requiring financial institutions within their jurisdiction to identify and report information relating to U.S. accounts.  Other IGAs require compliance with Treasury regulations, but with specified modifications (“Model II IGAs”).  Some countries will not enter into an IGA, and therefore, FFIs in those countries will be subject to FATCA as administered under Treasury regulations without any modification. Although IGAs facilitate FATCA implementation within specific jurisdictions by removing domestic legal impediments and simplifying other aspects of compliance for institutions in a given jurisdiction, they also may complicate compliance for multinational FFIs by giving rise to a patchwork of differing FATCA regimes.

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September 23, 2014 in Scholarship, Tax | Permalink | Comments (0)

Camp: 9th Circuit on 'Willful Attempts to Evade or Defeat Taxes' Under Bankruptcy Code § 523(a)(1)(C)

From Bryan Camp (Texas Tech), Hawkins v. Franchise Tax Board, No. 11-16276 (9th Cir. Sept. 15, 2014):

The bankruptcy court had refused to allow the discharge of certain tax debts, holding that the debtor’s actions pre-bankruptcy were “willful attempts to evade or defeat taxes” within the meaning of 11 U.S.C. § 523(a)(1)(C). The basis for the holding was that the debtor lived a life of luxury even in the face of overwhelming tax liabilities that had accrued because the Service disallowed losses from the taxpayer’s tax shelters. The bankruptcy court found that the debtors personal living expenses from January 2004 to September 2006 exceeded their earned income by up to $2.35 million during that period. The district court affirmed.

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September 23, 2014 in New Cases, Tax | Permalink | Comments (0)

SUNY-Buffalo Law School Dean Resigns Amidst Perjury Allegations in Lawsuit by Former Professor

Buffalo Art Voice, UB Law School Dean to Step Down Amid Charges of Perjury:

MutuaMakau Mutua will be stepping down as Dean of UB’s Law School effective December 19. He’ll then return to the law school faculty as SUNY Distinguished Professor and Floyd H. and Hilda L. Hurst Faculty Scholar. ...

Mutua was educated at the University of Nairobi, the University of Dar-es-Salaam and Harvard Law School. But the statement from UB doesn’t mention anything that was reported last month in The Star newspaper based in Nairobi, Kenya.

From The Star:

A Kenyan law professor based in US has been accused of committing perjury in an American court, his co-accused now wants the cases separated.

Makau Mutua, a human and civil rights activist, has been accused of lying in court. He is sued for allegedly irregularly laying off Jeffrey Malkan, a lecturer at Buffalo Law School where Mutua is a Dean. [Malkan was the former director of the law school’s Legal Research and Writing program.]

Evidence against Mutua is said to include sworn deposition testimony and sworn affidavits from seven tenured faculty members.

How embarrassing to all us local media outlets that this hometown story was broken over a month ago by a paper in Nairobi.

More details here and here.  The University's press release and other local and national press reports do not mention the lawsuit.

September 23, 2014 in Legal Education | Permalink | Comments (1)

Tax Prof Wedding: Victoria Haneman

Tax Prof Victoria Haneman (Concordia) married Jeff Stone yesterday.  Victoria reports:

Jeff and I moved to Idaho at the end of May 2014. We wanted to get married before the end of the tax year, and we also wanted to be married in our new home state. We did not, however, want to trouble our friends and family with having to fly all the way to Idaho to attend a ceremony. Jeff and I were married this afternoon by Idaho Supreme Court Justice Joel Horton, in a small private ceremony performed at the Court.  

Victoria Haneman

And to top things off, today is Victoria's birthday!

September 23, 2014 in Legal Education, Tax | Permalink | Comments (1)

Treasury Department Takes Action to Rein in Tax Inversions

Press and blogosphere coverage:

See also Steven M. Rosenthal (Tax Policy Center), Professor Shay Got It Right: Treasury Can Slow Inversions, 144 Tax Notes 1445 (Sept. 22, 2014).

(Hat Tip: Brian Davis.)

September 23, 2014 in IRS News, Tax | Permalink | Comments (0)

Boston College and Tax Analysts Host Conference on Reforming Entity Taxation

BCTABoston College and Tax Analysts are hosting a conference on Reforming Entity Taxation at Boston College on Friday, October 10:

Keynote Speaker:  Lee Sheppard (Tax Analysts)

Panel #1: Reforming Entity Taxation: Corporations

  • Papers: Mirit Eyal-Cohen (Alabama), Deborah Schenk (NYU), Dan Shaviro (NYU)
  • Moderator:  Jeremy Scott (Tax Analysts)
  • Commentator:  Brian Galle (Boston College)

Panel #2:  Reforming Entity Taxation: Partnerships

  • Papers:  Karen Burke (Florida), Andrea Monroe (Temple), Gregg Polsky (UNC)
  • Moderator:  Amy Elliot (Tax Analysts)
  • Commentator:  James Repetti (Boston College)

Panel #3: Reforming Entity Taxation: International

  • Papers:  Allison Christians (McGill), Robert Peroni (Texas), Martin Sullivan (Tax Analysts)
  • Moderator:  Sam Young (Tax Analysts)
  • Commentator:  Diane Ring (Boston College)

The conference is free and open to the public. To register, contact Ryan Hynes.

September 23, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Tax Court Invites Applications to Attend Judicial Conference at Duke

DukeThe Tax Court announced on Friday that it will hold a judicial conference at the Duke Law School Center on Judicial Studies on May 20-22, 2015:

The Court’s judicial conference will provide an opportunity for taxpayer representatives, government representatives, and members of the Court to discuss current topics relevant to Tax Court litigation. In the interest of expanding the discussion and providing as diverse a conference community as possible, the Court encourages academics, clinicians, practitioners, and others who have a professional interest in Tax Court practice and procedure to apply to attend and participate in the 2015 Tax Court Judicial Conference.

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September 23, 2014 in Conferences, Tax | Permalink | Comments (0)

60 Minutes: The Tax Refund Scam

(Click here to view video directly on CBS to avoid interruption caused by blog's refresh rate.)

GAO, Additional Actions Could Help IRS Combat the Large, Evolving Threat of Refund Fraud (GAO-14-633) (Sept. 22, 2014)

September 23, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 502

IRS Logo 2Politico:  Exclusive: Lois Lerner Breaks Silence, by Rachael Bade: 

Employers won’t hire her. She’s been berated with epithets like “dirty Jew.” Federal agents have guarded her house because of death threats. And she’s spent hundreds of thousands of dollars defending herself against accusations she orchestrated a coverup in a scandal that has come to represent everything Americans hate about the IRS.

Lois Lerner is toxic — and she knows it. But she refuses to recede into anonymity or beg for forgiveness for her role in the IRS tea party-targeting scandal.

“I didn’t do anything wrong,” Lerner said in her first press interview since the scandal broke 16 months ago. “I’m proud of my career and the job I did for this country.”

Lerner, who sat down with POLITICO in an exclusive two-hour session, has been painted in one dimension: as a powerful bureaucrat scheming with the Obama administration to cripple right-leaning nonprofits. Interviews with about 20 of her colleagues, friends and critics and a survey of emails and other IRS documents, however, reveal a much more complicated figure than the caricature she’s become in the public eye.

The portrait that emerges shows Lerner is, indeed, fierce, unapologetic and perhaps even tone-deaf when she says things that show her Democratic leanings. She had a quick temper and may have intimidated co-workers who could have helped her out of this mess. It’s easy to see how Republicans have seized on the image of a devilish figure cracking down on conservative nonprofits.

Wall Street Journal:  IRS Apologists, by James Taranto:

Politico landed an exclusive interview with Lois Lerner, the former IRS official at the center of the still-unresolved scandal, and to call it a whitewash would be an insult to lime.

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September 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, September 22, 2014

Oei Presents Human Equity? Regulating the New Income Share Agreements Today at Loyola-L.A.

OeiShu-Yi Oei (Tulane) presents Human Equity? Regulating the New Income Share Agreements (with Diane M. Ring (Boston College)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

A controversial new financing phenomenon has recently emerged. New “income share agreements” (“ISAs”) enable an individual to raise funds by pledging a percentage of her future earnings to investors for a certain number of years. These contracts, which are offered by entities such as Fantex, Upstart, Pave, and Lumni, raise important questions for the legal system: Are they a form of modern-day indentured servitude or an innovative breakthrough in human financing? How should they be treated under the law?

This Article constitutes the first real attempt in the legal literature to comprehensively address the public policy and legal issues raised by ISAs and to articulate an analytical approach to evaluating and regulating them.

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September 22, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Zwick Presents The Effect of Temporary Tax Incentives on Equipment Investment Today at UC-Berkeley

ZwickEric Zwick (Chicago) presents Do Financial Frictions Amplify Fiscal Policy? Evidence from Business Investment Stimulus (with James Mahon (Harvard)) at UC-Berkeley today as part of the Robert D. Burch Center for Tax Policy and Public Finance Seminar:

We estimate the effect of temporary tax incentives on equipment investment using shifts in accelerated depreciation. Analyzing data for over 120,000 firms, we present three findings. First, bonus depreciation raised investment 17.3 percent on average between 2001 and 2004 and 29.5 percent between 2008 and 2010. Second, financially constrained firms respond more than unconstrained firms. Third, firms respond strongly when the policy generates immediate cash flows but not when benefits only come in the future. Implied discount rates are too high to match a frictionless model and cannot be explained entirely by costly finance, unless firms neglect future financial constraints.

September 22, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Johnson Presents Recent Developments Involving Circular 230 and Tax Practitioner Regulation Today at FBA Tax Section Monthly Roundtable

Johnson (Steve)Steve R. Johnson (Florida State) presents Recent Developments Involving Circular 230 and Tax Practitioner Regulation at the Federal Bar Association Tax Section's Federal Tax Practice & Procedure Monthly Roundtable:

The past six months have produced a flood of judicial and agency action involving regulation of tax practitioners by the Service. The courts have suggested substantial limitations upon the Service’s regulatory authority in two recent decisions, and several other cases are pending in which practitioners are challenging other aspects of the Service’s authority. At the same time, the Service has initiated several regulatory efforts to govern practitioners. Professor Johnson, a nationally recognized scholar on tax litigation and procedure, including legislative and administrative law topics in tax, will apprise us of all these developments.

September 22, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Scholars Critique Validity of Student Evaluations: 'Consumer Satisfaction' ≠ 'Product Value'

Chronicle of Higher Education, Scholars Take Aim at Student Evaluations’ ‘Air of Objectivity’:

Student EvaluationsStudent course evaluations are often misused statistically and shed little light on the quality of teaching, two scholars at the University of California at Berkeley argue in the draft of a new paper.

"We’re confusing consumer satisfaction with product value," Philip B. Stark, a professor of statistics at Berkeley, said in an interview.

An Evaluation of Course Evaluations, which he wrote with Richard Freishtat, senior consultant at Berkeley’s Center for Teaching and Learning, lays out a mathematical critique of the evaluations and describes an alternative vision for analyzing and improving teaching.

Even though evaluations have become ubiquitous in academe, they remain controversial because they often assume a high-stakes role in determining tenure and promotion. But they persist because they are easy to produce, administer, and tabulate, Mr. Stark said. And because they are based on Likert scales whose results can be added and averaged, he said, they offer the comfort of a number. But it is a false kind of security. "Averages of numerical student ratings have an air of objectivity," the authors write, "simply because they are numerical."

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September 22, 2014 in Legal Education, Teaching | Permalink | Comments (3)

Tax Court Approves Taxpayer's Use of Predictive Coding to Respond to IRS's Discovery Request, Reducing Costs by 80%

In a case of first impression, the Tax Court has approved a taxpayer's use of predictive coding technology to respond to the IRS's discovery demand for tax information.  Dynamo Holdings LP v. Commissioner, 143 T.C. No. 9 (Sept. 17, 2014):

Predictive CodingRespondent requests that petitioners produce the electronically stored information (ESI) contained on two specified backup storage tapes or, alternatively, that they produce the tapes themselves (or copies thereof). Petitioners assert that it will take many months and cost at least $450,000 to fulfill respondent’s request because they would need to review each document on the tapes to identify what is responsive and then withhold privileged or confidential information. Petitioners request that the Court ... let them use predictive coding, a technique prevalent in the technological industry but not yet formally sanctioned by this Court, to efficiently and economically identify the nonprivileged information responsive to respondent’s discovery request [at a cost of $80,000]. ...

Although it is a proper role of the Court to supervise the discovery process and intervene when it is abused by the parties, the Court is not normally in the business of dictating to parties the process that they should use when responding to discovery. If our focus were on paper discovery, we would not (for example) be dictating to a party the manner in which it should review documents for responsiveness or privilege, such as whether that review should be done by a paralegal, a junior attorney, or a senior attorney. Yet that is, in essence, what the parties are asking the Court to consider--whether document review should be done by humans or with the assistance of computers. ...

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September 22, 2014 in IRS News, New Cases, Tax | Permalink | Comments (1)

Bernie Sanders Calls for Progressive Estate Tax Reform: $3.5m Exemption, 40%-55% Rates, and 10% Billionaire's Surtax

Huffington Post op-ed:  A Progressive Estate Tax, by Bernie Sanders (I-VT):

Estate Tax LogoMore than a century ago, President Theodore Roosevelt recognized the danger of massive wealth and income inequality and what it meant to the economic and political well-being of the country. In addition to busting up the big trusts of his time, he fought for the creation of a progressive estate tax to reduce the enormous concentration of wealth that existed during the Gilded Age. ...

A progressive estate tax on multi-millionaires and billionaires is the fairest way to reduce wealth inequality, lower our $17 trillion national debt and raise the resources we need for investments in infrastructure, education and other neglected national priorities.

I will shortly introduce legislation that will:

  • Call for a progressive estate tax rate structure so that the super wealthy pay their fair share of taxes. The tax rate for the value of an estate above $3.5 million and below $10 million would be 40 percent. The tax rate on the value of estates above $10 million and below $50 million would be 50 percent, and the tax rate on the value of estates above $50 million would be 55 percent.
  • Include a billionaire's surtax of 10 percent. This surtax on the value of estates worth more than $1 billion would currently apply to fewer than 500 of the wealthiest families in America worth more than $2 trillion.
  • Close estate tax loopholes that have allowed the wealthy to avoid billions in estate taxes. Some of the wealthiest Americans in this country have exploited loopholes in the tax code to avoid paying an estimated $100 billion in estate taxes since 2000. My bill would close those loopholes.
  • Exempt the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009. Under this legislation, 99.75 percent of Americans would not pay a penny in estate taxes.

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September 22, 2014 in Tax | Permalink | Comments (1)

$700 Million in New Buildings at Five Law Schools

Nat'l Law Journal, Law Schools Continue to Build Out
NY Law Journal, Fordham Celebrates New Law School

September 22, 2014 in Legal Education | Permalink | Comments (14)

Tax Court: Couple Failed to Report $30 Million Gift, But Not Liable for Penalty Due to Reliance on Advice From EY, WilmerHale

EYWHIn Cavallaro v. Commissioner, T.C. Memo. 2014-189 (Sept. 17, 2014), the Tax Court held that a Massachusetts couple failed to report a $30 million gift to their sons as a result of misvaluations in a merger of their company with their sons' company, but were not liable for penalties because they reasonably relied on the advice of Ernst & Young (now EY) and Hale & Dorr (now William Cutler Hale & Dorr).

Mr. and Mrs. Cavallaro made the requisite showing of reasonable cause. They had little to no advanced education, including no formal accounting, legal, or business education. Mr. and Mrs. Cavallaro hired advisers who were competent professionals with sufficient expertise to justify reliance. They engaged professionals from a well-known accounting firm and a well-known law firm to structure the tax-free merger of their S corporation, Knight Tool, with their sons' S corporation, Camelot Systems. As discussed above, the professionals initially had differing opinions regarding the ownership of the CAM/ALOT technology, and the issue was explicitly considered by those professionals. The team of advisers eventually structured the merger transaction according to the idea proposed by the Cavallaros' attorney Mr. Hamel at Hale & Dorr -- that is, that on the date of the merger, the CAM/ALOT technology belonged to Camelot and not to Knight (and therefore that no gift occurred) because of a prior transfer. They obtained the valuation report by Mr. Maio based on this assumption and allocated the post-merger stock accordingly.

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September 22, 2014 in IRS News, New Cases, Tax | Permalink | Comments (0)

The IRS Scandal, Day 501

IRS Logo 2Forbes:  Congress Moves To Reform The IRS, by Robert W. Wood:

Does the IRS need reforming? Many people think so, and not just people focused on the Tea Party targeting scandal, Lois Lerner and the missing emails. Anyone who has had a seriously bad tax audit or a run-in with an overly aggressive IRS Revenue Agent who many seem to take no for an answer may have a bone to pick.

It still isn’t a happy time for the IRS, and it seemed somehow lackluster when the IRS announced a Taxpayer Bill Of Rights. Many observers yawned. Even so, there is no question but that the IRS has a tough job to do. On the whole, the IRS does an amazingly even-handed job at it too. Yet if you are in the crosshairs, that may not be comforting. And seeing the poor and sometimes evasive testimony for top IRS officials over the last year or so hasn’t been inspiring.

So perhaps it’s not surprising that bills are getting introduced in Congress and some are passing. Well, sort of. The House has passed several recently. All were intended to highlight complaints that the IRS mistreated conservative political groups when they applied for tax-exempt status.

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September 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, September 21, 2014

Enrollments Decline at 8 of 9 Ohio Law Schools

The Blade, UT Law School Enrollment Decline Worst in Ohio as Slump Spooks Students:

OhioAs law school enrollment continues a four-year slide locally and across the country, Toledo attorney Randall Dixon didn’t have any trouble coming up with a topic for his first column as president of the Toledo Bar Association. “Don’t let your babies grow up to be lawyers” went the headline on a piece that posed the question, “What do you tell people about pursuing a career in law?” ...

Last week, the University of Toledo, whose law school took the biggest hit in the state this year with a 25.9 percent decline in first-year law students, announced a 13 percent reduction in tuition in an attempt to reverse the trend.

UT law school Dean Daniel J. Steinbock said he believes tuition costs, the resulting debt, and the less-than-promising job market for new lawyers have combined to create an overall decline in people interested in law school. ... Mr. Steinbock dismissed the idea that UT’s ranking as No. 140 in U.S. News and World Report’s annual law school ratings for 2014 played a part in its declining enrollment. ...

All nine of Ohio’s law schools have seen applications and enrollment drop since law school enrollments peaked in 2010.

Ohio

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September 21, 2014 in Legal Education | Permalink | Comments (6)

ABA Tax Section Fall CLE Meeting

ABA Tax Section (2014-2)The ABA Tax Section concludes its three-day Joint Fall CLE Meeting with the ABA Real Property, Trust and Estate Law Section today in Denver. The full program is here.  Tax Profs with speaking roles include:

  • Diversity:  Anthony Infanti (Pittsburgh)
  • Employee Benefits:  Jon Forman (Oklahoma), Kathryn Kennedy (John Marshall)
  • Exempt Organizations:  Nancy McLaughlin (Utah), Elaine Wilson (West Virginia)
  • Federal Income Tax Rules Affecting “Legal” Marijuana Businesses:  Edward Roche (Denver)
  • Individual & Family Taxation:  Lee-Ford Tritt (Florida)
  • Partnerships & LLCs:  Karen Burke (Florida)
  • Pro Bono & Tax Clinics:  Diana Leyden (Connecticut)
  • Sales, Exchanges & Basis:  Brad Borden (Brooklyn), Fred Brown (Baltimore), Erik Jensen (Case Western), Roberta Mann (Oregon)
  • Standards of Tax Practice:  Linda Beale (Wayne State), Steve Johnson (Florida State)
  • Tax Policy & Simplification:  Alice Abreu (Temple), Jon Forman (Oklahoma), Richard Lavoie (Akron), John Plecnik (Cleveland-Marshall)
  • Tax Practice Management:  Mike Lang (Chapman)
  • Teaching Taxation:  Danshera Cords (Albany), Adam Chodorow (Arizona State), Omri Marian (Florida), Diane Ring (Boston College), Kerry Ryan (St. Louis)

September 21, 2014 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with a new paper debuting on the list at #5.  The #1 paper is now #20 in all-time downloads among 10,321 tax papers:

  1. [2997 Downloads]  'Competitiveness' Has Nothing to Do with it, by Edward D. Kleinbard (USC)
  2. [332 Downloads]  2013 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  3. [230 Downloads]  Public Pressure and Corporate Tax Behavior, by Scott Dyreng (Duke), Jeffrey Hoopes (Ohio State) & Jaron Wilde (Iowa)
  4. [170 Downloads]  The OECD'S Flawed and Dated Approach to Computer Servers Creating Permanent Establishments, by Monica Gianni (Florida)
  5. [121 Downloads]  State Law Reporting and Disclosure Mandates Under ERISA, by Albert Feuer

September 21, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 500

IRS Logo 2Wall Street Journal: Stonewall Koskinen: The IRS Commissioner Was Supposed to Clean Up the Mess. Instead, He's Running Interference, by Kimberley A. Strassel:

Nine months have passed since President Obama installed John Koskinen as IRS Commissioner, charged with unearthing the agency's targeting scandal and restoring its credibility. It's about nine months past time to acknowledge that Mr. Koskinen is the problem, not the answer.

The 75-year-old former Fannie Mae executive on Wednesday put in another superficial appearance before House investigators, spent another two hours dodging questions, jabbing at investigators, and excusing the misdeeds of the least-trusted organization in America. This from the guy brought in to clean up the mess—a man presented in confirmation as a "turnaround artist" and "reformer."

The Koskinen fail is now becoming a central political focus, as Republicans and even some Democrats question his tenure. Mr. Obama had declared him someone who "knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances." Where are the sweeping changes? Where's the accountability? When the best the IRS commissioner can promise America is that "whenever we can, we follow the law"—we're in worse shape than nine months ago.

The only thing Mr. Koskinen has seemed remotely interested in turning around is his agency's ugly story-line. He has yet to even accept his agency did anything wrong, spending a March hearing arguing that the IRS didn't engage in "targeting" and claiming the Treasury inspector general agreed. This was so misleading the Washington Post gave Mr. Koskinen "three Pinocchios, " noting the IG had testified to the exact opposite.

Under his management, the agency has ignored and strung out congressional demands for documents and witnesses. Mr. Koskinen waited months to tell Congress the IRS had "lost" the emails of Lois Lerner, the former IRS official at the center the probe, and arguably only did so because an outside lawsuit revealed that the email record was incomplete. He testified that there were no backup tapes with Lerner emails, but we have since learned there are 760 server drives that may contain copies.

The "reformer" has bristled at every question. He's indignant that investigators might question how the Lerner emails were lost; indignant that they'd ask why her BlackBerry BB.T +0.93% was wiped after their investigation began; indignant that they'd wonder why he didn't tell them about the lost email. We're still waiting for him to show any indignation at the IRS employees who abused the law, and hid the fact.

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September 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)