TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, August 26, 2015

I Found Happiness When I Abandoned My Work As A Lawyer And Became A Clown

ClownNew York Times:  Abandoning the Work I Hated, by Robert Markowitz:

I was the envy of my 30-something friends in Palo Alto, Calif. I had my own law office right on California Avenue. People charged with crimes handed me cash, in advance, over a big oak desk. Occasionally, I’d make a couple of grand in an afternoon.

But soon, my body started giving out one part at a time. First a shoulder, then my lower back, knee cartilage, neck vertebrae. Two groin hernia surgeries later, at 33 years old, I could not lift a bag of groceries, or sit without an orthopedic pillow. After 10 years as a law student and lawyer, working in a profession I didn’t like was taking its toll. I sold my practice and fled. ...

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August 26, 2015 in Legal Education | Permalink | Comments (0)

Kuehn: Measuring Legal Education's Employment Outcomes

Robert R. Kuehn (Washington University), Measuring Legal Education's Employment Outcomes, 2015 Wis. L. Rev. ___ :

This Article examines evidence of a possible link between learning opportunities in law school and J.D. employment outcomes. It responds to a paper [Does Experiential Learning Improve JD Employment Outcomes?] by Jason Yackee that finds, using 2013 data from top 100 ranked schools, “not much evidence” that law clinic opportunities are likely to improve a school’s graduates’ employment outcomes and suggesting that those opportunities may even harm employment prospects.

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August 26, 2015 in Legal Education, Scholarship | Permalink | Comments (2)

How H&R Block Is Making The Tax Code More Complicated For America’s Poor

H&R BlockVox, H&R Block Snuck Language into a Senate Bill to Make Taxes More Confusing for Poor People:

H&R Block's entire business model is premised on taxes being confusing and hard to file. So, naturally, the tax preparation company has become — along with Intuit, the company behind TurboTax — one of the loudest voices on Capitol Hill arguing against measures that make it easier to pay taxes. For example, the Obama administration has pushed for automatic tax filing, in which the IRS uses income information it already has to fill out your tax return for you. That would save millions of Americans considerable time and energy every year, but the idea has gone nowhere. The main reason? Lobbying from H&R Block and Intuit.

But H&R Block's latest lobbying effort is even more loathsome than its opposition to automatic filing. At the company's instigation, the Senate Appropriations Committee has passed a funding bill covering the IRS whose accompanying report instructs the agency to at least quadruple the length of the form that taxpayers fill out to get the Earned Income Tax Credit.

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August 26, 2015 in Tax | Permalink | Comments (4)

Historical Novel: Could Flaws In Enactment Of 16th Amendment Bring Down Income Tax, Global Economy?

PatriotSteve Berry, The Patriot Threat (Cotton Malone Series Book 10) (2015):

The 16th Amendment to the Constitution is why Americans pay income taxes. But what if there were problems associated with that amendment? Secrets that call into question decades of tax collecting? In fact, there is a surprising truth to this hidden possibility.

Cotton Malone, once a member of an elite intelligence division within the Justice Department known as the Magellan Billet, is now retired and owns an old bookshop in Denmark. But when his former-boss, Stephanie Nelle, asks him to track a rogue North Korean who may have acquired some top secret Treasury Department files—the kind that could bring the United States to its knees—Malone is vaulted into a harrowing twenty-four hour chase that begins on the canals in Venice and ends in the remote highlands of Croatia.

With appearances by Franklin Roosevelt, Andrew Mellon, a curious painting that still hangs in the National Gallery of Art, and some eye-opening revelations from the $1 bill, this riveting, non-stop adventure is trademark Steve Berry—90% historical fact, 10% exciting speculation—a provocative thriller posing a dangerous question.

What if the Federal income tax is illegal?

The story line is compressed into a tight time frame, taking place in less than a day in real time.  And Berry cleverly mixes the history of the federal income tax law with the creation of the National Gallery of Art.  Speculation and gunplay make The Patriot Threat one of Berry’s best books to date.
The New York Times

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August 26, 2015 in Book Club, Tax | Permalink | Comments (3)

Foundation Press Publishes Seventh Edition Of Federal Wealth Transfer Taxation

Federal Wealth Transfer Taxation CoverFoundation Press has published the seventh edition of Federal Wealth Transfer Taxation (amazon), by the late Paul McDaniel (Florida), Jim Repetti (Boston College), and me:

This edition continues the comprehensive, yet flexible, presentation of prior editions. It explores technical and policy issues and is adaptable for use in a single course covering basic wealth transfer taxation or a sequence of such courses at either the J.D. level or LL.M. level. It includes approximately 300 problems, designed to help students master the material covered in each chapter. Within each section, the book moves from the straightforward to the more complex, empowering the professor to select the appropriate level of complexity for her course. It thoroughly integrates all changes in the law through May 1, 2015, including case law, legislation, regulations, rulings, and other administrative pronouncements.

Jim and I have sent the 212-page Teacher's Manual to Foundation Press:

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August 26, 2015 in Book Club, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Fleischer: Private Equity Fees Paid By Universities Deserve Examination

NY Times Dealbook (2013)New York Times Deal Book:  Private Equity Fees Paid by Universities Deserve Examination, by Victor Fleischer (San Diego):

Some financial professionals reacted to my Aug. 19 Op-Ed article on private equity fees and university endowments by emphasizing that superior performance justifies superior fees.

Fair enough. The essay focused on the spending side of the equation. Even if the high fees are justified, universities can and should do more to advance the charitable mission.

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August 26, 2015 in Tax | Permalink | Comments (0)

The Economic Guide To Picking A College Major: It's TEM, Not STEM

538 (2015)Five Thirty Eight, The Economic Guide To Picking A College Major:

The millions of American college students heading back to campus this month face a grim reality: A college degree is no guarantee of economic success. But through their choice of major, they can take at least some steps toward boosting their odds.

The link between education and earnings is notoriously fraught, with cause and effect often difficult to disentangle. But a look at detailed data on college graduates by major reveals some clear messages: Don’t be pre-med if you aren’t planning to go to medical school; don’t assume that all “STEM” — science, technology, engineering and math — majors are the same; and if you study drama, be prepared to wait tables.

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August 26, 2015 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 839

IRS Logo 2National Review, Who’s Toby Miles?, by Eliana Johnson:

The IRS disclosed in a court filing on Monday that former agency official Lois Lerner used a second personal e-mail operated under the alias “Toby Miles” to conduct IRS business.

Her use of the mysterious account has prompted speculation into the source of the name. “Toby Miles,” according to a former Lerner colleague, is the name of Lerner’s dog: Toby is the dog’s name, and Miles is the surname of Lerner’s husband, Michael Miles.

The IRS disclosed the existence of the second account in a legal filing as part of its ongoing battle with the right-leaning investigative group Judicial Watch. “In addition to e-mails to or from an e-mail account denominated ‘Lois G. Lerner’ or ‘Lois Home,’ some e-mails responsive to Judicial Watch’s’s request may have been sent to or received from a personal e-mail account denominated ‘Toby Miles,’” a lawyer for the agency told Federal District Court Judge Emmet G. Sullivan.

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August 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, August 25, 2015

NY Times Op-Ed: Too Many Law Students, Too Few Legal Jobs

New York Times op-ed:   Too Many Law Students, Too Few Legal Jobs, by Steven J. Harper (Adjunct Professor, Northwestern; author, The Lawyer Bubble):

Ten months after graduation, only 60 percent of the law school class of 2014 had found full-time long-term jobs that required them to pass the bar exam. ...

Amazingly (and perversely), law schools have been able to continue to raise tuition while producing nearly twice as many graduates as the job market has been able to absorb. How is this possible? Why hasn’t the market corrected itself? The answer is that, for a given school, the availability of federal loans for law students has no connection to their poor post-graduation employment outcomes.

Students now amass law school loans averaging $127,000 for private schools and $88,000 for public ones. Since 2006 alone, law student debt has surged at inflation-adjusted rates of 25 percent for private schools and 34 percent for public schools.

In May 2014, the ABA created a task force to tackle this problem. According to its recent report, 25 percent of law schools obtain at least 88 percent of their total revenues from tuition. The average for all law schools is 69 percent. So law schools have a powerful incentive to maintain or increase enrollment, even if the employment outcomes are dismal for their graduates, especially at marginal schools.

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August 25, 2015 in Legal Education | Permalink | Comments (3)

IRS Strikes Out, Settles Estate Tax Litigation Over Valuation Of Minnesota Twins For 20 Cents On The Dollar

Twins (2015)Forbes:  Estate Of Late Minnesota Twins Owner Carl Pohlad Settles With IRS, by Ashlea Ebeling:

The late Minnesota Twins owner Carl Pohlad’s three sons, executors of his estate, have chalked up a victory in a settlement with the Internal Revenue Service.

Forbes’ Janet Novack first wrote here about the lawsuit filed by Pohlad’s estate in U.S. Tax Court, contesting an assessment of $121 million in extra federal estate taxes for the team, plus a $48 million penalty for gross valuation misstatement. In the settlement, entered in June, the IRS and the Pohlad brothers agreed to an estate tax deficiency of $28 million and a penalty of $1.8 million.

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August 25, 2015 in Tax | Permalink | Comments (2)

California's 15-Credit Practical Skills Requirement Divides AALS: Clinicians Favor, Deans Oppose

AALS (2017)National Law Journal, Practical-Skills Plan Divides Law School Association:

Whether the State Bar of California’s plan to require new attorneys to complete at least 15-credits of practical skills courses in law school is unduly restrictive or a needed step to ensure they have some real-world competencies depends on whom you ask—even within the same organization.

The Association of American Law Schools is split over the bar’s proposal, with a coalition of law school deans in opposition and a group of clinical professors in favor.

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August 25, 2015 in Legal Education | Permalink | Comments (0)

Brown, Casselman & Sheppard Discuss The Business Of Life: Why Pay Your Taxes?

BusinessVice News, Why Pay Your Taxes? — The Business of Life (Episode 9):

The American tax code is one of the most impenetrable elements of our society. Surprising, considering how it affects your life every single day. On this episode of the Business of Life, we will show you exactly how your taxes are distributed—and what happens if you try to evade them. To unpack the issue, we are joined by panelists Lee Sheppard of Tax Notes, Ben Casselman of FiveThirtyEight, and Emory University Professor Dorothy Brown.

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August 25, 2015 in Tax | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through August 1, 2015) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):







Reuven Avi-Yonah (Michigan)


Reuven Avi-Yonah (Michigan)



Paul Caron (Pepperdine)


Ed Kleinbard (USC)



Michael Simkovic (Seton Hall)


Michael Simkovic (Seton Hall)



Louis Kaplow (Harvard)


D. Dharmapala (Chicago)



D. Dharmapala (Chicago)


Gregg Polsky (N. Carolina)



Vic Fleischer (San Diego)


Paul Caron (Pepperdine)



James Hines (Michigan)


Richard Ainsworth (BU)



Ted Seto (Loyola-L.A.)


Omri Marian (UC-Irvine)



Richard Kaplan (Illinois)


Robert Sitkoff (Harvard)



Ed Kleinbard (USC)


Jeff Kwall (Loyola-Chicago)



Katie Pratt (Loyola-L.A.)


Louis Kaplow (Harvard)



Carter Bishop (Suffolk)


Katie Pratt (Loyola-L.A.)



Richard Ainsworth (BU)


Brad Borden (Brooklyn)



Dennis Ventry (UC-Davis)


Dan Shaviro (NYU)



Jen Kowal (Loyola-L.A.)


David Gamage (UC-Berkeley)



Chris Sanchirico (Penn)


Jen Kowal (Loyola-L.A.)



Robert Sitkoff (Harvard)


Dick Harvey (Villanova)



Brad Borden (Brooklyn)


Chris Sanchirico (Penn)



David Weisbach (Chicago)


William Byrnes (Texas A&M)



Francine Lipman (UNLV)


James Hines (Michigan)



Bridget Crawford (Pace)


Ruth Mason (Virginia)



David Walker (BU)


Joe Bankman (Stanford)



Dan Shaviro (NYU)


Carter Bishop (Suffolk)



Herwig Schlunk (Vanderbilt)


Francine Lipman (UNLV)



Steven Bank (UCLA)


Ted Seto (Loyola-L.A.)


Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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August 25, 2015 in Legal Education, Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

The Impact Of Housing Subsidies And Tax Breaks On Inequality

Vox, This Chart Shows How Federal Housing Policy Benefits the Rich More Than the Poor:

If you take out a mortgage to buy a house, the federal tax code lets you deduct your interest payments from your taxable income. People can also deduct state and local property taxes from their federal income taxes.

Both of these tax deductions tend to be larger for rich people, who tend to have more expensive houses. And rich people are also in higher tax brackets, making every dollar deducted worth more. As a result, these tax breaks provide the biggest financial benefit to the wealthiest taxpayers. The Urban Institute's John McGinty, Benjamin Chartoff, and Pamela Blumenthal have created a helpful chart showing just how big these tax breaks get.

Housing tax breaks for rich people are larger than housing subsidies for poor people.

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August 25, 2015 in Tax, Think Tank Reports | Permalink | Comments (1)

ABA Tax Section Accepting Nominations For 2016-2018 Public Service Fellowships

ABA Tax Section Logo (2012)The ABA Tax Section is accepting applications for Public Service Fellowships for 2016-2018:

The American Bar Association Section of Taxation is pleased to announce that it is now accepting applications for its Christine A. Brunswick Public Service Fellowship program class of 2016-2018. ...

The Christine A. Brunswick Public Service Fellowships provide funding for the Fellows’ salaries and benefits, as well as law school debt assistance, by means of charitable contributions to the sponsoring organization. The Section plans to award two fellowships each year.

Applications must be received by November 13, 2015, to be considered. Interviews will be conducted during the Section’s Midyear Meeting in Los Angeles, CA, on January 28-30, 2016. The Section will cover the cost of travel and accommodations for applicants selected for interviews.

To apply for the Christine A. Brunswick Public Service Fellowships, see here

August 25, 2015 in ABA Tax Section, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 838

IRS Logo 2Washington Times, IRS Finds Yet Another Lois Lerner Email Account:

Lois Lerner had yet another personal email account used to conduct some IRS business, the tax agency confirmed in a new court filing late Monday that further complicates the administration’s efforts to be transparent about Ms. Lerner’s actions during the tea party targeting scandal.

The admission came in an open-records lawsuit filed by Judicial Watch, a conservative public interest law firm that has sued to get a look at emails Ms. Lerner sent during the targeting.

IRS lawyer Geoffrey J. Klimas told the court that as the agency was putting together a set of documents to turn over to Judicial Watch, it realized Ms. Lerner had used yet another email account, in addition to her official one and another personal one already known to the agency.

“In addition to emails to or from an email account denominated ‘Lois G. Lerner‘ or ‘Lois Home,’ some emails responsive to Judicial Watch’s request may have been sent to or received from a personal email account denominated ‘Toby Miles,’” Mr. Klimas told Judge Emmet G. Sullivan, who is hearing the case.

It is unclear who Toby Miles is, but Mr. Klimas said the IRS has concluded that was “a personal email account used by Lerner.”

Tom Fitton, president of Judicial Watch, said it was stunning the agency was just now admitting the existence of the address.

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August 25, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, August 24, 2015

Morse Presents Safe Harbors, Sure Shipwrecks Today At Indiana

Morse (2015)Susan C. Morse (Texas) presents Safe Harbors, Sure Shipwrecks at Indiana today as part of its Faculty Speaker Series:

Safe harbors and sure shipwrecks are rule-standard hybrids that appear throughout statutory, regulatory and case law. Safe harbors guarantee compliance, and also leave open the question of compliance for fact situations not described by the safe harbor. Sure shipwrecks provide a conclusive noncompliance result and also leave open the question of compliance outside the sure shipwreck. Safe harbors and sure shipwrecks produce asymmetric behavioral incentives for persons subject to them. Like bright-line rules, safe harbors encourage behavior to converge from both sides of the line drawn by the safe harbor. This is because of the advantage of a zero chance of liability within the safe harbor. Sure shipwrecks generally encourage convergence only from the noncompliant side of the line. Ex ante versus ex post policy making, overinclusion and underinclusion, interest group influence, and other factors also affect safe harbor and sure shipwreck policy making.

August 24, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Simkovic Calls For 50%-100% Increase In Law School AALS Dues To Change Public Perception Of Legal Education

AALS (2017)Michael Simkovic (Seton Hall), Law Schools’ Four Billion Dollar Collective Action Problem:

Earlier this month, I charted the overwhelmingly negative press coverage of law schools and the legal profession over the last 5 years and discussed the disconnect between the news slant and economic reality. To the extent that news coverage dissuaded individuals from attending law school for financial reasons, or caused them to delay attending law school, newspapers will on average have cost each prospective law students tens of thousands, or even hundreds of thousands of dollars. The total economic harm across all prospective law students could easily be in the low billions of dollars.*

What can we learn from this?

Accurate, informed, and balanced news coverage does not happen of its own volition, particularly in a world where sensationalism and negativity attract eyeballs and sell advertising. ...

Collective action problems precluded any individual law school from acting unilaterally to correct the record and from bearing all of the associated costs for a small fraction of the benefits. ... Worse yet, some law schools unwittingly contributed to the press’s anti-law school excesses. ...

Law schools are competitors, but they need not compete in ways that are mutually destructive. Competition should drive progress, innovation, and value, not mud slinging. Law schools have a great deal in common, make important contributions to society, and can and should pursue shared goals and values together. ...

For years, misinformation accelerated while the AALS failed to respond effectively. ... The AALS now has new leadership with new priorities and there have been welcome signs of progress. ... However, there is still a great deal of work to be done. ...

[T]he AALS needs to become a valuable resource for journalists, helping them provide higher quality coverage and guiding them toward greater accuracy when they err. If this effort is to succeed, it will require more resources. ...

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August 24, 2015 in Legal Education | Permalink | Comments (5)

TIGTA: IRS Office of Appeals May Have Incorrectly Abated Penalties In 83% Of Cases

TIGTAThe Treasury Inspector General for Tax Administration has released Additional Documentation Is Needed to Support Office of Appeals Penalty Abatement Decisions (2015-10-059):

The Office of Appeals (Appeals) is an independent function within the IRS whose mission is to resolve disputes on a fair and impartial basis without litigation. Appeals has the authority to abate certain taxpayer penalties when the abatement has been denied by other functions within the IRS. In Fiscal Year 2013, Appeals abated approximately $127 million in penalties. It is important that Appeals personnel apply a consistent methodology when deciding whether or not to abate penalties to promote fair and impartial resolutions to taxpayers.

TIGTA found that in most cases Appeals properly accepted cases in which the IRS operating divisions had previously denied the taxpayer’s request for abatement and sufficiently documented the reasons for penalty abatements in case files. However, TIGTA found that 59 of 140 sampled penalty appeal cases were not abated in accordance with Appeals criteria because operating divisions had not denied the abatement or because case files did not support the abatement. Based on these results, TIGTA estimates that in Fiscal Year 2013,1,411 penalty appeal cases and more than $39 million in penalty abatements did not comply with Appeals criteria.

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August 24, 2015 | Permalink | Comments (1)

Trump Says Tax Code Is Letting Hedge Fund Managers 'Get Away With Murder'

TrumpNew York Times, Trump Says Tax Code Is Letting Hedge Funds 'Get Away With Murder':

Republican presidential front-runner Donald Trump blasted hedge fund managers on Sunday as mere "paper pushers" who he said were "getting away with murder" by not paying their fair share of taxes.

In a telephone interview on CBS's "Face the Nation," Trump vowed to reform the tax laws if elected and said the current system was harming middle class Americans who currently faced higher tax rates than traders on Wall Street.

"The hedge fund guys didn't build this country. These are guys that shift paper around and they get lucky," Trump said.

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August 24, 2015 in News, Political News, Tax | Permalink | Comments (0)

IRS State Migration Data: Taxpayers Flock To Texas & Florida, Flee From New York, Illinois & California

Table 1Clean Slate Tax, IRS 2012-2013 State Migration Data — NY Down Big, TX & FL Shine:

The IRS recently released state and county-level migration for 2012-2013. The data is based off individual income tax returns (Forms 1040) filed, received, and processed by the IRS from January 1st to December 31st. The data doesn’t represent the whole population, as many individuals are not required to file a tax return every year. The report did take into account the number of exemptions these returns had. To calculate net migration, the IRS subtracted the number of out-migrant returns from the number of in-migrant returns. The results are quite interesting.

Texas, Florida, Colorado, and South Carolina shined. The state of Texas had the largest influx of new taxpayers for a total of 72,032 new tax returns, representing 152,477 exemptions. Florida was behind Texas, with 27,991 returns representing 73,789 exemptions (see Table 1).

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August 24, 2015 in Tax | Permalink | Comments (3)

ABA Releases Three Guidance Memos On Law School Accreditation

ABA Logo 2The Managing Director of the ABA Section of Legal Education and Admission to the Bar has released thee Guidance Memos:

  1. Standards 102(e), 102(f), and 509(e), which regulate how a school is to disclose its status as an approved school
  2. Standard 504, which stipulates how to inform applicants of bar admission requirements
  3. Interpretation 305-2, which describes compensation and reimbursement restrictions on field placements.

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August 24, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 837

IRS Logo 2Fox News, Gov't Watchdogs Urge Congress to Reverse Obama Administration IG Crackdown:

Nearly six-dozen watchdog agencies are asking Congress to step in after the Obama administration clamped down on access to government records they say are vital for their investigations into waste, fraud and abuse. 

The Council of the Inspectors General on Integrity and Efficiency sent an Aug. 3 letter to congressional leaders ahead of a hearing scheduled for Wednesday where they will ask lawmakers to pass legislation reversing a controversial decision made July 20 by the Department of Justice’s Office of Legal Counsel. The OLC is now requiring investigators to get permission to review sensitive documents from the very agencies they are monitoring.

This decision, the letter said, "represents a serious threat to the independent authority" of all inspectors general. 

IGs are assigned to audit and conduct internal reviews of federal agencies, and recently have been responsible for investigating the IRS targeting scandal, TSA security gaps, personal email use at the State Department and other issues. 

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August 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, August 23, 2015

Stephen Colbert's Secret Of Life (And Faith): 'I Love The Thing That I Most Wish Had Not Happened'

GQGQ, The Late, Great Stephen Colbert:

He used to have a note taped to his computer that read, “Joy is the most infallible sign of the existence of God.”

It's hard to imagine any comedian meditating every day on so sincere a message. It's even harder when you know his life story, which bears mentioning here—that he is the youngest of eleven kids and that his father and two of his brothers, Peter and Paul, the two closest to him in age, were killed in a plane crash when he was 10. His elder siblings were all off to school or on with their lives by then, and so it was just him and his mother at home together for years. They moved from James Island to downtown Charleston, and she sent him to a prep school, Porter-Gaud, where for the next several years he did next to nothing academically. “There was no way to threaten me,” he said. “It was like, ‘What? What's that? Oh, okay, I might get a bad grade? Oh no. Wouldn't want that.’ ”

He was completely traumatized, of course. And one way of contending with the cruel indifference of the universe is to be indifferent in return. But he was also raised in a deeply Catholic intellectual family (his father had been a dean of Yale Medical School and St. Louis University and the Medical College of South Carolina). And so his rebellion against the world was curiously self-driven and thoughtful. He refused to do anything his teachers required of him, but would come home every day and shut himself in his room and read books. “I had so many books taken away from me,” he said. “I read a book a day. Spent all of my allowance on books. Every birthday, confirmation, Christmas—books, please, stacks of books.” 

He barely graduated from high school and then went to Hampden-Sydney College in Virginia only because a friend had applied there. He studied philosophy; he joined the school's theater troupe. After his sophomore year he transferred to Northwestern's theater program, where he was purely focused on drama. “I was doing Stanislavsky and Meisner, and I was sharing my pain with everyone around me,” he says in an interview that appears in Judd Apatow's book Sick in the Head. “It was therapy as much as it was anything.”

And then he met Del Close, the legendary improv teacher and mentor and champion of the idea that improvisational comedy, when performed purely, was in fact high expressive art.

“I went, ‘I don't know what this is, but I have to do it,’ ” he said. “I have to get up onstage and perform extemporaneously with other people.” He was part of the same Second City class that included Amy Sedaris and Paul Dinello and Chris Farley. “Our first night professionally onstage,” he said, the longtime Second City director Jeff Michalski told them that the most important lesson he could pass on to them was this: “You have to learn to love the bomb.”

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August 23, 2015 in Legal Education, Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

Does Student Assessment Work? Yes.

AssessmentFollowing up on Wednesday's post, Why Don't We Ever Assess The Value Of The Student Assessment Mania?:  Chronicle of Higher Education op-ed:  Does Assessment Make Colleges Better? Let Me Count the Ways, by Joan Hawthorne (University of North Dakota):

Erik Gilbert’s recent commentary in The Chronicle, "Does Assessment Make Colleges Better? Who Knows?" raises an important question about the value of assessment. As one who has worked in education for 15 years and dutifully assessed learning in his classes, Gilbert now wonders if that measurement has been a worthwhile use of time. He’s not certain that the tweaks he’s made (and they’ve been mostly tweaks) have been meaningful enough to merit the time all that assessing has required. ...

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August 23, 2015 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 836

IRS Logo 2Washington Examiner: Is This Woman the New Lois Lerner?:

As some at the Federal Election Commission seek to broaden the power of the agency, critics are arguing that it's beginning to look increasingly like the Internal Revenue Service under Lois Lerner, who has been accused of using her office for partisan purposes.

They take special aim at the commission's Democratic chairwoman, Ann Ravel, who also served as chairwoman of California's equivalent to the FEC, the Fair Political Practices Commission, before coming to Washington in 2013. Ravel has lambasted the commission as "dysfunctional" because votes on enforcement issues have often resulted in ties, and she has said the commission should go beyond its role of enforcing election laws by doing more to get women and minorities elected to political office. She has complained that super PACs are "95 percent run by white men," and that as a result, "the people who get the money are generally also white men."

To remedy those problems, Ravel sponsored a forum at the FEC in June to talk about getting more women involved in the political process. She has also proposed broadening disclosure laws to diminish the role of outside spending, and suggested that the FEC should claim authority to regulate political content on the Web. She's also voiced support for eliminating one member of the commission in order to create a partisan majority that doesn't have tie votes, saying in an interview with Roll Call, "I think it would help."

Hans von Spakovsky, who served on the FEC from 2006-2008, takes issue with Ravel's effort to go beyond the traditional purview of the commission's functions. "The FEC has one duty, and one duty only — to enforce the existing campaign finance laws. It has no business trying to 'encourage' or 'discourage' folks to get involved in politics, no matter who they are, minority or otherwise," Spakovsky told the Washington Examiner. ...

Wall Street Journal's editorial board has compared Ravel to the IRS' Lerner, who's also been accused of using her office to push a political agenda. "We'll take our chances with donations freely given than with the arbitrary and partisan rulings of Lois Lerner at the IRS or Ann Ravel at the Federal Election Commission," the editorial board wrote.

Spakovsky also referred to a June 2013 interview with Ravel in which she appeared to express support for Lerner's targeting of conservative organizations. In the interview, Ravel said, "The IRS has apparently sent some letters to a number of 501(c)(4)s [nonprofit, tax-exempt organizations] asking them to justify that they are in fact social welfare organizations, but so far there is no evidence that the IRS has taken any action against these organizations." She went on to say, "It is very important that it happen."

Asked about the comments, Ravel's office stated that she "was responding to a question and by stating 'apparently' made plain that she based her remarks on publicly available media reports, not on personal knowledge," and that "she was not referring to any particular cases."

Lerner had apologized the preceding May for the discovery that, under her leadership, the IRS had targeted groups with words such as "tea party" and "patriot" in their names. Lerner resigned the following September.

Ravel, Spakovsky said, "does not see her role as enforcing campaign finance laws," but rather "to use her government authority as a partisan weapon, particularly against the same type of conservative groups that Lois Lerner targeted."

Cleta Mitchell, a Republican campaign finance attorney in Washington, voiced a similar sentiment. "She and Lois Lerner are peas in a pod," Mitchell said. "She wants to weaponize government agencies to shut down and chill free political speech," which, she continued, is "a very odd position for someone who swore to uphold the Constitution."

Yet Ravel has supporters, and if she fails at the FEC, others have advocated using the IRS to accomplish some of her policy objectives.

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August 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, August 22, 2015

This Week's Ten Most Popular TaxProf Blog Posts

9th Circuit's Mortgage Interest Deduction Decision Adds To Tax Code's Marriage Penalty

9th CircuitFollowing up on last week's post, Ninth Circuit Gives Unmarried Couples Double The Mortgage Interest Deduction Available To Married Couples:  

Forbes, Does Ninth Circuit Mortgage Interest Decision Create Special Rights?, by Peter J. Reilly:

is kind of ironic for the Ninth Circuit, which played such a big role in advancing marriage equality, to be issuing a decision that discourages registered  domestic partners from marrying. That is an effect of the decision in the case Bruce Voss and Charles Sophy vs. IRS, although I imagine it is an unintended consequence.  It almost seems as if the Ninth Circuit  has instituted that conservative trope — special rights for homosexuals — with this decision. Closer analysis would show it would be more like special rights for homosexuals and geezers. ...

Thanks to the Ninth Circuit’s recent decision, there is now a new marriage penalty for couples with large mortgages.  The amount of the penalty depends on how much the mortgage exceeds $1.1 million, its interest rate and the marginal tax rate of the taxpayers.  My back of the envelope computation would put the maximum penalty at not a lot more than $20,000. ...

A committed unmarried couple who did some serious planning could really go to town exploiting the fact that they are considered unrelated for federal income tax purposes.  

Wall Street Journal, Another Reason Not to Get Married: Recent Court Ruling in California Gives Unmarried Couples a Big Tax Break:

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August 22, 2015 in New Cases, Tax | Permalink | Comments (3)

Anderson: Opting Out Of New Editions Of Casebooks And Saving Students 97 Cents On The Dollar

BooksRob Anderson (Pepperdine), Opting Out of New Editions for Casebooks:

The price of law school casebooks (as well as college textbooks generally) seems to grow every year. At the present time, many casebooks cost over $200 when purchased new. The high cost is made worse by the appearance of a new edition every few years, which makes the cheaper used books in short supply (or completely unavailable). New editions seem to appear every five years or so for many casebooks, and this is true not only in fast-moving areas of law, but even in subjects where most of the cases are decades (or centuries) old.

We as faculty can greatly reduce the cost of casebooks to students by simply opting out of new editions and staying with the older edition.

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August 22, 2015 in Legal Education | Permalink | Comments (6)

The IRS Scandal, Day 835

IRS Logo 2Statement of NTEU National President Tony Reardon:

IRS employees are dedicated and committed public servants who perform vital work for our country. No bipartisan report, including the bipartisan Senate Finance Committee report and reports by the Treasury Inspector General, has ever found any evidence of political motivation on the part of IRS employees.

Treasury Inspector General J. Russell George, the author of the TIGTA report, testified repeatedly under oath that the TIGTA report found no evidence of partisan motive or intentional wrongdoing on the part of IRS employees in the tax-exempt division. The report also noted that IRS officials stated that the criteria used to evaluate tax-exempt applications were not influenced by any individual or organization outside the IRS.

The frontline employees at IRS are represented by NTEU as part of the IRS bargaining unit. NTEU does not represent management officials, such as Lois Lerner.

NTEU members participated throughout the investigation, testified voluntarily in congressional hearings and were thanked by the chair and Republican members of the House Oversight and Government Reform Committee for their assistance and patriotism.

Oversight Committee Chairman Darryl Issa publicly told two frontline IRS employees at a hearing: "I just want to take a moment to say that I appreciate that both of you are not political folks, and that it is appropriate that, no surprise, you did everything as far as we know, very professionally." And Congressman Turner at the same hearing stated: "I want to thank both of you, because you're coming forward and being honest."

Without collective bargaining rights, frontline employees would have little protection against retaliation by senior management when reporting wrongdoing. This is not the first time eliminating collective bargaining rights has been proposed by Sen. Hatch. He has previously called for eliminating collective bargaining rights at IRS and other agencies long before this report was issued.

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August 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, August 21, 2015

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Jessica Berg And Michael Scharf Named Case Western Law School Co-Deans

Case WesternAs expectedJessica Berg and Michael Scharf, who have been serving as acting or interim co-deans since November 2013 following the resignation of former dean Lawrence Mitchell amidst a tawdry sexual harassment scandal and resulting lawsuit (and settlement), have been named permanent co-deans:

"Jessica and Michael worked closely with faculty, staff, students and alumni to create a sense of community and possibility," President Snyder said. "The results have been outstanding, and we look forward to the school's continued progress."

Over the past two years, the school has achieved an all-time record for annual fundraising; moved up nine slots in U.S. News & World Report rankings; and grown the number and quality of student admissions applications.

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August 21, 2015 in Legal Education | Permalink | Comments (0)

Yelp Is Now Rating The IRS: 2.5 Stars

IRS Yelp

The Atlantic, Can Yelp Make Government Agencies Work Better?:

The feds are partnering with the popular review site to encourage feedback on public services like the TSA and IRS—and preparing to get an earful.

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August 21, 2015 in IRS News, Tax | Permalink | Comments (1)

From The Paper Chase To Dumb And Dumber: Are Lawyers (And Law Students) Getting Dumber?

Bloomberg,  Are Lawyers Getting Dumber? Yes, Says the Woman Who Runs the Bar Exam:

Paper ChaseLast August, the tens of thousands of answer sheets from the bar exam started to stream into the National Conference of Bar Examiners. The initial results were so glaringly bad that staffers raced to tell their boss, Erica Moeser. ... By the time all the states published their numbers, it was clear that the July exam had been a disaster everywhere. Scores on the multiple-choice part of the test registered their largest single-year drop in the four-decade history of the test.

Panic swept the bottom half of American law schools, all of which are ranked partly on the basis of their ability to get their graduates into the profession. Moeser sent a letter to law school deans. She outlined future changes to the exam and how to prepare for them. Then she made a hard turn to the July exam. “The group that sat in July 2014 was less able than the group that sat in July 2013,” she wrote. It’s not us, Moeser was essentially saying. It’s you.


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August 21, 2015 in Legal Education | Permalink | Comments (11)

Trump Bashes $4 Billion In IRS Refunds To Illegals

TrumpForbes:  Trump Bashes $4 Billion In IRS Refunds To Illegals, by Robert W. Wood:

President Obama and Donald Trump see immigration differently. The President’s aggressive executive action on immigration is still being litigated, and Mr. Trump proposes action of a different kind. In the meantime, tax credits and refunds for illegal immigrants have become controversial. Mr. Trump says illegal immigrants get $4.2 billion in tax credits. He can point to a 2011 audit by the Treasury Inspector General for Tax Administration. It confirms that individuals who are not authorized to work in the United States were paid $4.2 billion in refundable credits.

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August 21, 2015 in Political News, Tax | Permalink | Comments (17)

5th Circuit: Donee's Liability For Billionaire's Unpaid Gift Tax And Interest Cannot Exceed The Amount Of The Gift

A divided Fifth Circuit withdrew an earlier opinion (771 F.3d 854 (5th Cir. 2014)) and held that the heirs of J. Howard Marshall (who was married to model Anna Nicole Smith) are not liable for gift tax and interest beyond the value of a gift from Marshall on which he did not pay gift tax.  United States v. Marshall, No. 12-20804 (5th Cir. Aug. 19, 2015).


One of the principal issues in this appeal is whether a donee’s liability for a donor’s unpaid gift tax and interest on that tax is limited under 26 U.S.C. § 6324(b) to the value of the gift of the donee. We hold that a donee’s liability for the donor’s unpaid gift tax and interest is capped by the amount of the gift. Accordingly, we reverse the district court’s judgment to the extent that it imposed liability upon the donees beyond the value of the gifts.


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August 21, 2015 | Permalink | Comments (1)

The IRS Scandal, Day 834

IRS Logo 2Fox News op-ed:  IRS Targeting Scheme Is a Scandal With No End in Sight, by Jay Sekulow (American Center for Law and Justice) :

When the Senate Finance Committee released its findings on the Internal Revenue Service scheme targeting conservative organizations a couple of weeks ago, the initial determination was clear.

As I reported earlier: The findings of the bi-partisan report revealed gross mismanagement at the IRS. But more than that, the evidence shows partisan political animus resulted in the unwarranted targeting of conservative groups because of their political beliefs.

But in the weeks since, as we have dug further into the lengthy report, some important and disturbing comments by former top IRS official Lois Lerner, who served as director of the Exempt Organizations Unit, have come to light.

Remember, it was Lerner who tried to blame this scandal on low-level employees at the IRS in a faux apology issued May 2013 – a flawed attempt to get out in front of an explosive inspector general’s report about the targeting scheme released just days later.

Now we are learning more of the disturbing details about Lerner’s beliefs and behavior thanks to new emails released in conjunction with a two-year probe by the Senate Finance Committee.

The picture is not a pretty one. ...

The findings of the Senate Finance Committee – along with the ongoing probes by other congressional committees – ensure that we will continue to learn more about the depth and breadth of this scheme implemented by Lois Lerner and others.

But, unfortunately, we are no closer to holding those responsible for this unlawful targeting scheme accountable.

And that must become a priority.

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August 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, August 20, 2015

LSAT Takers Fall 34% Since 2010

Following up on yesterday's post, Cumulative Percent Decline In LSAT By State:  Keith Lee mines the data in The Continuing Declining In LSAT Takers:


Although California's 36.5% decline does not even put it in the Top 25 states in percentage terms, the large numerical decline (4,200 (from 14,309 in 2010-11 to 9,089 in 2014-15)) is dramatic:

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August 20, 2015 in Legal Education | Permalink | Comments (2)

Wells: The Foreign Tax Credit War

FTCBret Wells (Houston), The Foreign Tax Credit War, 2016 BYU L. Rev. ___ :

The government has been involved in a sustained war against objectionable foreign tax credit transactions, and this war has caused the U.S. foreign tax credit regime to be riddled with complexity that spawns incoherent outcomes. The complexity contained in section 901 was created due to a legitimate concern. The threats posed by objectionable transactions that artificially generate excess foreign tax credits represent real policy problems. Since at least 1975, Congress and the Treasury Department have been convinced that the cross-crediting of excess foreign tax credits arising from “objectionable transactions” required a response in addition to simply relying on section 904. Thus, it is understandable that Congress and the Treasury Department would seek to redefine the foreign tax credit eligibility standards in response to transactions that generate foreign tax credits in objectionable ways. However, the historical record indicates that Congress and the Treasury Department ran roughshod over section 901 and used a scorched earth approach in their war against objectionable foreign tax credit transactions. The result is that the U.S. foreign tax credit regime is a “byzantine structure of staggering complexity.” In the rush to enact reforms, ill-conceived provisions were enacted that should not have been enacted.

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August 20, 2015 in Scholarship, Tax | Permalink | Comments (1)

Former UCLA Law Dean To Lead ABF Diversity Research Initiative

Moran (Rachel)Press Release, American Bar Foundation Appoints Rachel F. Moran Inaugural William H. Neukom Fellows Research Chair in Diversity and Law:

The American Bar Foundation has announced the appointment of Rachel F. Moran as the first scholar to hold the William H. Neukom Fellows Research Chair in Diversity and Law.  Moran, who recently stepped down as dean of UCLA Law School, is Dean Emerita and the Michael J. Connell Distinguished Professor of Law at UCLA School of Law, and will hold the Neukom Fellows Research Chair as a visiting professor in 2015-2016.

The Neukom Fellows Research Chair was established in 2014 by the ABF to spearhead empirical research on law and legal processes centered on issues of diversity and inequality that women, people of color, people with disabilities, and persons from the LGBTQ community face in legal practice and before the law. At the ABF Moran will serve as co-director of a new ABF research initiative, The Future of Latinos in the United States: Law, Opportunity, and Mobility.  She will also begin a new research project on U.S. inequality, diversity, and the future of legal education and the legal profession. ...

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August 20, 2015 in Legal Education | Permalink | Comments (0)

Avi-Yonah & Zelik: Are We Trapped By Our Capital Gains?

Reuven S. Avi-Yonah (Michigan) & Dima Zelik (Michigan), Are We Trapped by Our Capital Gains?:

For political reasons, we seem to be stuck with the current realization-based system of taxing capital gains. This means that lock-in is a serious problem. Inflation can be dealt with by adjusting basis and bunching by averaging devices, but it is hard to address lock-in, especially if step-up on death is retained. The current rate structure is 39.6% for ordinary income (higher if limits of deductions are taken into account) and 23.8% for capital gains. This has already led to a proliferation of conversion transactions and to pressure on the labor/capital distinction. We are doubtful that an effective centrifuge can be devised to segregate income from labor from income from capital. This may work in Sweden, but it may not work in a country like the US with a hyper-sophisticated capital market and very aggressive tax advisors.

Thus, we have reluctantly come to the conclusion that we are indeed trapped by our capital gains, that the current rate structure is indefensible in practice, and that we should revert to an overall rate of 28% for all income.

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August 20, 2015 in Scholarship, Tax | Permalink | Comments (4)

Utah Seeks To Hire A Tax Prof

Utah Logo (2015)The University of Utah S.J. Quinney College of Law invites applications for a tenure-track faculty position at the rank of associate professor beginning academic year 2016-17:

Qualifications for the position include a record of excellence in academics, successful teaching experience or potential as a teacher, and strong scholarly distinction or promise. The College is particularly interested in candidates in the areas of business and tax law. Interested persons can submit an application to the University of Utah Human Resources website  (with a cover letter, CV, and list of references). If you have questions, contact Baiba Hicks, Administrative Assistant to the Faculty Appointments Committee.

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August 20, 2015 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Presenting While Black

Faculty WorkshopInside Higher Ed, 'Presenting While Black':

There’s a rich of body of research suggesting that higher education can be inhospitable to faculty members of color. But little has been written about “performance” demands on black faculty members at academic conferences or meetings -- what they are and how they might contribute to overall concerns about climate.

A new paper seeks to shed on light on this topic. “Entertainers or Education Researchers: The Challenges Associated With Presenting While Black,” published in Race, Ethnicity and Education, is a phenomenological study of 33 black faculty members’ experiences presenting their research in academic settings. All were scholars of education, and many were interested in race. Common themes experienced by a majority of interviewees include audience critiques or questions about their research being sufficiently objective, and their appearance, energy levels and humor (too unprofessional, too high, not enough, respectively). Such experiences have made a majority of respondents sacrifice key parts of their identity so as to not attract criticism, and, for some, those sacrifices have been damaging enough to hurry their exit from higher education.

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August 20, 2015 in Legal Education | Permalink | Comments (4)

Section 162(f) And The Deductibility Of Fines, Penalties, And Settlement Payment

Florida Tax ReviewAbraham N.M. Shashy, Jr., Sara A. Silverstein & Ariana F. Wallizada (all of King & Spalding, Washington, D.C.), Beyond Frustration: Section 162(f) and the Deductibility of Fines, Penalties, and Settlement Payments, 17 Fla. Tax Rev. 349 (2015):

Section 162(f) is both currently relevant and a developing area of law. Taxpayers can expect continued efforts by lawmakers to broaden the scope of nondeductibility pursuant to section 162(f) as evidenced by the Obama Administration’s continued focus to that end in its current budget proposal.238 Without further clarification of section 162(f), taxpayers and the IRS alike will continue to struggle under section 162(f). At the very least, however, relevant case law and factors discussed herein may help taxpayers navigate the uncertainty of section 162(f) and avoid its applicability.

August 20, 2015 | Permalink | Comments (0)

The IRS Scandal, Day 833

IRS Logo 2Waterbury Republican American, IRS Scandal's Emerging Facts:

Sen. Ron Wyden, D-Ore., recently claimed there was nothing nefarious about the Obama Internal Revenue Service's 2010-12 scrutiny of conservative groups. Referencing a report from the Senate Finance Committee — of which he is ranking member — Sen. Wyden said, "The results of this in-depth, bipartisan investigation showcase pure bureaucratic mismanagement without any evidence of political interference."

The senator is dishonest or delusional. The facts of "IRSgate" leave no doubt there was intentional, systematic harassment. Indeed, the affair constitutes one of President Obama's biggest betrayals of Americans who bought the "hope" and "change" lines from 2008.

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August 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, August 19, 2015

Fleischer: Stop Universities From Hoarding Money By Requiring Them To Spend 8% Of Endowment Each Year

8%New York Times op-ed:  Stop Universities From Hoarding Money, by Victor Fleischer (San Diego):

Who do you think received more cash from Yale’s endowment last year: Yale students, or the private equity fund managers hired to invest the university’s money?

It’s not even close.

Last year, Yale paid about $480 million to private equity fund managers as compensation — about $137 million in annual management fees, and another $343 million in performance fees, also known as carried interest — to manage about $8 billion, one-third of Yale’s endowment.

In contrast, of the $1 billion the endowment contributed to the university’s operating budget, only $170 million was earmarked for tuition assistance, fellowships and prizes. Private equity fund managers also received more than students at four other endowments I researched: Harvard, the University of Texas, Stanford and Princeton.

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August 19, 2015 in Legal Education, Tax | Permalink | Comments (8)