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Tuesday, July 21, 2015

Diana Leyden Leaves UConn To Be NYC Taxpayer Advocate

LeydenFrom the Hartford Courant:

Thumbs up to Diana Leyden, founder and director of the UConn School of Law tax clinic. Since 1999, she has run the free legal service that helps low-income earners with their tax problems. She is leaving for a newly created position, taxpayer advocate for the New York City Finance Department. In Connecticut, she has trained and supervised many law students (as well as volunteer attorneys) to represent clients in audits and at tax court, and she has helped set up free tax-preparation sites around Hartford so families can claim the Earned Income Tax Credit. She even wrote the book on the topic: Advocating for Low Income Taxpayers: A Clinical Studies Casebook.

July 21, 2015 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Henderson: What You Learn Is More Important Than Rank Of Law School Attended

The Legal Whiteboard:  What Is More Important for Lawyers: Where You Go to Law School or What You Learned? (Part I), by William Henderson (Indiana):

The Economist reports a very interesting analysis from Payscale.  The questions being asked are pretty simple: If you want to generate earnings that justify the time and cost of an undergraduate education, what should you study and where should you enroll?

Lots of people have strong opinions on this set of questions, but Payscale has the data to answer them empirically. It turns out that at the undergraduates level, course of study is much more important than the prestige of the college or university you attend.  The hard evidence is shown below.

Payscalegraphic

For those working in law or thinking about attending law school, a natural question to ask is whether the legal industry is closer to the blue dot (art & humanities) or red dot pattern (engineering/CS/math).  A second, related question whether the future of law is more blue or more red.

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July 21, 2015 in Legal Education | Permalink | Comments (1)

Shobe: Disaggregating The State And Local Tax Deduction

Gladriel Shobe (Weil, Gotshal & Manges, New York), Disaggregating the State and Local Tax Deduction, 35 Va. Tax Rev. ___ (2015):

The appropriateness of a federal deduction for state and local taxes is a frequent point of contention among scholars and policymakers, and various proposals have been offered to limit or modify the deduction. All of the debates and proposals surrounding the deduction treat states and localities as if they were the same. This Article disaggregates state and local governments to show that the way they tax and spend is different in many ways that are relevant to the deduction. When state and local government revenues are disaggregated, it becomes clear that the “state and local tax deduction” is actually two distinct deductions, one primarily for state income taxes and another primarily for local property taxes. Property taxes, which make up nearly three-quarters of local taxes, are fully deductible. Sales taxes, which make up nearly half of state revenue, can only be deducted in lieu of income taxes, an option that few itemizing taxpayers take. When state and local expenditures are disaggregated, it becomes apparent that local expenditures provide more direct benefits to taxpayers living within relatively homogeneous localities while state expenditures provide fewer public benefits to those who pay state taxes and are more likely to result in redistribution.

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July 21, 2015 in Scholarship, Tax | Permalink | Comments (2)

ABA Tax Section Publishes Summer 2015 Issue Of News Quarterly

ABA News QuarterlyThe ABA Tax Section has published 34 News Quarterly No. 4 (Summer 2015):

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July 21, 2015 in ABA Tax Section, Tax | Permalink | Comments (0)

Weiser: Innovation In Law Firm Hiring (And Law School Training): Grades, School Rank Are Out; Resilience, Teamwork, Empathy & Leadership Are In

Legal RebelsABA Journal Legal Rebels, The New Normal: How Law Firms Are Innovating When It Comes to Hiring, by Phil Weiser (Dean Colorado):

The legacy model of law firm hiring, which has prevailed over the last several decades, involves screening applicants purely on grades and what schools they attended. The second screen, often conducted without regard to identified competencies that matter for clients or success, is “would I enjoy going out to lunch with this person?” For many applicants, the test is therefore “can I put on a good face at lunch?”

For most industries, such hiring processes are truly yesterday’s practices. For starters, many have observed how unstructured and subjective standards can allow implicit biases to hold sway in hiring decisions. Such approaches also generate poorer results. At Google, for example, even the first screen used by law firms is now out, with Laszlo Bock, the senior vice president of people operations for Google, revealing to the New York Times that “our data crunching” tells us that GPA is “worthless as a criteria for hiring.” By contrast, a major law firm partner told me recently that the firm might not hire a very successful lawyer, even if that lawyer had a significant book of business, if that lawyer had not been in the top 10 percent of his or her law school class. Just another concrete example that change is hard, particularly for our tradition-bound profession.

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July 21, 2015 in Legal Education | Permalink | Comments (5)

Microsoft, IRS Square Off In Court Today: 'The IRS Claims It Has No Money To Answer Its Phones, Yet Can Pay Millions To Hire Private Lawyers'

MicrosoftSeattle Times, Microsoft, IRS Going to Court Over Longtime Tax Scrutiny:

Microsoft and the federal government have squared off in court over the years, and this week another high-stakes match is in the offing, this time involving the Internal Revenue Service.

The case is part of the IRS’ campaign to ensure that U.S. companies, particularly those in the tech sector, follow the law when they make moves involving overseas subsidiaries that have tax consequences. Such practices have been the subject of congressional hearings and are a hotly debated political topic.

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July 21, 2015 in IRS News, Tax | Permalink | Comments (6)

2015 Legal Education Data Deck

AccessAccess Group, 2015 Legal Education Data Deck: Key Trends on Access, Affordability, and Value:

On February 20, 2015, Access Group released the 2015 Legal Education Data Deck (Data Deck). It is comprised of a set of data points showing trends organized around the three driving principles of Access Group’s research agenda — access, affordability and the value of legal education. The Data Deck was developed for the legal education community, policymakers, and others interested in legal education, to provide them with key pieces of data about national trends in legal education.

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July 21, 2015 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 803

IRS Logo 2Forbes:  IRS Denies Exempt Status To Group Helping Undocumented Aliens Leave USA, by Peter J. Reilly:

I have been something of a skeptic of the narrative of the IRS Exempt Division targeting conservative organizations. As a matter of fact, one of my less than attentive commenters recently accused me of being, if you will excuse the expression, a Democrat. So when I see something, otherwise unremarked, that might support the narrative, I’m going to take notice. Such is Private Letter Ruling 201527043. The PLR is a denial of exempt status to an organization that I will call Ticket Back Home (TBH). (The public version of a private letter ruling does not include identifying information, so when I write about them I try to make up an appropriate name.)

TBH is concerned with illegal immigration, which is one of the Tea Party’s biggest issues. Being descended from some of the huddled masses yearning to breathe free, famine refugees no less, I have a hard time connecting emotionally with the Tea Party animus toward the undocumented. Even if he is breaking the law, I just can’t get mad at somebody who is shaping up at the Home Depot to go hang drywall or do some landscaping so he can send money home to the Old Country. ...

I have been unable to penetrate the redaction on this ruling, so I have no candidates for the particular organization that was denied exempt status by this ruling. Reading between the lines of the ruling, it does seem to be coming from a place of right-wing populism, that I am not really that sympathetic with. Nonetheless, I think the IRS case for denying exempt status is on the weak side.

One thing that I have noted about the exempt organization controversy is that a lot of noise is made about all the hoops that organizations have to jump through to get exempt status, but there is little attention paid when there is an outright denial. This ruling, which has received no other coverage I could find is another example of that phenomenon.

I can’t rule out that there is something altogether unsavory about this group that would cause me to sympathize with IRS in turning them down, but the rationale in the ruling does not really stand up.

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July 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, July 20, 2015

'Going To Law School Is Becoming A Thing Again'

Following up on my previous post, Light At The End Of The Law School Tunnel?:  Matt Leichter, LSAT Tea-Leaf Reading: June 2015 Edition:

Leichter

In other surprising news, the number of law school applicants is … about the same as last year.

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July 20, 2015 in Legal Education | Permalink | Comments (1)

America's Best Program For The Poor May Be Even Better Than We Thought

EITC Logo (2014)Hilary W. Hoynes (UC-Berkeley) & Ankur J. Patel (U.S. Treasury Department), Effective Policy for Reducing Inequality? The Earned Income Tax Credit and the Distribution of Income:

In this paper, we examine the effect of the EITC on the employment and income of single mothers with children. We provide the first comprehensive estimates of this central safety net policy on the full distribution of after-tax and transfer income. We use a quasi-experiment approach, using variation in generosity due to policy expansions across tax years and family sizes. Our results show that a policy-induced $1000 increase in the EITC leads to a 7.3 percentage point increase in employment and a 9.4 percentage point reduction in the share of families with after-tax and transfer income below 100% poverty. Event study estimates show no evidence of differential pre-trends, providing strong evidence in support of our research design. We find that the income increasing effects of the EITC are concentrated between 75% and 150% of income-to-poverty with little effect at the lowest income levels (50% poverty and below) and at levels of 250% of poverty and higher. By capturing the indirect effects of the credit on earnings, our results show that static calculations of the anti-poverty effects of the EITC (such as those released based on the Supplemental Poverty Measure, Short 2014) may be underestimated by as much as 50 percent.

Vox, America's Best Program for the Poor May be Even Better Than We Thought:

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July 20, 2015 in Scholarship, Tax | Permalink | Comments (5)

2014-15 College Faculty Salaries

Inside High Ed, Faculty Salaries:

Top Private Universities for Faculty Salaries for Full Professors, 2014-15

University

Average Salary

1. Stanford University

$224,300

2. Columbia University

$223,900

3. University of Chicago

$217,300

4. Princeton University

$215,900

5. Harvard University 

$213,500

6. Yale University

$198,400

7. University of Pennsylvania

$197,500

8. New York University

$196,900

9. Massachusetts Institute of Technology

$193,900

10. Duke University

$193,300

Top Public Universities for Faculty Salaries for Full Professors, 2014-15

University

Average Salary

1. University of California at Los Angeles

$181,000

2. New Jersey Institute of Technology

$174,500

3. University of California at Berkeley

$172,700

4. University of Michigan at Ann Arbor

$160,900

5. University of Maryland at Baltimore

$157,000

6. University of Virginia

$156,900

7. University of Maryland at College Park

$154,200

8. University of California at San Diego

$153,900

9. University of California at Santa Barbara

$152,800

10. University of California at Irvine

$152,600

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July 20, 2015 in Legal Education | Permalink | Comments (1)

The Case For Replacing Investment Income Taxes With An Annual Wealth Tax

S. Douglas Hopkins (Krestel Consulting, Sparta, NJ), The Case for Replacing Investment Income Taxes with an Annual Wealth Tax, 147 Tax Notes 1305 (June 15, 2015):

The tax reform debate in America is largely framed as a conflict of competing principles rather than shared goals and the resulting politicized power struggle has left us blind to a critical flaw in fiscal policy: Structural preferences that shelter wealth from direct taxation are subsidizing unproductive and illiquid capital, thereby distorting investment incentives and obstructing sustainable economic growth and job creation. Those preferences are both inefficient and inequitable, contrary to core principles of both democracy and capitalism.

A properly designed annual wealth tax could facilitate removal of those preferences and serve as the cornerstone element of simultaneously more equitable and efficient comprehensive tax reform: a) stimulating more productive investment and thereby job growth, while allowing us to b) equalize effective tax rates between labor and capital, and c) lower the maximum marginal tax rate to 25%.

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July 20, 2015 in Scholarship, Tax | Permalink | Comments (2)

Police Release New Details In Dan Markel's Murder

Following up on Saturday's post, Dan Markel Deserves Justice:  Tallahassee Police Department, Investigation into Markel Murder Continues:

The Tallahassee Police Department Violent Crimes Unit, with assistance from the FBI, have been actively investigating the murder of Florida State University Law Professor Daniel Markel since his death on July 18, 2014. TPD is releasing two updates to the case, one focusing on the vehicle specifics and the other focuses on a new reward amount.

Please see the attached images of the suspect car, determined to be a 2006-2009 Toyota Prius. The color is named 'Silver Pine Mica' by Toyota and appears metallic to light green, depending on lighting. The windows of the car are dark tinted.

Car

The vehicle has three (3) distinctive characteristics:

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July 20, 2015 in Legal Education | Permalink | Comments (9)

Law Profs, Law Grads Debate Changing Accreditation Standards To Permit Paid Externships

ABA Logo 2ABA Journal, Educators and Young Lawyer Take Opposing Sides at Hearing Over Academic Credit for Paid Externships:

The governing council of the ABA Section of Legal Education and Admissions to the Bar has approved six proposed changes to the law school accreditation standards for notice and comment.

But only one—a proposal to eliminate the current ban on students receiving academic credit for paid externships—drew any testimony at a public hearing Thursday.

Representatives from two legal education groups—the Society of American Law Teachers and the Clinical Legal Education Association—spoke out against the proposed change.

But Mathew Kerbis, immediate-past chair of the ABA Law Student Division, argued in favor of it.

Under the current standard, law students are barred from receiving both pay and credit for an externship or field placement. Under the proposed change, a law school could decide for itself whether a student should receive credit, but only if the school can demonstrate that it has maintained sufficient control over the experience to ensure that the requirements of the standards are being met.

In order to ensure that those requirements are being met, a law school granting credit where compensation is provided would also have to maintain separate records of the placement so accreditors can periodically evaluate the quality of the program. ...

The council has received nearly four dozen written comments (PDF) on its six proposed changes in the standards, mostly about the credit-for-paid-externships proposal and most of them in opposition to any change in the current prohibition, section officials say.

The proposed changes will come back to the council for final consideration July 31. If approved, they will be reviewed by the House of Delegates at the ABA’s Annual Meeting in early August. The House can either concur with a change in the standards or refer it back to the council for reconsideration. But the council has the final word.

Deborah Jones Merritt (Ohio State), More on Paid Clinical Externships:

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

Turmoil Continues At SUNY-Buffalo Law School

SUNY 2Following up on my previous posts:

Buffalo News:  UB Law School Faculty Must Be Held Accountable, by Andrew Remley (J.D. 2017, SUNY-Buffalo):

The University at Buffalo Law School leaves much to be desired. Last fall, as reported by The News, Dean Makau Mutua was forced to step down following allegations that he perjured himself in a gender-based wrongful termination lawsuit in Federal Court.

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

The IRS Scandal, Day 802

IRS Logo 2IJReview, New Documents Link Justice Department to IRS Scandal, But How Ted Cruz Reacted is the Big Surprise:

Has Senator Ted Cruz lost his bark?

When the news broke in mid-2013 that the Internal Revenue Service (IRS) had spent much of the past three years singling out conservative groups for extra scrutiny in their nonprofit applications, Cruz was among the first to call for a special prosecutor to investigate the scandal rather than the Department of Justice (DOJ).

But now that a slew of new documents has come to light this week, revealing that the DOJ, along with the FBI, actually played a much more hands-on role with IRS than previously thought, Cruz has gone mum. ...

Since the release of Judicial Watch’s documents, Cruz has not commented on the documents or released an official press statement. Cruz’s office did not return multiple requests for comment on whether the Republican presidential candidate would call for Loretta Lynch, the current attorney general, to appoint a special prosecutor.

A DOJ spokesman told IJReview only that the “investigation into the IRS’ handling of applications by tax-exempt organizations” is ongoing and declined to comment further.

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July 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, July 19, 2015

Merritt: The White Bias in Legal Education

Following up on Tuesday's post, LSAT Is Poor Predictor Of Law School Grades: 6 LSAT Points = 0.1 LGPA:  Deborah Jones Merritt (Ohio State), The White Bias in Legal Education:

Alexia Brunet Marks and Scott Moss have just published an article that analyzes empirical data to determine which admissions characteristics best predict law student grades. Their study, based on four recent classes matriculating at their law school (the University of Colorado) or Case Western’s School of Law, is careful and thoughtful. Educators will find many useful insights.

The most stunning finding, however, relates to minority students. Even after controlling for LSAT score, undergraduate GPA, college quality, college major, work experience, and other factors, minority students secured significantly lower grades than white students. The disparity appeared both in first-year GPA and in cumulative GPA. The impact, moreover, was similar for African American, Latino/a, Asian, and Native American students. ...

What accounts for this disturbing difference? Why do students of color receive lower law school grades than white students with similar backgrounds?

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July 19, 2015 | Permalink | Comments (2)

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [200 Downloads]  Citizenship Taxation, by Ruth Mason (Virginia)
  2. [196 Downloads]  Reducing Inequality With A Retrospective Tax On Capital, by James Kwak (Connecticut)
  3. [151 Downloads]  Capital Accounts in LLCs and in Partnerships: Powerful Default Rules and Potential Tax Significance, by Donald J. Weidner (Dean, Florida State)
  4. [106 Downloads]  How I Learned to Stop Worrying and Love Our Homeowner Tax Rules, by David Hasen (Colorado)
  5. [101 Downloads]  Safe Harbors, Sure Shipwrecks, by Susan C. Morse (Texas)

July 19, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

NY Times: Judges Rebuke Limits On Wiping Out Student Loan Debt

Student LoansNew York Times, Judges Rebuke Limits on Wiping Out Student Loan Debt:

[A judicial ruling has] ruling captured the attention of other judges and legal scholars because of a judge’s bluntly worded written opinion that rebuked the widely adopted hardship standard used to determine whether a [student loan] debtor is worthy of a discharge.

The judge, Jim D. Pappas, in his concurring opinion for the bankruptcy appellate panel decision in the United States Court of Appeals for the Ninth Circuit, said the analysis used “to determine the existence of an undue hardship is too narrow, no longer reflects reality and should be revised.”

He added: “It would seem that in this new, different environment, in determining whether repayment of a student loan constitutes an undue hardship, a bankruptcy court should be afforded flexibility to consider all relevant facts about the debtor and the subject loans.” But the current standard, he wrote, “does not allow it.”

Judge Pappas isn’t the only critic. Although plenty of cases still hew closely to a strict interpretation of the test, some judges and courts have signaled in recent years that they believe the rigid standard — known as the Brunner test — should be reconsidered, even if they are still bound to it now.

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July 19, 2015 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 801

IRS Logo 2The Daily Signal, How the IRS, FBI and Justice Department Are Agents of Modern American Tyranny:

Imagine having a vision for your country.

You worked hard to start an organization to promote the ideas and values that you believe can fix our nation.

When you apply for tax-exempt status, which should be a simple matter of paperwork, you face repeated delays and demands from the government that stretch the process across months and years.

Then you learn—not from the government, but from an outside source—that your private information was shared with multiple government agencies, all of whom wanted to “piece together” criminal charges against you.

Imagine being awakened in the middle of the night by a gang of police, shouting and waving their weapons at you. They turn your house inside-out, steal your laptop and phone, then order you not to tell anyone they were there.

All this happened because your political beliefs landed on the wrong side of those officials in power.

This is not a scenario from China, Russia, or Iran.

Welcome to the very real tyranny of modern America.

Think it can’t happen here? Just do some reading on the John Doe proceedings in Wisconsin, or the IRS targeting scandal.

As documents slowly begin to trickle out, the scandal of the IRS targeting conservative political organizations only grows bigger.

We learned a year ago that the IRS was helping the Department of Justice trump up charges on conservative groups by 2013.

New documents show this was in the works as early as 2010.

These two dates perfectly bookend the period of time that conservative groups were intentionally harassed and their applications for tax-exempt status delayed. From the first reaction to Citizens United to the week of Lois Lerner’s misleading admission of targeting, multiple government agencies were in on it together. ...

We have now entered a time in America when citizens can be labeled as “political dissident” and targeted by their own government for harassment and prosecution.

Abuse that formerly only went on in places like China, Russia, and Iran has repeatedly happened right here within the USA. This is not the nation we used to know and love.

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July 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, July 18, 2015

Dan Markel Deserves Justice

MarkelTallahassee Democrat editorial, Dan Markel Deserves Justice:

On Friday morning, July 18, 2014, an assailant, some speculate that it could have been a professional hit man, shot Florida State law professor Dan Markel as he sat in his car in his garage.

Markel’s murder represents a diminishment of our community on so many levels: as a father, educator, scholar, neighbor, congregant and human being. The loss is compounded by the frustration over the lack of progress in bringing his killer or killers to justice. All lives matter, but the need for justice in this case seems more urgent than ever. If this can happen to Dan Markel, then we are all vulnerable.

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July 18, 2015 in Legal Education, Obituaries | Permalink | Comments (7)

This Week's Ten Most Popular TaxProf Blog Posts

P&G's Use Of Reverse Morris Trust In Selling 43 Beauty Brands To Coty For $12.5 Billion: 'A Thing Of Tax Beauty'

P&GWashington Post:  For Tax Techies, P&G’s Deal With Coty Is a Thing of Beauty, by Allan Sloan:

To most people, Procter & Gamble is known for powerhouse brands such as Tide, Tampax and Pampers. But to people whose stomachs churn when American companies go to great lengths to avoid taxes, there’s a more appropriate P&G product: Pepto-Bismol.

My stomach got a bit queasy when I examined P&G’s deal to sell 43 beauty brands to Coty, the big beauty company, for $12.5 billion (what Coty said it’s paying) or maybe $15 billion (the deal’s value the day it was announced last week).

Either way, the transaction is a thing of beauty to tax techies — although not to regular taxpayers. P&G is using a “Reverse Morris Trust” to avoid billions in taxes that it would have owed in a straight-up sale of the brands, which include Wella, Clairol, Max Factor and Covergirl.

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July 18, 2015 in Tax | Permalink | Comments (3)

The IRS Scandal, Days 701-800

July 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

The IRS Scandal, Day 800

IRS Logo 2Forbes:  Court Agrees Lois Lerner's Group Did Not Trigger Individual Audits, by Peter J. Reilly:

The perennial never-ending IRS scandal now on Day 795 by TaxProf count , in part, is a search for smoking guns.  Sometimes it turns out that all that can be found is unloaded, never fired guns. The response of those promoting the scandal narrative is that, you have to look harder.  Enough is never enough. Sometimes the courts agree that the IRS must search its records more assiduously. Earlier this month, though the DC District issued an enough is enough ruling on one of Judicial Watch’s Freedom of Information Requests.

The FOIA request concerned Lois Lerner’s Cincinnati gang that couldn’t sort straight causing individuals connected in one way or another to the exempt applications to have their individual returns audited.  There is anecdotal evidence that this sort of thing was going on.  Various Tea Party people came forward and indicated that they were audited for the first time after they became involved.  The problem with that type of anecdotal evidence is that every year some number of people are going to be audited for the first time.  You would expect that some number of those audited in say 2011 were active in the Tea Party or similar groups.

You are never going to convince most of those people that it was just luck of the draw.  It would be very hard to make a statistical inference about whether Tea Party affiliation or something like that affected individual audit probability, since it is hard to define the group that the sample is being drawn from and it is possible, even likely, that the people who became involved in the conservative causes were people who already had a higher than average probability of being audited. ...

Certainly Judicial Watch thinks so.  They brought up indications that IRS had communicated with DOJ about prosecuting people for lying on 501(c)(4) exemption applications.  That particular assertion has created some media excitement.  I haven’t figured out what is scandalous about it, particularly since it appears nobody was ever prosecuted.  Those applications are signed under penalties of perjury and there is some indication that on some of them people were kind of shading the truth just a bit.  The Court noted, though, that the communication to DOJ had nothing to do with audit referrals. ...

I suspect that the IRS scandal will keep going at least through the upcoming Presidential election, since it allows Republicans to run against Lois Lerner.  It is apparently also pretty good for fundraising.  According to its 2013 Form 990, Judicial Watch raised over $20 million just shy of $6 million of that was spent on fundraising.  I didn’t see any mention of this DC District decision on their website in the weekly updates.

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July 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Friday, July 17, 2015

Tax Prof Wedding: Allen Madison

Congratulations to Tax Prof Allen Madison and DaVida Russell, who were married yesterday in Stonington, Connecticut:

Madison

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July 17, 2015 in Legal Education, Tax, Tax Prof Weddings, Tax Profs | Permalink | Comments (3)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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July 17, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Taylor: Should Payroll Taxes Be Repealed?

Willard B. Taylor (NYU & Sullivan & Cromwell), Should Payroll Taxes Be Repealed?, 148 Tax Notes 213 (July 13, 2015):

This article argues that serious consideration should be given to the repeal or payroll taxes, i.e., of FICA and SECA, and of the 3.8% tax on net investment income, and Social Security and Medicare benefits funded with personal income tax revenues. There is no sound reason not to do so, apart from politics, and repeal would focus Congress on the regressive structure of taxes imposed on labor income and eliminate the complexity (and distortion with respect to, e.g., the choice of entity to carry on a business) of three separate taxes.

July 17, 2015 in Scholarship, Tax | Permalink | Comments (1)

University of Chicago Law School Study: Better Scholars Are Better Teachers

Tom Ginsburg (Chicago) & Thomas J. Miles (Chicago), The Teaching/Research Tradeoff in Law: Data from the Right Tail, 39 Evaluation Rev. 46 (2015):

Background: There is a long scholarly debate on the trade-off between research and teaching in various fields, but relatively little study of the phenomenon in law. This analysis examines the relationship between the two core academic activities at one particular school, the University of Chicago Law School, which is considered one of the most productive in legal academia. Method: We measure of scholarly productivity with the total number of publications by each professor for each year, and we approximate performance in teaching with course loads and average scores in student evaluations for each course. In OLS regressions, we estimate scholarly output as a function of teaching loads, faculty characteristics, and other controls. We also estimate teaching evaluation scores as a function of scholarly productivity, fixed effects for years and course subject, and faculty characteristics. Result: Net of other factors, we find that, under some specifications, research and teaching are positively correlated. In particular, we find that students’ perceptions of teaching quality rises, but at a decreasing rate, with the total amount of scholarship. We also find that certain personal characteristics correlate with productivity. Conclusion: There recent debate on the mission of American law schools has hinged on the assumption that a trade-off exists between teaching and research, and this article’s analysis, although limited in various ways, casts some doubt on that assumption.

Chicago Chart

Orin Kerr (George Washington), Is There a Teaching/Scholarship Trade-off in Law Schools?:

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July 17, 2015 in Legal Education, Scholarship, Teaching | Permalink | Comments (1)

Madison: The Denial Of IRS Access To The Taxpayer's Playbook

PlaybookAllen D. Madison (South Dakota), The Denial of IRS Access to its Adversary's Playbook, 60 S.D. L. Rev. 232 (2015):

When examining a corporate taxpayer, the IRS often seeks special accounting documents called tax accrual workpapers. These workpapers often contain privileged documents, but the IRS does not care. It believes it is entitled to the documents despite that the work product doctrine protects the documents from the IRS's investigation authority. Although the law seems clear, some courts appear to have ignored the law and permitted the IRS to obtain the documents in some cases. Differing results under similar circumstances have made the law less clear. The IRS should stop trying to obtain taxpayers' work product, and the Supreme Court should clear up the law with respect to these documents.

July 17, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 799

IRS Logo 2Library of Law & Liberty:  Impeachment of the IRS Commissioner, by Mike Rappaport (San Diego):

I have long believed that the House Republicans should be using their impeachment power against the IRS.  I thought that they should have seriously considered impeaching Lois Lerner (although I suppose there is question whether she was a constitutional officer).  I certainly believe that they should consider whether to impeach IRS Commissioner John Koskinen and other relevant IRS officials.  (Note: the House impeaches or accuses; the Senate tries the official and can convict with a two thirds majority.)

It is true that an impeachment of the IRS Commissioner will not directly affect the President or the White House.  But it is important to use the tools that the Congress has to police wrongdoing and impeachment is one of them. ...

Once it becomes clear that officials may be impeached, their will be greater reluctance on the part of officials to engage in wrongdoing.  Moreover, the impeachment may reveal information about wrongdoing by the White House. ...

It is true that while the House can impeach an official with a majority vote, a conviction and removal from office requires a two thirds vote of the Senate.  Thus, depending on the evidence against the official and the degree of politics at work in the Senate, it is possible that an official who should be removed would not be convicted in the Senate.  But that is not a serious problem in my view.

Washington Free Beacon, Rep. Jim Jordan: ‘Definitely’ Looking at Possibility of Impeaching IRS Commissioner:

Rep. Jim Jordan (R., Ohio) said that the House Oversight and Government Reform Committee is “definitely” looking at the possibility of impeaching IRS Commissioner John Koskinen in an interview with the Washington Free Beacon on Thursday.

“We are definitely looking at that,” Jordan said. “Definitely looking at that. I’ll say this, Mr. Koskinen has on more than one occasion come in front of the committee and conveyed information to the committee that later turned out not to be accurate.” ...

Jordan said that impeachment is a possibility for the IRS commissioner.

“When you have an individual who’s head of an agency with this kind of power the Internal Revenue Service has, who has stated things under oath that turned out later to be false, that’s a problem,” he said. “Couple that with the false information that was sent out to a lot of Obamacare enrollees that impacted their tax liability that was just false, and some of the data breaches that have taken place there too—so the main focus is, of course, the targeting scandal and his answers to questions in front of the committee under oath that I’ve said later turned out to be untrue.”

“But there’s also these other things, so that’s something that the committee is looking at but there’s a certain amount of homework you’ve got to do before you start down that path,” he said. “So we’re looking at it.” ...

Jordan also expressed skepticism about the Justice Department’s handling of the IRS controversy.

“Everyone knows the fix is in at the Justice Department,” said Jordan. “The FBI announced a year and a half ago, according to the Wall Street Journal, that no one was going to be prosecuted. The President made his famous statement on Super Bowl Sunday a year and a half ago that there’s no corruption, not even a smidgen, and the lead attorney on the case is Barbara Bosserman who’s a maxed-out contributor to the President’s campaign.”

“So everyone knows the fix is in, and what really tells you that the fix is in with the Justice Department investigation is Lois Lerner was willing to sit down with Justice Department attorneys, Ms. Bosserman and her team, and answer their questions but she’s not willing to answer members of Congress’ questions,” said Jordan.

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July 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, July 16, 2015

Osofsky: Tax Administration And Tax Scholarship

Leigh Osofsky (Miami) has a great series of posts on tax administration and tax scholarship:

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July 16, 2015 in Scholarship, Tax | Permalink | Comments (0)

The Contemporary Tax Journal Publishes New Issue

Contemporary Tax JournalsThe San Jose State University Masters of Science in Taxation Program in the Lucas Graduate School of Business has published the sixth issue (Vol. 5, No. 1 (Spring/Summer 2015)) of The Contemporary Tax Journal.

July 16, 2015 in Scholarship, Tax | Permalink | Comments (0)

Chodorow: The Tax Consequences Of Catalyzed Fans

Red SoxAdam Chodorow (Arizona State), The Tax Consequences of Catalyzed Fans, 6 Harv. J. Sports & Ent. L. 187 (2015):

This article, in honor of Dan Markel, explores the tax issues that would arise were fans to band together as a Fan Action Committee (FAC) to offer players additional compensation or a donation to a favored charity as an incentive to sign with the fans’ team, the proposal at the heart of one of Dan’s last articles. Both the direct compensation and charitable models raise questions regarding whether the players and owners have income, the tax consequences for the FAC of both contributions and distributions, and the fans’ ability to deduct contributions to the FAC. Exploring these questions will help pave the way for FACs to move from academic discourse to the real world, offers the opportunity to consider a number of important tax policy issues that have far broader application, and seems like a wonderful way to honor Dan’s memory.

July 16, 2015 in Scholarship, Tax | Permalink | Comments (0)

Taylor: Law School Scholarships Foist Surtax On The Neediest Students

National Law Journal op-ed:  Law School Scholarships Foist Surtax On Neediest, by Aaron Taylor (St. Louis):

Students with less-educated parents and lower LSAT scores accrue the most debt.

The ABA Task Force on the Financing of Legal Education recently released its report identifying factors driving the high costs of legal education. One factor cited by the task force was law school scholarship policies based on high Law School Admis­sion Test scores, instead of financial need. These policies contribute in large part to high levels of law student debt, particularly among first-generation students. Worse yet, they result in the neediest students paying a tuition premium — a "merit surtax," if you will — that subsidizes the attendance of their wealthier peers.

An analysis of data from the 2014 administration of the Law School Survey of Student Engagement charts how this phenomenon unfolds. The purpose of the analysis was to identify trends relating to the law school experience that were attributable to socioeconomic factors. ... We found that average LSAT scores increased as parental education increased. 

These numbers suggest that respondents with more highly educated parents tended to have an advantage in the admissions process. This is where the merit surtax comes into play. The neediest applicants are doubly disadvantaged. They are least likely to gain admission and, even if admitted, they are least likely to be awarded the most generous scholarships. Student loan debt trends from Law School Survey of Student Engagement support this supposition. Respondents whose parents had lower levels of education were more likely to have law school debt and more likely to have higher levels of that debt. 

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July 16, 2015 in Legal Education | Permalink | Comments (0)

NYC Firm Refuses To Hire Ivy League Law Grads: Top Students From Lower Ranked Schools Are Hungrier, More Ambitious

Ivy LeagueHuffington Post op-ed:  Why We Do Not Hire Law School Graduates from the Ivy League Schools, by Adam Leitman Bailey:

In order to strive to become one of New York's best real estate law firms we do not hire law school graduates from Harvard, Yale, Cornell, Columbia or any of the other traditional highest tier schools.

Our hires come from the top of the classes of the second, third or fourth tier law schools. We find these men and women we take under our wing to be more ambitious and more hungry to excel in the legal profession. They are hard-working and usually grew up with a middle or lower class upbringing. We do not hire our clients' sons and daughters unless they demonstrate the same merits as any stranger to our family. The candidates we recruit are those who have been battle tested in one manner or another. They have been forced to compete against their peers to rank at the top of their law school and college classes.

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July 16, 2015 in Legal Education | Permalink | Comments (18)

NPR: Medicine, Law, Business: Which Grad Students Borrow The Most?

Taxing Meat To Fight Climate Change

MeatMarya Torrez (American), Accounting for Taste: Trade Law Implications of Taxing Meat to Fight Climate Change, 27 Geo. Int'l Envtl. L. Rev. 61 (2014):

Global climate change threatens to have disastrous consequences for life as we know it. Animal agriculture makes a tremendous contribution to climate change. While largely ignored in the policy arena, in recent years, scientists have suggested a tax on meat to begin to address this issue.

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July 16, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 798

IRS Logo 2Washington Examiner, With New Documents, Stench of IRS Scandal Reaches Into its Third Year:

In 2013, Lois Lerner, former head of the IRS non-profit section, pleaded the Fifth Amendment before the House Oversight Committee. She had been called to testify about her division's unjustifiable harassment of conservative applicants for nonprofit status.

Just over a year later, it was reported that a number of Lerner's work emails had gone missing due to a supposed problem with her hard drive. Then last month, the Treasury inspector general for tax administration testified that IRS employees — despite being under explicit orders not to destroy records — had "magnetically erased" as many as 24,000 of Lerner's missing emails from hundreds of data tapes where they were being stored.

Whether the emails' disappearance was innocent or not, the public is only now beginning to get more information about just what it concealed, thanks to an ongoing Freedom of Information Act lawsuit against the IRS by the conservative watchdog group Judicial Watch. Documents unearthed this week show that in Fall 2010, Lerner was working to get the Justice Department to prosecute nonprofits that engaged in political activity. This despite the fact that 501(c)4 groups, which cannot take tax-deductible donations, are permitted to engage in some political advocacy by law and by Civil Rights-era court precedents. ...

The original IRS scandal hinted at an intensive but narrow effort within one division to punish or at least make life difficult for the Obama administration's political opponents — the sort of thing that could perhaps be chalked up to a few bad actors. But the new documents suggest there were at least attempts to bring other agencies in on the wrongdoing. ...

This scandal continues to stink at least as badly as it did when IRS targeting of conservative non-profits was first acknowledged. This isn't a partisan political issue — unfair tax enforcement is unfair to everyone, and anyone can become a victim. Moreover, federal tax privacy laws exist because tax information is so sensitive and susceptible to abuse by politicians and ideologically interested parties.

Congress is right not to let go of this bureaucratic malfeasance, and to continue investigating what could prove to be a with a broader scope than anyone anticipated.

Daily Caller, Bozell On IRS Scandal: ‘A Tyrannical Administration Using Stalinist Tactics Against Its Political Opponents’:

The president of the Media Research Center, Brent Bozell, came out swinging Thursday in response to the revelations — uncovered by the watchdog Judicial Watch — that Lois Lerner, other officials from the IRS, the Department of Justice, and the FBI met in 2010 to discuss criminally prosecuting non-profit organizations targeted for illegal political activities.

Bozell was incensed that few media outlets bothered to cover the news. “The networks’ refusal to cover these devastating revelations borders on being complicit in a cover-up of criminal misconduct by a tyrannical administration using Stalinist tactics against its political opponents,” the conservative figure declared in a statement.

In Bozell’s opinion, the meeting revealed “criminal coordination between the IRS, FBI and the Department of Justice in an effort to politically persecute innocent, law-abiding Americans and independent organizations.”

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July 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, July 15, 2015

TurboTax To Drop Cloud Backup Option; Desktop Users Have 1 Week To Download Their Returns

Turbo Tax (2015)New York Times, TurboTax Drops Cloud Backup Option for Desktop Users:

If you used the desktop version of TurboTax during the most recent tax filing season and backed up your return online, you may want to make sure you have a copy of it stored on your computer.

Intuit, the maker of TurboTax tax preparation software, has notified some desktop customers that it is discontinuing a service that allowed them to store a copy of their return on TurboTax’s cloud system. (Desktop customers install the tax software on their own computer, by buying a CD-ROM or a download, rather than preparing their returns on the TurboTax website.)

Users have until July 21 to gain access to their tax returns on the cloud and resave them on their own computer if they need to do so. ...

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July 15, 2015 in Tax | Permalink | Comments (0)

Soled & Gans: Asset Preservation And The Evolving Role Of Trusts In The 21st Century

AssetJay A. Soled (Rutgers) & Mitchell M. Gans (Hofstra), Asset Preservation and the Evolving Role of Trusts in the Twenty-First Century, 72 Wash. & Lee L. Rev. 257 (2015):

For the vast majority of the twentieth century, trusts served two pivotal roles. The first was as a vehicle to help mitigate federal and state estate tax burdens, the rates of which could be quite significant. The second was to assist in asset preservation, safeguarding trust beneficiaries from their profligacy, former spouses, creditors, and the like.

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July 15, 2015 in Scholarship, Tax | Permalink | Comments (0)

Report: IRS Hung Up On 8.8 Million Taxpayers This Year (Up From 544k Last Year); ‘Courtesy Disconnects’ Increased 1,500 Percent

TAS 2National Taxpayer Advocate Nina Olson today released (IR-2015-97) her semi-annual report to Congress, FY 2016 Objectives Report to Congress:

“With funding down about 17 percent on an inflation-adjusted basis since FY 2010, and with the IRS having had to implement large portions of the [ACA] and the Foreign Account Tax Compliance Act (FATCA) this year without any supplemental funding, sharp declines in taxpayer service were inevitable,” Olson wrote. Likening the 2015 filing season to “A Tale of Two Cities,” however, the report says: “For the majority of taxpayers who filed their returns and did not require IRS assistance, the filing season was generally successful. For the segment of taxpayers who required help from the IRS, the filing season was by far the worst in memory.”

  • The IRS answered only 37 percent of taxpayer calls routed to customer service representatives overall, and the hold time for taxpayers who got through averaged 23 minutes. This level of service represents a sharp drop-off from the 2014 filing season, when the IRS answered 71 percent of its calls and hold times averaged about 14 minutes.
  • The IRS answered only 39 percent of calls from taxpayers seeking assistance from TAS on the National Taxpayer Advocate (NTA) Toll-Free hotline, and hold times averaged 19 minutes. TAS serves as the IRS’s “safety net” for taxpayers who are experiencing a financial or systemic hardship as a result of IRS action or inaction.
  • The IRS answered only 17 percent of calls from taxpayers who called after being notified that their tax returns had been blocked by the Taxpayer Protection Program (TPP) on suspicion of identity theft, and the hold times averaged about 28 minutes. In three consecutive weeks during the filing season, the IRS answered fewer than 10 percent of these calls.
  • The IRS answered only 45 percent of calls from practitioners who called the IRS on the Practitioner Priority Service line, and hold times averaged 45 minutes.
  • The number of “courtesy disconnects” received by taxpayers calling the IRS skyrocketed from about 544,000 in 2014 to about 8.8 million this filing season, an increase of more than 1,500 percent. The term “courtesy disconnect” is used when the IRS essentially hangs up on a taxpayer because its switchboard is overloaded and cannot handle additional calls.

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July 15, 2015 in IRS News, Tax | Permalink | Comments (5)

Chorvat: Taxation And Liquidity — Evidence From Retirement Savings

Elizabeth Chorvat (Illinois), Taxation and Liquidity: Evidence from Retirement Savings:

This paper tests the response of a cross section of U.S. households to a reduction in the tax cost of holding liquid assets by the 2003 Jobs and Growth Tax Relief Reconciliation Act, whether that response was tax efficient, and the distribution of that response. Empirical results based on regression analyses of Survey of Consumer Finances data between 1998 and 2010 suggest that lower, middle, and high-income households responded to the enactment of the dividend preference in a tax-efficient manner, increasing allocations to liquid accounts and away from tax-preferred retirement accounts. Notwithstanding the conventional wisdom that behavioral responses to changes in the taxation of investments occur predominantly among the wealthy, the paper finds that the largest behavioral response to the 2003 dividend preference appears to have been among those households in the highest and lowest income groups, with the largest response among the lowest income households. If household income is an important determinant to the value of liquidity, we might well understand that those with the highest need for liquidity might have the largest response to a reduction in the cost of that liquidity. Curiously, while middle-income households responded to the lower cost of liquidity in a tax-efficient manner, theirs was a distinctly smaller response.

July 15, 2015 in Scholarship, Tax | Permalink | Comments (0)

Luke: The Taxing Problem of Debt Principal

Charlene Luke (Florida), Of More Than Usual Interest: The Taxing Problem of Debt Principal, 39 Seattle U. L. Rev. ___ (2015):

Leverage is an essential but often troubling component of the U.S. market. In the tax area, the potentially problematic incentive effects of interest deductibility have long engaged a wide array of tax commentators and policymakers. While interest deductibility rightly receives widespread scrutiny, a more comprehensive approach to leverage is needed. This Article focuses on the surprisingly complicated tax treatment of cash (and cash equivalent) borrowings. This Article highlights that using debt principal to finance business and investment tax benefits yields favorable tax timing mismatches for taxpayers and thereby theoretically amplifies any distortions caused by the deductibility of debt interest.

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July 15, 2015 in Scholarship, Tax | Permalink | Comments (0)

District Court Refuses To Dismiss Claim By Law Prof Denied Tenure That Failure To Provide Annual Reviews Breached His Contract

MawakanaFollowing up on my previous post, Prof Sues UDC Law School For Discrimination After Tenure Denial:  National Law Journal, Fired Prof’s Lawsuit Against University of DC Law Survives:

A professor at the University of the District of Columbia David A. Clarke School of Law who was denied tenure then fired in 2013 may move forward with his breach-of-contract claim against the university, a federal judge has ruled.

Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia ruled on July 10 that Kemit Mawakana’s complaint offered just enough evidence to support a claim that he and the university had an implied contract that guaranteed him annual performance reviews leading to his tenure eligibility.

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July 15, 2015 | Permalink | Comments (0)

The Impact Of The Obama Administration’s New 'REPAYE' Plan On Law Students

Gregory Scott Crespi (SMU), The Obama Administration's New 'Repaye' Plan for Student Loan Borrowers: Not Much Help for Law School Graduates:

In response to President Obama’s 2014 directive the DOE has proposed a new student loan repayment option, labeled the Repaye As You Earn Plan (“REPAYE Plan”), which will be open for enrollment in early 2016 to up to five million student loan borrowers who are not eligible for enrollment in the generous Pay As You Earn Plan (“PAYE Plan”) because of pre-October 1, 2007 student loan debts. I estimate that approximately 60,000 of those five million persons are law graduates. However, I also estimate that approximately three-quarters of those 60,000 law graduates have already enrolled in either the Income-Based Repayment Plan (“old IBR Plan”) or the Income-Contingent Repayment Plan (“ICR Plan”). Most of those persons among the remaining group of about 15,000 PAYE Plan-ineligible law graduates who have not already enrolled in a loan repayment Plan, if they later do decide to enroll, will enroll in the old IBR Plan rather than the new REPAYE Plan because of the REPAYE Plan’s spousal income inclusion rules.

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July 15, 2015 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 797

IRS Logo 2The Hill, Senate Panel's IRS Report Due in Weeks:

The Senate Finance Committee plans to release its report on the IRS’s improper scrutiny of conservative groups before lawmakers leave Washington for the August recess, a panel spokesman said Tuesday. 

The committee’s IRS investigation has lasted for more than two years, ever since former agency official Lois Lerner apologized in May 2013 for the IRS’s treatment of groups seeking tax-exempt status.

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July 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)