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Monday, June 16, 2014

The IRS Scandal, Day 403

IRS Logo 2National Journal:  Did The IRS Really Lose Lois Lerner's Emails? Let a Special Prosecutor Find Them, by Ron Fournier:

A sloppy mistake, the government calls it, but you couldn't blame a person for suspecting a cover-up -- the loss of an untold number of emails to and from the central figure in the IRS tea party controversy. And, because the public's trust is a fragile gift that the White House has frittered away in a series of second-term missteps, President Obama needs to act.

If the IRS can't find the emails, maybe a special prosecutor can. ...

The White House is stonewalling the IRS investigation. The most benign  explanation is that Obama's team is politically expedient and arrogant, which makes them desperate to change the subject, and convinced of their institutional innocence. That's bad enough. But without a fiercely independent investigation, we shouldn't assume the explanation is benign.

Roger Kimball, 18 1/2 Minutes vs. 2 Years: Which Is Worse?:

WoodsWriting yesterday about the IRS’s amazing loss of more than two years of Lois Lerner’s emails (“Where’d they go? They were here just a minute ago!”), I wondered in passing how the Extended White House Public Relations Office, e.g., the New York Times, MSNBC, et al. would handle the news. The Nixon White House, you’ll recall, found quite a lot of the morning’s scrambled on its collective countenance when 18 and 1/2 minutes of audio tape somehow went missing as the Watergate scandal unfolded around the president.

What a godsend to the guardians of our “Right to Know” Watergate was! Day after day, week after week, month after month, the front pages and editorial pages of our former Paper of Record were full of stern admonitions about that egregious abuse of executive power. You could not look at the paper without a synesthetic shudder: Reading it, you could almost hear them licking their chops as their prey—the dastardly Richard Nixon—came ever closer to his doom.

So how does the New York Times handle this extraordinary loss of two years’ worth of Lois Lerner’s emails? ... This will amaze you, I know, but it is true: the New York Times today devotes zero words to the story. Take a look at the front page here: Nothing. ... [A]bout the missing emails in one of the most disgusting political scandals in recent times, the deployment of the IRS with its virtually unlimited powers, against political opponents of the administration? Nothing. Nada. Rien.

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June 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, June 15, 2014

ABA Releases Revised Law School Accreditation Standards, Protocol for Reporting Placement Data

ABA Logo 2Following up on Monday's post, ABA: Law Schools Can Admit 10% of Students Without LSAT, Must Do Annual Audit of Placement Data, Can't Give Academic Credit for Paid Externships

ABA Section of Legal Education and Admission to the Bar Standards Review Committee, Final Revisions to the ABA Standards and Rules of Procedure for Approval of Law Schools:

At its meeting in March 2014, the Council approved the vast majority of the revisions that had been circulated for Notice and Comment. In addition, the Council approved several additional matters for Notice and Comment. After reviewing the comments received on the matters circulated for comment in March 2014, the Council made final determinations on the recommendations at its meeting on June 6, 2014.

The complete set of revisions is scheduled to be reviewed by the ABA House of Delegates in August 2014 in accordance with House Rule 45.9. The House may either concur with the Council’s decisions or refer a proposed change back to the Council for further consideration. Any reference back to the Council must include a statement setting forth the reasons for the referral. A decision by the Council is subject to a maximum of two referrals back to the Council by the House. The decision by the Council following the second referral is final.

The Standards and Rules will become effective immediately upon concurrence by the House of Delegates in August. Although the Standards will be effective in August, there will be a phase-in period for some Standards and a delay in implementation. A timeline and more detailed information about the implementation of the revised Standards and Rules of Procedure will be available this fall.

ABA Section of Legal Education and Admissions to the Bar, Protocol for Reviewing Law Graduate Employment Data, and Statement of Procedures for Collecting, Maintaining, and Reporting Law Graduate Employment Data (June 9, 2014):

I. Protocol for Reviewing Law Graduate Employment Data.
This Protocol addresses the review of law graduate employment data reported to the ABA or presented to the public. There will be four types of reviews:
(A) Standard 509 Website Compliance Review: All law schools accredited by the ABA will be subject to this type of review.
(B) Random School Review: At least 10 law schools each year will be selected at random for this type of review.
(C) Random Graduate Review: Random reviews will be conducted on a statistically sound sample of graduates drawn from the population of all graduates of ABA accredited law schools.
(D) “Red Flag” Review: Red Flag Reviews will be conducted of schools as provided in paragraph D below. ...

II. Statement of Procedures for Collecting, Maintaining and Reporting Law Graduate Employment Data.
This Statement sets forth instructions and guidelines for law schools in collecting, maintaining, reporting, and publishing graduate employment data. In order for the ABA to effectively review reported graduate employment outcomes data, law schools must maintain accurate, contemporaneous, and verifiable documentation that supports them.

III.  Timetable for Section Graduate Employment Data Reviews.

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June 15, 2014 in Legal Education | Permalink | Comments (4)

Walgreens' Planned Move From Illinois to Switzerland Would Save $4 Billion in Taxes

Americans for Tax Fairness, Offshoring America’s Drugstore Walgreens May Move its Corporate Address to a Tax Haven to Avoid Paying Billions in U.S. Taxes:

WalgreensWalgreens could cost taxpayers $4 billion in lost revenue over five years should the company decide to renounce its American corporate legal status and move its official address to Switzerland, a tax haven. The company is widely reported to be considering this move and says it will announce its intentions as soon as this summer. Walgreens is the nation’s largest pharmacy retailer with 8,200 stores and locations in all 50 states.

June 15, 2014 in Tax, Think Tank Reports | Permalink | Comments (10)

Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads on SSRN is the same as last week's list:

  1. [326 Downloads]  The New Flat Tax: A Modest Proposal for a Constitutionally Apportioned Wealth Tax, by John Thomas Plecnik (Cleveland State)
  2. [321 Downloads]  Just Say No: Corporate Taxation and Corporate Social Responsibility, by Reuven Avi-Yonah (Michigan)
  3. [227 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)
  4. [208 Downloads]  The Real Problem with Carried Interests, by Heather Field (UC-Hastings)
  5. [181 Downloads]  A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act, by Samuel Eisenberg (Stanford), Michael Wara (Stanford), Adele Morris (Brookings Institution), Marta Darby (Stanford) & Joel Minor (Stanford)

June 15, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 402

IRS Logo 2Wall Street Journal editorial:  The IRS Loses Lerner's Emails (And Other News That the Beltway Press Corps Won't Cover):

The IRS—remember those jaunty folks?—announced Friday that it can't find two years of emails from Lois Lerner to the Departments of Justice or Treasury. And none to the White House or Democrats on Capitol Hill. An agency spokesman blames a computer crash.

Never underestimate government incompetence, but how convenient. The former IRS Director of Exempt Organizations was at the center of the IRS targeting of conservative groups and still won't testify before Congress. Now we'll never know whose orders she was following, or what directions she was giving. If the Reagan White House had ever offered up this excuse, John Dingell would have held the entire government in contempt.

The suspicion that this is willful obstruction of Congress is all the more warranted because this week we also learned that the IRS, days before the 2010 election, shipped a 1.1 million page database about tax-exempt groups to the FBI. ...

New IRS Commissioner John Koskinen promised to cooperate with Congress. But either he is being undermined by his staff, or he's aiding the agency's stonewalling. And now that we know that Justice was canoodling with Ms. Lerner, its own dilatory investigation becomes easier to understand. Or maybe that was a computer crash too.&

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June 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, June 14, 2014

Hanlon: The Lose-Lose Tax Policy Driving Away U.S. Business

Wall Street Journal op-ed:  The Lose-Lose Tax Policy Driving Away U.S. Business, by Michelle Hanlon (MIT):

Apple issued $12 billion of U.S. debt in April, which gave the company a domestic cash infusion that allowed it to keep more earnings overseas. Last month Pfizer attempted to acquire AstraZeneca, a transaction that would have made Pfizer a subsidiary of the U.K.-based company. These were useful examples in the taxation classes I teach at MIT's business school, but the real-world implications of these decisions are troubling. Even worse, legislators have responded with proposals that seek to prevent companies from escaping the U.S. tax system.

The U.S. corporate statutory tax rate is one of the highest in the world at 35%. In addition, the U.S. has a world-wide tax system under which profits earned abroad face U.S. taxation when brought back to America. The other G-7 countries, however, all have some form of a territorial tax system that imposes little or no tax on repatriated earnings.

To compete with foreign-based companies that have lower tax burdens, U.S. corporations have developed do-it-yourself territorial tax strategies. They accumulate foreign earnings rather than repatriate the earnings and pay the U.S. taxes. This lowers a company's tax burden, but it imposes other costs. ...

In short, our international tax policy encourages U.S. multinational corporations to keep cash abroad, borrow more in the U.S. and invest more in foreign locations than they otherwise would. Everyone loses: The U.S. government gets little if any tax revenue from the foreign earnings, and shareholders and the U.S. economy are deprived of valuable resources. ...

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June 14, 2014 in Tax | Permalink | Comments (0)

Brauner Presents Prospects of U.S. Corporate Tax Reform in Switzerland

BraunerYariv Brauner (Florida) presented Prospects of Corporate Tax Reform in the United States yesterday at the Université de Lausanne (Switzerland):

At the time that the international tax community focuses on the BEPS initiative, the US is distancing itself from the project that it's MNEs behavior triggered and to which it heavily contributed at first. Instead a large number of corporate tax reform proposals have been promoted over the last few years with what seems to be zero chance of being passed. The political climate stifles progress despite a surprising consensus among the parties over the tax policy that they would be able to implement under current conditions. In any event, any feasible tax reform is unlikely to affect the prospects of any likely Swiss corporate tax reform.

June 14, 2014 in Colloquia, Tax | Permalink | Comments (0)

The Good Lawyer: Seeking Quality in the Practice of Law

Good LawyerDouglas Linder (UMKC) & Nancy Levit (UMKC), The Good Lawyer: Seeking Quality in the Practice of Law (Oxford University Press, 2014), reviewed by David Lat (Above the Law), Over a Third of All Law-School Graduates Can't Find Work Requiring Bar Passage. It's Worth Asking: What Does a Good Lawyer Look Like?, Wall Street Journal:

What does it mean to be a good lawyer? One is tempted to respond by quoting Justice Potter Stewart's famous quip about pornography: "I know it when I see it." But that wouldn't be terribly
illuminating, particularly during a period of such turmoil and transformation for the legal profession, with lawyers chasing after scarce jobs and firms fighting for limited clients. As Douglas Linder and Nancy Levit note in their new book, over a third of all law-school graduates cannot find work requiring bar passage, and median starting salaries for lawyers fell by 15% from 2009 to 2012.

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June 14, 2014 in Book Club, Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 401

IRS Logo 2House Ways & Means Committee Press Release:  IRS Claims to Have Lost Over 2 Years of Lerner Emails (June 13, 2014):

Today, Ways and Means Committee Chairman Dave Camp (R-MI) issued the following statement regarding the Internal Revenue Service informing the Committee that they have lost Lois Lerner emails from a period of January 2009 – April 2011.  Due to a supposed computer crash, the agency only has Lerner emails to and from other IRS employees during this time frame.  The IRS claims it cannot produce emails written only to or from Lerner and outside agencies or groups, such as the White House, Treasury, Department of Justice, FEC, or Democrat offices.

“The fact that I am just learning about this, over a year into the investigation, is completely unacceptable and now calls into question the credibility of the IRS’s response to Congressional inquiries.  There needs to be an immediate investigation and forensic audit by Department of Justice as well as the Inspector General.

“Just a short time ago, Commissioner Koskinen promised to produce all Lerner documents.  It appears now that was an empty promise.  Frankly, these are the critical years of the targeting of conservative groups that could explain who knew what when, and what, if any, coordination there was between agencies.  Instead, because of this loss of documents, we are conveniently left to believe that Lois Lerner acted alone.  This failure of the IRS requires the White House, which promised to get to the bottom of this, to do an Administration-wide search and production of any emails to or from Lois Lerner.  The Administration has repeatedly referred us back to the IRS for production of materials.  It is clear that is wholly insufficient when it comes to determining the full scope of the violation of taxpayer rights.”

Oversight Subcommittee Chairman Charles Boustany Jr., M.D. (R-LA) added, "In the course of the Committee's investigation, the Administration repeatedly claimed we were getting access to all relevant IRS documents. Only now - thirteen months into the investigation - the IRS reveals that key emails from the time of the targeting have been lost.  And they bury that fact deep in an unrelated letter on a Friday afternoon.  In that same letter, they urge Congress to end the investigations into IRS wrongdoing. This is not the transparency promised to the American people.  If there is no smidgeon of corruption what is the Administration hiding?"

IRS Statement (June 13, 2014):

At the request of the Senate Finance Committee, the IRS today provided a summary of its production of email and materials to the Committee related to the processing and review of applications for tax-exempt status, as described in the May 2013 report by the Treasury Inspector General for Tax Administration. The IRS has made unprecedented efforts in connection with this effort, producing more than 750,000 pages of documents to help complete the investigations. In total, the IRS’s efforts to respond to Congress have involved more than 250 IRS employees working more than 120,000 hours at a direct cost of nearly $10 million.

As we advised the committee three months ago, we have completed the production of materials related to the investigation, including 11,000 emails sent or received by Lois Lerner.

Since then, at the request of other Congressional committees, the IRS has been working on the identification and production of other Lois Lerner emails. The additional emails do not relate to the Finance Committee’s investigation. As part of this additional search, the IRS collected emails from 83 individuals. Congressional investigators have – or will soon have – a total of 67,000 emails sent or received by Ms. Lerner. In the course of collecting and producing Ms. Lerner’s additional emails, the IRS determined her hard drive crashed in 2011. At the time, Ms. Lerner asked IRS IT professionals to restore her hard drive, but they were unable to do so. Nonetheless, the IRS has or will produce 24,000 Lerner emails from this 2009-2011 time period, largely from the files of the other 82 individuals. The IRS’s production to Congress of the 67,000 Lerner emails is nearly complete.

The IRS is committed to working with Congress. The IRS has remained focused on being thorough and responding as quickly as possible to the wide-ranging requests from Congress while taking steps to protect underlying taxpayer information.

IRS Letter to Senate Finance Committee (June 13, 2014):

I am writing to provide an update on IRS document productions to Congress. As of mid-March 2014, the Senate Finance Committee and the House Ways & Means Committee had received the documents the IRS identified as related to the processing and review of applications for tax-exempt status as described in the May 2013 report by the Treasury Inspector General for Tax Administration. See Enclosure 1. As my August 29, 2013 letter to you described, in order to produce those documents, we ran agreed search terms on many (then 77, now 83) custodians’ electronic materials, reviewed the resulting materials for responsive documents, and produced them. See Enclosure 2. Production of those materials identified as responsive from the agreed custodians and search terms was completed three months ago. See Enclosure 1.

The IRS hopes that your investigation can be concluded and the Senate Finance Committee’s report issued in the very near future so that the IRS can then take further corrective action to address issues, where necessary. Congressional reports are important to learn from, address, and move beyond the problems and concerns identified. Your committee’s conclusions and recommendations will be a critically important step in that process.

More than 250 IRS employees have spent over 120,000 hours working on compliance with several investigations stemming from last May’s report related to the processing and review of applications for tax-exempt status by the Treasury Inspector General for Tax Administration. We have responded to hundreds of Congressional requests for information. In so doing, the IRS has incurred a direct cost of nearly $10 million. We have spent an additional $6-8 million to optimize existing information technology systems and ensure a stable infrastructure for the production and required redactions to protect taxpayer information. I have attached a document describing some of the challenges and limitations that the IRS faced in its production process. See Enclosure 3.

Since mid-March, in response to Chairman Dave Camp’s request and Chairman Darrell Issa’s subpoena, the IRS has been reviewing and producing all remaining email for which Lois Lerner was a custodian – regardless of search terms, relevance, or subject matter. In other words, these Lerner documents are beyond and in addition to the already-produced Lerner materials the IRS identified as related to the processing and review of applications for tax-exempt status, which your Committee had received by mid-March. In addition, as described in Enclosure 3, when unavailable from Ms. Lerner’s custodial account, we are producing Lerner-related email (i.e., email on which Ms. Lerner was an author or recipient) from other custodians regardless of subject matter. In certain instances, such as personal conversations between Ms. Lerner and her family regarding health issues, we expect to make the materials available here at the IRS for interested Congressional staff to come review. In all, the IRS has produced or will produce or make available approximately 67,000 emails in which Ms. Lerner was an author or a recipient. As per your staff’s request, we will continue to include your committee in our productions until or unless you instruct us otherwise.

Description of IRS Email Collection and Production (June 13, 2014):

Over the past year, the Internal Revenue Service made a massive document production in response to Congressional and other inquiries. This activity has been challenging since processing email for production to third parties is a more complex process for the IRS than it is for many private or public organizations. Below we analyze why it is so complicated for the agency to respond to what otherwise in this modern day seem like straightforward requests, including an assessment of what is and is not currently possible. Sophisticated IRS information technology systems are designed to facilitate tax administration, cost-effective use of resources, and preserve confidential taxpayer information, not to facilitate matters related to document preservation, collection, processing, and review. The IRS faces unique challenges in producing email to third parties because of how its email is stored, the security required for IRS email, and the laws protecting confidential taxpayer information from disclosure.

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June 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, June 13, 2014

The 10 Most-Cited Tax Faculty

Brian Leiter (Chicago) has announced that he will be releasing an updated ranking of the Ten Most-Cited U.S. Law Faculty in 11 areas of specialization, as measured by citations during the past five years (2009-2013).  He previewed the ranking today by releasing the ten most-cited tax faculty:

Rank

Tax Prof

Citations

Age

1

Michael Graetz (Columbia)

400

69

 

David Weisbach (Chicago)

400

50

3

Reuven Avi-Yonah (Michigan)

350

56

4

Daniel Shaviro (NYU)

340

56

5

Leandra Lederman (Indiana)

290

47

 

Larry Zelenak (Duke)

290

58

7

Victor Fleischer (San Diego)

280

42

8

Edward Zelinsky (Cardozo)

270

58

9

Joseph Bankman (Stanford)

250

58

 

Edward McCaffery (USC)

250

55

Leiter also lists four highly-cited scholars who work partly in tax.

In our article, Pursuing a Tax LLM Degree: Where?, Jennifer M. Kowal (Loyola-L.A.), Katherine Pratt (Loyola-L.A.), Theodore P. Seto (Loyola-L.A.) and I used a variation of Leiter's methodology in conducting a citation count study of the faculty in thirteen highly rated graduate tax programs  (pp. 28-29):

Rank

Graduate Tax Program Faculty

Citations

1

NYU

1917

2

Florida

1181

3

Georgetown

861

4

Miami

799

5

Northwestern

667

6

Boston University

614

7

Loyola-L.A.

475

8

San Diego

377

9

Villanova

177

10

SMU

139

11

Chapman

112

12

U. Washington

75

13

Denver

42

Prior TaxProf Blog coverage:

In our article, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83, 120-22 (2006), Bernie Black (Northwestern) and I examined the Top 25 tax faculty as measured by SSRN downloads, a practice I update monthly on TaxProf Blog.

June 13, 2014 in Tax, Tax Faculty Rankings, Tax Prof Rankings | Permalink | Comments (2)

Weekly Tax Roundup

 Weekly Roundup

June 13, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

June 13, 2014 in Scholarship, Tax | Permalink | Comments (0)

Weekly Legal Education Roundup

June 13, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

June 13, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

LL.M. Degrees Help Prepare Law Students for a More Specialized Future

LLMLawyer & Stateman (June 2014):

A More Specialized Future:  Law schools are busy launching LL.M. programs in an effort to keep up with the need to deliver more specialized education.  The job market is tight and law firms are looking for attorneys with specialized training. Enter the LL.M., a graduate degree that was once exclusive to tax lawyers and a few select others.  The degree, however, has grown in popularity in recent years, and law schools are responding with even more specialized offerings for attorneys.

The Online LL.M.; Is It the Right Option for You?  The online option is becoming increasingly popular as technology improves and attorneys find that the degree offers the flexibility they need.  No matter where they live or work, they can get an advanced degree in programs like, taxation, health law, business transactions, wealth management or risk management.  Whereas students were cautious a few years ago, the experience has improved to the point where most now say they have ample opportunities to interact with fellow students and professors.

A Consumer Guide to LL.M. Programs

June 13, 2014 in Legal Education | Permalink | Comments (4)

President Obama Requests 10.5% Budget Increase for IRS, Despite IRS's Failure to Perform Basic Budget Planning

GAO LogoThe Government Accountability Office has released IRS 2015 Budget: Long-Term Strategy and Return on Investment Data Needed to Better Manage Budget Uncertainty and Set Priorities (GAO-14-605):

Since fiscal year 2010, the Internal Revenue Service (IRS) budget has declined by about $900 million. As a result, funding is below fiscal year 2009 levels.

IRS Appropriations FY 2009 - 2014 and FY 2015 Requested Appropriation

IRS Appropriations Fiscal Years 2009 through 2014 and Fiscal Year 2015 Requested Appropriation

Staffing has also declined by about 10,000 full-time equivalents since fiscal year 2010, and performance has been uneven. ...

IRS does not calculate actual ROI or use it for resource decisions. These limitations are important, which is why GAO recommended in 2012 that IRS explore developing such estimates. ... GAO recommends that IRS (1) develop a long-term strategy to manage uncertain budgets, and (2) calculate actual ROI for implemented initiatives, compare actual ROI to projected ROI, and use the data to inform resource decisions.

June 13, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (5)

Orszag: Toward a Progressive Tax Policy: The Case for a Consumption Tax and an Inheritance Tax

Bloomberg View:  Toward a Progressive Tax Policy, by Peter R. Orszag:

In the hoopla over whether Thomas Piketty’s data on growing global inequality are correct, an important question about how to address the problem has been obscured. Piketty describes his own global wealth tax idea as more of a “useful utopia” than a practical policy suggestion. Is there anything more plausible that can be done?

Two suggestions come to mind, at least for U.S. policy makers.

The first is a progressive consumption tax. This kind of tax is already embraced by many conservative thought leaders because it is, compared with other types of taxes, economically efficient. But it is efficient in no small part because it imposes a tax on wealth. People have no way to convert their money into anything they consume without paying the tax. ...

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June 13, 2014 in Tax | Permalink | Comments (3)

Jocelyn Benson Named Dean at Wayne State, Youngest Woman Dean in American Law School History

Wayne State press release, Jocelyn Benson Appointed Wayne Law's 11th Dean:

BensonJocelyn Benson, who has served as interim dean of Wayne State University Law School since December 2012, has been appointed permanent dean.

At age 36, Benson becomes the youngest woman ever to lead a U.S. law school.

WSU Provost and Senior Vice President for Academic Affairs Margaret E. Winters announced the appointment, which is effective Monday, June 16. “While serving as the law school’s interim dean since December 2012, Dean Benson has improved bar passage rates, increased the law school’s ranking with U.S. News & World Report and added hands-on learning opportunities for students,” Winters said. “I’m excited to see her future accomplishments in the years ahead.”

Benson, who joined the Wayne Law faculty in 2005, was selected for the permanent deanship after a national search. [The other finalists were Danielle Conway (Hawaii), Kary Moss (ACLU of Michigan), and Christopher Peters (Baltimore).]

(Hat Tip: Law Deans on Legal Education Blog.)

June 13, 2014 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 400

IRS Logo 2Power Line Blog, Bill Henck: Inside the IRS, Part 3:

William Henck has worked inside the IRS Office of the Chief Counsel as an attorney for over 26 years. We posted his personal account, including his testimony to a retaliatory audit conducted by the IRS against him, this past February in “Inside the IRS” and followed up with Inside the IRS, part 2″ in May. ... Henck’s experience illuminates a deeply sinister aspect of the current controversy over the agency’s illegal activities.

American Spectator:  Mickelson Targeted Like Tea Partiers?:

Here's how it sounds to me: Famous rich athlete complains about the negative incentives caused by high taxes. Government usees especially aggressive tactics to try to find him guilty of securities violations, not least perhaps intentionally leaking the existence of an investigation, a story which the Obama-cheerleading, tax-loving NY Times is only too happy to cover. The Times then reports that "Mr. Mickelson’s ties to the investigation are weaker than previously reported." But of course much of the damage to Mickelson is done, harming his reputation as well as distracting him from his profession and the rest of his life.

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June 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, June 12, 2014

Fleischer: President Obama Should Unilaterally Raise the Tax Rate on Carried Interest Earned by Hedge Fund Managers

New York Times Deal Book:  How Obama Can Increase Taxes on Carried Interest, by Victor Fleischer (San Diego):

NY Times Dealbook (2013)President Obama could change the tax treatment of carried interest with a phone call to the Treasury Department. But the White House will need a precise understanding of the regulatory landscape to make a change that is fair, easy to administer, and will hold up in court.

The administration has increasingly relied on executive branch rule-making authority to make policy without waiting for a gridlocked Congress to act. The White House has made significant changes to education policy, immigration policy, environmental standards and climate change policy, and, most recently, student loans. And it has the legal authority to unilaterally change the tax treatment of carried interest. ...

A recent article by David Lebedoff called on the White House to act unilaterally, as it has done in other areas. The article identifies a 1993 revenue procedure as the source of the problem under current law. Mr. Lebedoff, who is a respected author and lawyer but not a tax expert, misses the mark a bit in his legal analysis. But he is dead right in suggesting that the administration may consider unilateral action. ...

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June 12, 2014 in Tax | Permalink | Comments (1)

Law School Rankings: Judicial Clerkships

Robert Morse (Director of Data Research, U.S. News & World Report), Grads of These Law Schools Get the Most Judicial Clerkships:

U.S. News has just published two exclusive clerkship lists of law schools using data from our 2015 Best Law Schools rankings for the 2012 J.D. graduating class. The first list shows which ranked law schools have the largest proportion of their employed 2012 graduates working at judicial clerkships with federal judges. The second list shows which ranked law schools have the largest proportion of their employed 2012 graduates working at clerkships with judges at the state and local levels.

 

School (US News Rank)

Fed. Clerkship %

School (US News Rank)

St. & Local Clerkship %

1

Yale (1)

36.3%

Rutgers-Camden (81)

42.0%

2

Stanford (3)

29.1%

Rutgers-Newark

33.2%

3

Harvard (2)

18.5%

Seton Hall (68)

33.1%

4

Chicago (4)

15.0%

Hawaii (100)

28.0%

5

Duke (10)

14.3%

South Dakota (145)

20.6%

6

Vanderbilt (16)

12.6%

UNLV (83)

19.5%

7

Virginia (8)

12.6%

South Carolina (93)

19.4%

8

Notre Dame (26)

11.0%

Colorado (43)

19.0%

9

Pennsylvania (7)

10.6%

Oregon (100)

17.7%

10

Georgia (29)

10.3%

Howard (135)

17.6%

June 12, 2014 in Law School Rankings, Legal Education | Permalink | Comments (2)

Crawford Reviews McCouch's Who Killed the Rule Against Perpetuities?

JotwellBridget Crawford (Pace), A Lawyer With a Candlestick in the Conservatory: The Perpetuities Whodunit (Jotwell), reviewing Grayson M.P. McCouch (Florida), Who Killed the Rule Against Perpetuities?, 40 Pepp. L. Rev. 1291 (2013) (Symposium on Tax Reform in a Time of Crisis):

For readers who are interested in the relationship between and among tax law, legal reform and professional culture and change, this article provides much food for thought. Many states that have repealed the rule against perpetuities have also abolished income taxation of trusts and their beneficiaries. For that reason, even states with a booming trust business may not receive any direct tax revenue from it. But the ancillary effects of increased trust business—more jobs created in that state—should not be underestimated. It may be that some lawyers and bankers have benefited handsomely from perpetuities reform, but so has that same reform given rise to a new cadre of supporting professionals who pay taxes and spend their paychecks in those states. McCouch’s article undoubtedly will serve as the inspiration for additional scholarship in this area.

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Professionals' Contribution to the Legislative Process

Adam S. Hofri-Winogradow (Hebrew University of Jerusalem, Faculty of Law), Professionals' Contribution to the Legislative Process: Between Self, Client, and the Public, 39 Law & Soc. Inquiry 96 (2014):

How may professionals be made to contribute to legislative processes so that their expertise redounds to the public interest, despite the legislative product being likely to have a negative impact on their clients' wealth? Drawing on a case study of the legislative process that gave birth to Israel's recent (2002–2008) trusts taxation regime, based on five years of participant observation among the trust professional community, I find that to obtain the benefit of private-sector professionals' expertise under such circumstances, government should have legislation drafted in a dispassionate, exclusive environment of experts rather than in the political arena; it should build professionals' trust in government by adopting an explicitly collegial approach; it should focus reform efforts on elements of the existing law so clearly inequitable as to make a refusal to contribute difficult to justify; and take care that the new regime creates a compliance practice lucrative enough to compensate for any loss to professionals consequent on its enactment. Once professionals' interests are suitably safeguarded, their loyalty to clients appears surprisingly brittle and government can successfully combine with them in the public interest.

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Citing His Own Law School Debt, President Obama Expands Student Loan Relief

ABA Journal, Citing His Own Law School Debt, Obama Expands Repayment Caps on Student Loans:

President Barack Obama has signed an executive order expanding a 2010 law that capped student-loan repayments for newer government-backed loans at 10 percent of the borrower’s monthly income.

Obama announced his action on Monday, citing his own experience with law school loans paid off just 10 years ago. The goal is to implement the expansion in December 2015, after new rules are drafted. The New York Times and Politico have reports.

Currently the 10 percent cap, part of the Pay as You Earn program, is not available to those with older loans, according to a fact sheet. Monthly payments are based on a sliding scale, and any remaining balance is forgiven after 20 years of payments, or 10 years for those in public service jobs.

Obama’s order would expand Pay as You Earn to include nearly 5 million additional federal direct student loan borrowers. Pay as You Earn is more generous in its loan caps than a different Income Based Repayment program that currently applies to all borrowers with federal student loans, according to Bloomberg Business Week. IBR caps payments at 15 percent of discretionary income.

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June 12, 2014 in Legal Education | Permalink | Comments (1)

Tax Implications of $1,500 Waffle House Tip

(Hat Tip: Darryll Jones, Leandra Lederman)

June 12, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Gerzog: The Façade Easement Charitable Deduction

Wendy C. Gerzog (Baltimore), Alms to the Rich: The Façade Easement Deduction:

This article presents the case for repeal of the façade easement deduction. Proponents of this benefit argue that the deduction encourages historic preservation by reimbursing property owners for relinquishing their right to alter the façade of their property in a way inconsistent with that conservation goal; however, this article shows that there are many reasons to urge its repeal: the revenue loss, the small number of beneficiaries, the financial demographics of that group of beneficiaries; the dubious industries that are supported by the deduction; and the continual marked overvaluation and abuse despite Congressional, court, and administrative review and expense.

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June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Yesterday's Tax Reports

June 12, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 399

IRS Logo 2Wall Street Journal:  FBI Returns Taxpayer Information It Got From IRS:

The FBI has returned a large database of taxpayer information it received from the IRS, amid an investigation into possible political targeting of conservative groups, the FBI's director said on Wednesday.

Testifying before the House Judiciary Committee, James Comey said FBI investigators didn't examine the database, which included private taxpayer information that isn't supposed to be shared without a judge's order. "The only thing that was done, (was) analysts looked at the table of contents,'' Mr. Comey said.

In January, The Wall Street Journal reported that law-enforcement officials don't expect to file criminal charges as a result of the probe into how the IRS scrutinized conservative tax-exempt groups.

Congressional Republicans are incensed that the IRS transmitted a 1.1 million-page database of information concerning tax-exempt organizations to the FBI shortly before the 2010 election.

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June 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, June 11, 2014

Marian Presents Designing a Regulatory System for the Bitcoin Era Today in Albuquerque

MarianOmri Marian (Florida) presents Designing a Regulatory System for the Bitcoin Era at the annual meeting of the National Association of Consumer Credit Administrators (NACCA) today in Albuquerque:

Abstract: Bitcoin is now touted as revolutionary as the Internet in the early 1990s. The potential of Bitcoin and other cryptocurrencies is hardly limited to being a medium of exchange. At its core, Bitcoin is a protocol that allows for the verification of transactions without the need for a trusted third party. As such, Bitcoin holds great positive potential. However, Bitcoin is also uniquely suited to facilitate harmful behaviors. Traditional regulatory models rely heavily on intermediaries that are optimally positioned to identify and disrupt misconduct, but Bitcoin has the potential to eliminate intermediaries without eliminating the underlying conduct. How can policymakers address the challenges that Bitcoin presents to traditional regulatory models, without hindering Bitcoin’s generative potential? This is the question the Article seeks to answer. The Article advances two main arguments: First, intermediary-based regulation will persist to a significant extent even in a Bitcoin-dominated environment. Many intermediaries are market-created, not government-created constructs. Such intermediaries can be regulated under traditional intermediary-liability models. Second, where intermediaries are eliminated, the article proposes a different theoretical model of regulatory framework – “passive crowd participation”. Under a passive crowd participation model, actors who use Bitcoin for legitimate purposes are incentivized to act in a manner that makes the Bitcoin ecosystem less attractive for illicit users. I use tax evasion to explain how such model might work in practice. I propose a model of “surrogate presumptive collection” tax, by which merchants accepting bitcoins collect gross tax that serves as a proxy for the consumer’s income tax liability. The surrogate tax is waived if the consumer identifies itself to the merchant or to a trusted bitcoin clearing service.

June 11, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Suffolk Freezes Faculty and Staff Salaries in Wake of Declining Law School Enrollment

Boston Globe:  Suffolk University Freezing Salaries for Year; University Cites Drop in Revenue, Enrollment:

Sufolk Law SchoolSuffolk University, facing a $11 million drop in budgeted revenue and a dip in enrollment, will freeze employee salaries for the next fiscal year. ...

“We continue to build for the future; therefore this budget was created with an emphasis on investing in our students while containing costs to minimize tuition increases,” university president James McCarthy wrote in a message to employees last week. ... The budget sought to address a “challenging enrollment environment,” McCarthy wrote. Administrators expect a smaller-than-anticipated law school class, a slight decline in the ranks of new undergraduates, and flat graduate enrollment. ... Nationally, law school enrollment has also suffered in recent years, with the number of first-year students dropping 24 percent since the fall of 2010, according to the ABA.

First year enrollment fell 15% in 2013 (457) compared to 2012 (535).

June 11, 2014 in Legal Education | Permalink | Comments (1)

EU Investigates Tax Planning by Apple, Starbucks

Dave Chappelle Makes the Case for High Marginal Tax Rates

New York Times:  Dave Chappelle Makes the Case for High Marginal Tax Rates, by Neil Irwin:

Dave Chappelle, the comedian who walked away from a wildly successful TV show named for him a decade ago, made his first talk show appearance in ages Tuesday night. He probably wasn’t intending to make an argument about maximizing the efficiency of the tax system in his appearance on the “Late Show With David Letterman,” but that’s what he ended up doing.

Mr. Chappelle discussed the reported $50 million contract he walked away from when he abruptly ended “The Chappelle Show.” Does the loss of all that money haunt him?

“So I look at it like this,” Mr. Chappelle said. “I’m at a restaurant with my wife. It’s a nice restaurant. We’re eating dinner. I look across the room and I say: ‘You see this guy, over here across the room? He has $100 million. And we’re eating the same entree. So, O.K., fine, I don’t have the $50 million or whatever it was, but say I have $10 million in the bank.’ The difference in lifestyle is minuscule.”

His point is about the diminishing marginal utility of rising wealth. If you are flat broke and somebody gives you $1 million, that money significantly increases your quality of life. Going from $1 million to $10 million makes you better off, though probably not 10 times better off. And similarly, going from $10 million to $50 million in net worth creates far less improvement in your quality of life than those early steps of going from broke to $1 million or $1 million to $10 million. ...

That’s a reason advocates of higher marginal income tax rates on the highest earners would argue there is little loss of human welfare by enacting very high rates on the highest income brackets. The difference in quality of life between “very wealthy” and “extraordinary wealthy” is not that great, which should make it a relatively painless way to raise tax revenue.

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June 11, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Shanske: State-Level Carbon Taxes and the Dormant Commerce Clause

Darien Shanske (UC-Davis), State-Level Carbon Taxes and the Dormant Commerce Clause: Can Formulary Apportionment Save the World?, 19 Chapman L. Rev. ___ (2015):

This short Article, a contribution to a symposium, outlines some possible design responses to the primary legal issue raised by the implementation of a state-level carbon tax. There are at least two reasons for states to consider a carbon tax. First, somewhat prosaically, the Environmental Protection Agency just released draft rules requiring states to reduce carbon emissions; these rules appear to permit states to achieve at least some of the required reduction through carbon taxes. Second, and more importantly, economists offer strong arguments for preferring carbon taxes as a method of greenhouse gas mitigation. Accordingly, even before the new EPA rules were proposed, a carbon tax was already being considered in some U.S. states, such as Oregon, and a carbon tax is in place in one Canadian province, British Columbia.

The primary legal issue with a state-level tax in the United States is the following: a carbon tax imposed in only one state will presumably make goods and services produced in that state more expensive. The direct response would be to impose a complementary carbon tax on imports. Yet it would appear that the dormant Commerce Clause, and particularly the Supreme Court’s narrow interpretation of the complementary tax doctrine, bars the way to such border adjustments. This Article argues that appearances might be deceiving and that border adjustments might be possible. Alternatively, this Article argues that formulary apportionment could take the place of border adjustments. 

June 11, 2014 in Scholarship, Tax | Permalink | Comments (1)

CRS: Tax Issues in Corporate Expatriation, Inversions, and Mergers

CRS LogoDonald J. Marples & Jane G. Gravelle, Corporate Expatriation, Inversions, and Mergers: Tax Issues, Cong. Res. Serv. (R43568) (May 27, 2014):

News reports in the late 1990s and early 2000s drew attention to a phenomenon sometimes called corporate “inversions” or “expatriations”: instances where U.S. firms reorganize their structure so that the “parent” element of the group is a foreign corporation rather than a corporation chartered in the United States in order to reduce the effect of the U.S. corporate income tax. These corporate inversions apparently involved few, if any, shifts in actual economic activity from the U.S. abroad, at least in the near term. Bermuda and the Cayman Islands—countries with no corporate income tax—were the location of many of the newly created parent corporations, and tax savings were the principal objective.

These types of inversions largely ended with the enactment of the American Jobs Creation Act of 2004 (JOBS Act, P.L. 108-357), which denied the tax benefits of an inversion if the original U.S. stockholders owned 80% or more of the new firm. The Act effectively ended shifts to tax havens where no real business activity took place.

However, two avenues for inverting remained. The Act allowed a firm to invert if it has substantial business operations in the country where the new parent was to be located; the regulations at one point set a 10% level of these business operations. Several inversions using the business activity test resulted in Treasury regulations in 2012 that increased the activity requirement to 25%, effectively closing off this method. Firms could also invert by merging with a foreign company if the original U.S. stockholders owned less than 80% of the new firm.

Two features made a country an attractive destination: a low corporate tax rate and a territorial tax system that did not tax foreign source income. Recently, the UK joined countries such as Ireland, Switzerland, and Canada as targets for inverting when it adopted a territorial tax. At the same time the UK also lowered its rate (from 25% to 20% by 2015).

Recently, several high profile companies have indicated an interest in merging or plans to merge with a non-U.S. headquartered company, including Pfizer and Chiquita. Pfizer, for example, was interested in merging with a smaller British firm, AstraZeneca, and moving headquarters to the UK. For Pfizer, which has accumulated substantial profits in subsidiaries in low tax foreign countries that would be taxed if paid to the U.S. parent, the territorial tax system is likely the most important tax benefit from such a merger. This “second wave” of inversions again raises concerns about an erosion of the U.S. tax base.

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June 11, 2014 in Congressional News, Tax | Permalink | Comments (1)

The Gift Tax Treatment of Donations to Social Welfare Organizations

Matthew A. Melone (Lehigh), Gift Taxes on Donations to Social Welfare Organizations: De-politicizing Social Welfare Organizations or Politicizing the IRS?, 12 DePaul Bus. & Com. L.J. 51 (2013):

Part III of this Article provides an analysis of the gift tax in general and its application to contributions to section 501(c)(4) organizations. Despite the dearth of case law on this issue, it appears that taxing contributions to these organizations has ample statutory support, and the current regulations interpreting the statute should survive the deferential standard of review to which they are subject. Moreover, enforcement of the tax against donors to section 501(c)(4) organizations does not do violence to the First Amendment. However, notwithstanding the legal justification for enforcement of the tax, Part IV argues that the enforcement of the tax is unwarranted from a policy standpoint. Enforcement of the gift tax with respect to contributions to section 501(c)(4) organizations will not reduce politically motivated giving because such giving will be diverted to vehicles to which donations are exempt from the gift tax. Moreover, large corporations, for all practical purposes, will be unaffected by the gift tax thereby raising the possibility that section 501(c)(4) organizations will remain a significant political force but one dominated by corporate donors. Perhaps the most salient objection to enforcement of the tax is the risk that the public comes to perceive enforcement of the tax as selective and politically motivated. The IRS recently has taken actions that, to its critics, were politically motivated, and, for the most part, taxpayers are powerless to challenge such actions. A tax system already suffering from a lack of public respect can do without accusations of political meddling.

June 11, 2014 in Scholarship, Tax | Permalink | Comments (0)

Northwestern Dean Rodriguez: Never Let a Good Crisis go to Waste

FortuneFortune:  Northwestern Law Dean: Never Let a Good Crisis Go to Waste, by Maya Itah:

Dean Daniel Rodriguez discusses the opportunities in the highly challenging times for law schools today.

Between its accelerated JD program and its insistence on interviewing every single one of its applicants, Northwestern University School of Law is known for doing things differently. Nevertheless, Dean Daniel B. Rodriguez wants to make it absolutely clear that innovating isn’t a matter of survival for the school, which, at No. 12 in the U.S. News ranking, has long been a member of the hallowed Top 14.

“We don’t have to do anything differently,” he asserts. “We’re greatly, greatly blessed by having an extraordinarily strong reputation, and have had that reputation for a century-and-a-half and counting, so I just want to quibble with the description of having to do things differently.” Point taken. ...

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June 11, 2014 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 398

IRS Logo 2Wall Street Journal, Another IRS Abuse: Lois Lerner's Office Sent Confidential Taxpayer Data to the FBI:

In a Monday letter to IRS Commissioner John Koskinen, Reps. Darrell Issa (R., Calif.) and Jim Jordan (R., Ohio) of the House Oversight Committee reveal still another IRS abuse of conservatives. In October of 2010, apparently without a court order, the IRS sent 21 computer disks containing 1.1 million pages of tax-return documents to the Federal Bureau of Investigation. According to the Justice Department, the massive data dump included public returns from non-profit groups but also taxpayer information that by law the IRS is required to keep confidential. Reps. Issa and Jordan ask in their letter for information relating to the preparation and transmittal of the data.

How did these documents wind up at the FBI? In September of 2010, IRS officials including Lois Lerner and Sarah Hall Ingram helped the New York Times prepare a story about non-profit policy groups which "heavily favored Republicans" in their purchases of issue advertising. 

The day after the article appeared, Justice Department Public Integrity Section Chief Jack Smith noted the story in an email to colleagues and asked whether they could charge the groups with conspiracy to violate U.S. laws. Mr. Smith also suggested scheduling a meeting with Ms. Ingram, who like Ms. Lerner was a senior official overseeing tax-exempt organizations at the IRS. ...

Last month, 26 House Democrats joined with Republicans in voting to urge Attorney General Eric Holder "to appoint a special counsel to investigate the targeting of conservative nonprofit groups by the Internal Revenue Service." The new revelations of taxpayer abuse ensure that Congressional pressure for a more thorough investigation will continue.

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June 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, June 10, 2014

Zelenak: The Taxation of Frequent Flyer Benefits in the U.S., Canada, and Australia

Lawrence Zelenak (Duke), Up in the Air Over Taxing Frequent Flyer Benefits: The American, Canadian, and Australian Experiences:

Since frequent flyer programs first appeared in the early 1980s, the agencies charged with the administration of their nations' income tax laws have struggled with the question of whether -- and if so, how -- to tax employees who earn frequent flyer points (or "miles") on employer-paid business trips, and who eventually redeem those points for personal travel rewards (or other personal consumption services or goods). This article describes and evaluates the ways in which three agencies -- the Internal Revenue Service (IRS) in the United States, the Canada Revenue Agency (CRA) and the Australian Taxation Office (ATO) -- have responded to the tax administration challenge presented by frequent flyer programs. The rather disheartening end of the story (in all three countries) is that no significant amount of tax is being collected on frequent flyer benefits, even though the benefits are clearly taxable in theory (at least in the United States and Canada), and that respect for the rule of law (on the part of both taxpayers and the agencies themselves) has been eroded. The article analyzes what features of frequent flyer programs are responsible for the tax agencies' difficulties, and explains that taxing benefits involves serious problems of timing, valuation, enforcement, and public acceptance. Finally, the article considers how, in light of those problems, an agency (or legislature) could go about designing an effective system for taxing frequent flyer benefits. The task is not easy, but it is also not impossible.

June 10, 2014 in Scholarship, Tax | Permalink | Comments (3)

Rodriguez: Anxiety and Ambition in the Law School Trenches

Dan Rodriguez (Dean, Northwestern), Anxiety and Ambition in the Trenches:

A benefit of my temporary role as AALS president is the opportunity to meet with faculty and administrators at their law schools, mainly in order to listen to their concerns and advice and hopefully draw upon this wisdom to improve the service of the organization in this time of disruptive change.

The atmosphere of these visits reveals a high level of concern (of course) with the impact of the changing admissions structure and what it portends for law school benefits generally and faculty well-being particularly.  Yet, what is remarkably encouraging, when taking these high-anxiety conversations as a whole, is this:

First, faculty members truly get that the core dilemma is how best to provide a high-quality education to the group of students, even as they come in often at smaller numbers, and, moreover, how to inculcate in them the value of a manifestly comprehensive, creative set of skills -- theoretical and experiential -- in a fluid marketplace, the future contours of which none of us can predict exactly. That the infrastructure of student learning is at the heart of what we do as faculty members comes up in these discussions reliably and eloquently.  And, further, that the key threat from the war on law schools is that directed at the students who are investing, and the young alumni who have invested, in legal education is very much on the minds of our member school faculties.

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June 10, 2014 in Legal Education | Permalink | Comments (2)

IRS Adopts Taxpayer Bill of Rights

TBOR

The IRS today announced (IR-2014-72) the adoption of a Taxpayer Bill of Rights in updated Publication 1:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System  

TBOR 2

Taxpayer Advocate Service, Taxpayer Bill of Rights:

Since assuming her position in 2001, National Taxpayer Advocate Nina E. Olson has emphasized the protection of taxpayer rights in tax administration. In her 2007 Annual Report to Congress, and in later reports, she proposed a new Taxpayer Bill of Rights. On June 10, 2014, the IRS formally adopted the Advocate’s proposal, to renew the focus on protecting the rights of taxpayers in all of their dealings with the IRS.  

This document groups the dozens of existing rights in the Internal Revenue Code into ten fundamental rights, and makes these rights clear, understandable, and accessible for taxpayers and IRS employees alike.

Taxpayer Advocate Service, What the Taxpayer Bill of Rights Means for You

Update:

June 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Lucas: How Opportunity Cost Neglect Undermines Democracy

Gary Lucas, Jr. (Texas A&M), Out of Sight, Out of Mind: How Opportunity Cost Neglect Undermines Democracy, 9 N.Y.U. J.L. & Liberty ___ (2014):

Every government program has an opportunity cost, which consists of the private and public goods that society must forgo to make the program possible. In evaluating government programs, rational voters would take opportunity costs into account. Unfortunately, opportunity costs are usually implicit, and psychologists have shown that decision makers tend to irrationally ignore implicit information while giving too much weight to explicit information. This Article presents evidence that the bias against implicit information causes voters to neglect the opportunity costs of government programs. The Article also explains for the first time the implications of opportunity cost neglect for democracy.

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June 10, 2014 in Scholarship, Tax | Permalink | Comments (0)

Back in San Diego

Usd_photoI have made the considerably shorter trek from Malibu to San Diego for my eleventh summer teaching Tax I at the University of San Diego School of Law, my sixth as the Herzog Summer Visiting Professor in Taxation.  San Diego is truly America's Finest City, with spectacular weather, natural beauty, and a dizzying array of things to do. But what is even more enjoyable is renewing acquaintances with the many friends we have made over the years here (not to mention partaking in the world's best pizza and hamburgers).

June 10, 2014 in Legal Education, Tax | Permalink | Comments (2)

ABA: Law Schools Can Admit 10% of Students Without LSAT, Must Do Annual Audit of Placement Data, Can't Give Academic Credit for Paid Externships

ABA Journal, Legal Ed Section’s Council Wraps Standards Review, Keeps Ban on Academic Credit For Paid Externships:

ABA Logo 2The governing council of the ABA Section of Legal Education and Admissions to the Bar has wrapped up its comprehensive review of the law school accreditation standards.

The council, which met Friday in Cleveland, approved five of the six remaining proposed changes in the standards, including one that would permit schools to admit up to 10 percent of their entering class with students who haven’t taken the LSAT and one that would limit the number of transfer credits a school can grant for prior law study not taken as a JD-degree student at an ABA-approved school.

It also approved new rules of procedure, a new set of definitions, a new protocol for auditing reported law school employment outcomes beginning with the graduating class of 2015, and the deletion of a chapter of standards whose provisions have been moved elsewhere in the standards.

In fact, the only proposed change in the standards the council didn’t approve was one that would have eliminated the current prohibition against granting academic credit to a student for participating in a field placement program for which the student receives compensation. ...

All of the proposed changes in the standards—along with a host of others approved by the council in March—will be reviewed by the ABA House of Delegates at the association’s 2014 annual meeting in Boston in August.

Update:  National Law Journal, ABA Council Says No to Paid Law Student Externships

June 10, 2014 in ABA Tax Section, Legal Education | Permalink | Comments (8)

Rodriguez: More on the Technology-Fueled Decline of Lawyers (and Law Schools)

Following up on last week's post, John McGinnis: The Five Ways Computers are Revolutionizing Legal Practice (and Legal Education):  Dan Rodriguez (Dean, Northwestern), Decline of Lawyers? Law Schools Quo Vadis?:

My Northwestern colleague, John McGinnis, has written a fascinating essay in City Journal on "Machines v. Lawyers."  An essential claim in the article is that the decline of traditional lawyers will impact the business model of law schools -- and, indeed, will put largely out of business those schools who aspire to become junior-varsity Yales, that is, who don't prepare their students for a marketplace in which machine learning and big data pushes traditional legal services to the curb and, with it, thousands of newly-minted lawyers.

Bracketing the enormously complex predictions about the restructuring of the legal market in the shadow of Moore's Law and the rise of computational power, let's focus on the connection between these developments and the modern law school. ...

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June 10, 2014 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 397

IRS Logo 2Wall Street Journal, IRS Sent FBI Database on Nonprofit Groups in 2010, GOP Lawmakers Say:

The IRS transmitted a 1.1 million-page database of information concerning tax-exempt organizations to the Federal Bureau of Investigation in the run-up to the 2010 election, including confidential taxpayer information that should not have been shared, according to House GOP lawmakers investigating the IRS.

The information was to be used in investigations of nonprofit groups' political activity, the lawmakers say, citing internal emails from the agencies.

The Justice Department turned over the database to the House Oversight and Government Reform Committee this month in response to a subpoena, officials said on Monday.

"We were extremely troubled by this new information, and by the fact that the IRS has withheld it from the committee for over a year," wrote Reps. Darrell Issa (R., Calif.) and Jim Jordan (R., Ohio) in a letter to IRS Commissioner John Koskinen. "We were astonished to learn days ago from the Justice Department that these 21 disks contained confidential taxpayer information protected by federal law."

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June 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, June 9, 2014

Wake Forest Dean Blake Morant Named Dean at George Washington

BlakePress Release:

The George Washington University announced the selection of Blake D. Morant as the next dean of the GW Law School and Robert Kramer Research Professor of Law. He will assume the deanship on Sept. 1 after having served seven years as dean of the Wake Forest University School of Law.

“Blake Morant is not only a seasoned dean but also a national leader in legal education,” said GW President Steven Knapp. “He brings to this important position a proven record of accomplishments, and his extensive leadership experience will make him an extremely valuable addition to our law school and the entire university.” ...

Following many years of deep involvement at the committee level, Mr. Morant was elected to serve as president-elect of the Association of American Law Schools for 2014 and president in 2015.

(Hat Tip: Greg McNeal.)

Update

June 9, 2014 in Legal Education | Permalink | Comments (3)

Doonesbury: Laptops in the Classroom

DoonesburyHere.  (Hat Tip: Francine Lipman, Jeffrey Kahn.)

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

Douthat: Family-Friendly Tax Reform and the Poor

New York Times:  Family-Friendly Tax Reform and the Poor, by Ross Douthat:

Having promised them some time ago, before a week of travel left me behind on blog posts, I hope to have responses up next week to some of the recent macro-level liberal takes on “reform conservatism” — from E.J. DionneWilliam Galston, and my colleague Tom Edsall, among others.

For now, though, let me direct you elsewhere for more general thoughts on our quasi-movement, and dip a toe into the waters with some comments on one of the specific reformist ideas closest to my heart: A family-friendly tax reform along the lines suggested by Ramesh Ponnuru and Robert Stein, and proposed in legislative form by Utah Senator Mike Lee. A case for that reform (penned by Stein) fills one of the chapters in “Room to Grow,” the recent book of essays that tries to distill reformist thinking on a number of issues, and it inspired a sharply worded attack from Matt Bruenig over at Salon, who dismissed the Lee plan as a “horror show” — an idea that’s “grotesque, vicious and cruel,” he wrote, because it “leaves poor families totally out in the cold.”

Patrick Brennan then defended the proposal for National Review, and Bruenig followed up with a more restrained version of his original critique: In a nutshell, he argues that it doesn’t make sense to have a child tax credit that (because it’s only refundable against payroll taxes) delivers somewhat larger benefits to middle class and rich families than to very poor ones, and that instead pro-family policymakers should favor a flat “child allowance” that gives every family or parent the same per-child benefit regardless of their income.

It’s an interesting argument, so here are few thoughts in response:

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June 9, 2014 in Tax | Permalink | Comments (0)

Thimmesch: The Tax Hangover -- Trailing Nexus

Adam B. Thimmesch (Nebraska), The Tax Hangover: Trailing Nexus, 33 Va Tax Rev. 497 (2014):

Discussions regarding the scope of state taxing power over nonresident persons have generally focused on one issue — the conditions under which a state can tax such a person without violating the Dormant Commerce Clause. That issue has resulted in significant debate regarding whether physical or economic presences are required to create state power. Unfortunately, however, the discussion has ignored an equally important question — when state power, once it is created, terminates. Notwithstanding the lack of academic or judicial analysis of this issue, many states currently apply “trailing nexus” policies that extend their authority past the cessation of taxpayers’ nexus-creating activities. That concept challenges traditional views of the nexus requirement and seems to directly conflict with the Court’s physical-presence rule. This article analyzes the permissibility and scope of trailing nexus under both physical-presence and economic-nexus paradigms and finds that a disaggregated view of the nexus requirement supports its validity. The article also critiques state’s current trailing-nexus formulations and proposes an economic-latency approach that better comports with the Court’s Dormant Commerce Clause jurisprudence.

June 9, 2014 in Scholarship, Tax | Permalink | Comments (0)