TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, September 18, 2017

July 2017 Florida Bar Exam Results: Florida International Is #1 For 4th Year In A Row

Florida Bar 2The July 2017 Florida bar passage rates by school are out. The overall pass rate for first-time takers is 71.3%, up 3.1 percentage points from last year. For the fourth year in a row, Florida International is #1. Here are the results for the 11 Florida law schools, along with each school's U.S. News ranking (Florida and overall):

Bar Pass

Rank (Rate)

 

School

US News Rank

FL (Overall)

1 (87.8%)

Florida Int'l

5 (100)

2 (84.2%)

Miami

3 (77)

3 (83.9%)

Florida State

2 (48)

4 (77.0%)

Florida 

1 (41)

5 (76.8%)

Stetson

4 (96)

6 (70.2%)

Nova

Tier 2

7 (63.6%)

St. Thomas

Tier 2

8 (58.9%)

Barry

Tier 2

9 (51.3%)

Ave Maria

Tier 2

9 (51.3%)

Florida A&M

Tier 2

11 (47.7%)

Florida Coastal

Tier 2

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September 18, 2017 in Legal Education | Permalink | Comments (3)

The Capacity Of Governments To Raise Taxes

OECD Econ. Dep't Working Paper No. 1407, The Capacity of Governments to Raise Taxes:

This paper investigates the factors that shape governments’ capacity to collect revenue. To do so, it analyses how tax revenue responds to tax rates using evidence from a panel of 34 OECD countries over 1978-2014. The estimations show that the response of revenue to rates weakens as rates become higher, confirming the existence of a hump-shaped relationship between tax revenue and rates for corporate income taxation and providing a new contribution by analysing value-added taxation. Importantly, the estimated responses of revenue to tax rates vary, in some cases very strongly from an economic perspective, depending on country-specific policies and framework conditions. In particular, the corporate income tax revenue-generating potential of hiking the effective rate shrinks much more quickly in more open economies than in more closed ones.

OECD

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September 18, 2017 in Gov't Reports, Scholarship, Tax | Permalink | Comments (0)

Hasen: Taxation And Innovation

David Hasen (Colorado), Taxation and Innovation: A Sectorial Approach, 2017 U. Ill. L. Rev. 1043:

A number of tax rules have been adopted or proposed to promote innovation. The primary justification for these rules is that they can be effective in reducing or eliminating chronic market failure in the innovation sector. This paper argues that special tax rules for innovation generally are inappropriate.

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September 18, 2017 in Scholarship, Tax | Permalink | Comments (0)

McIntyre & Simkovic: Are Law Degrees As Valuable To Minorities?

Frank McIntyre (Rutgers) & Michael Simkovic (USC), Are Law Degrees as Valuable to Minorities?, 52 Int'l Rev. L. & Econ. ___ (2017):

We estimate the increase in earnings from a law degree relative to a bachelor’s degree for graduates of different race/ethnic groups. Law earnings premiums are higher for whites than for minorities (excluding individuals raised outside the U.S.). The median annual law earnings premium is approximately $41,000 for whites, $34,000 for Asians, $33,000 for blacks, and $28,000 for Hispanics.

MS4

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September 18, 2017 in Legal Education, Scholarship | Permalink | Comments (3)

An Emotionally Distressing Lesson From The Tax Court

Tax Court (2017)Last week, in the Summary Opinion of Collins v. Commissioner, the Tax Court agreed with the Service that a taxpayer could not exclude $85,000 under section 104(a)(2) for payments received for "emotional distress" even though that distress resulted in physical sickness.  It's a case that not only teaches an important basic lesson about 104(a)(2) but also exposes a distressing gap in current tax law.  More below the fold. 

Mr. Collins had sued his employer for workplace discrimination and retaliation.  One of his allegations was that he had "suffered severe emotional distress and anxiety, with physical manifestations, including high blood pressure."  The case settled, with $85,000 of the settlement was allocated to "emotional distress."  Could Mr. Collins exclude that $85k under section 104(a)(2)?  Mr. Collins---like many of my basic tax students---thought he could because he had undeniably physical sickness stemming from the stress of his workplace situation.  The Service and Tax Court properly said "no exclusion" based on current law.  

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September 18, 2017 in New Cases, Tax | Permalink | Comments (10)

Hayashi: A Theory Of Facts And Circumstances

Andrew Hayashi (Virginia), A Theory of Facts and Circumstances, 69 Ala. L. Rev. ___ (2017):

The legal consequences of an action often depend on information that only the actor knows. This information is typically inferred from the observable “facts and circumstances” attending the actor’s conduct, which creates a seemingly unresolvable tension in legal design. On the one hand, these unstructured inquiries give free rein to the factfinder’s judgment about which facts justify an inference to the hidden information. On the other hand, specifying the facts that will be used to draw that inference would provide a roadmap for actors to strategically adjust their conduct to manipulate the factfinder’s conclusions. I argue that this tension can be resolved by applying insights from the economics literature on asymmetric information.

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September 18, 2017 in Scholarship, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, September 17, 2017

Becoming 'The Nation's Premier Christian Law School'

Pepperdine EquippedMy friend Rick Garnett (Notre Dame) noted on his Mirror of Justice Blog (a member of my Law Professor Blogs Network) that "our good friends at Pepperdine have started to market themselves as 'The Nation's Premier Christian Law School'" and linked to my blog post marking my 100th day as dean.  Rick also wrote:

I certainly agree that Pepperdine is an excellent institution that does a very good job of engaging and meaningfully embracing its Christian character.  I hope, though, that they have not fallen into the old error — and, knowing so many at Pepperdine, I have to believe they have not — of excluding Catholics (and, more specifically, certain outstanding Catholic law schools) from their definition and understanding of "Christian"!  Remember, Evangelicals and Catholics Together (on law)!

I responded to Rick privately that neither of these claims are true.  After an exchange of emails, we agreed that it would be helpful for me to publicly set the record straight so no one is left with the impression that Notre Dame and Pepperdine are anything other than, as Rick put it, "fellow laborers in the vineyard."

On the first point, in the post Rick linked to, I wrote that "our shared goal [at Pepperdine] is to become the nation's premier Christian law school by combining academic and research excellence with a deep-rooted commitment to our Christian mission that welcomes people of all faiths and backgrounds."  In my only other blog post on the subject — marking my first day as dean —   I wrote that "I am especially proud to have the support of our faculty, staff, students, and university administration in the ambitious plan I outlined as a dean candidate for Pepperdine to become the nation's premier Christian law school."  Indeed, in all of the speeches I make as dean (including yesterday in San Francisco), I always say that its is Pepperdine's goal (or aspiration) to be the nation's premier Christian law school, not that we currently claim that mantle.

Rick kindly updated his post to say: 

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September 17, 2017 in Legal Education | Permalink | Comments (0)

Larson & Ruse: On Faith And Science

Larson 2Edward J. Larson (Pepperdine)  & Michael Ruse (Florida State), On Faith and Science (Yale Univ. Press 2017):

Throughout history, scientific discovery has clashed with religious dogma, creating conflict, controversy, and sometimes violent dispute. In this enlightening and accessible volume, distinguished historian and Pulitzer Prize–winning author Edward Larson and Michael Ruse, philosopher of science and Gifford Lecturer, offer their distinctive viewpoints on the sometimes contentious relationship between science and religion. The authors explore how scientists, philosophers, and theologians through time and today approach vitally important topics, including cosmology, geology, evolution, genetics, neurobiology, gender, and the environment. Broaching their subjects from both historical and philosophical perspectives, Larson and Ruse avoid rancor and polemic as they address many of the core issues currently under debate by the adherents of science and the advocates of faith, shedding light on the richly diverse field of ideas at the crossroads where science meets spiritual belief.

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September 17, 2017 in Book Club, Legal Education, Tax | Permalink | Comments (0)

HMRC Chief Warns Brexit Merger Of UK Border And Tax Operation Is A 'Mega Project' Requiring 5,000 Extra Staff

International Business Times, HMRC Chief Warns Brexit Merger of UK Border and Tax Operation is a 'Mega Project' 

Britain's top tax body said a merged border force and tax checking operation will need 5,000 extra staff cost up £800m after Brexit.

HMRC director general of customer strategy Jim Harra told MPs the country will have to tackle 130,000 new companies that import and export within the European Union (EU) that do not currently come into contact with British customs.

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September 17, 2017 in Tax | Permalink | Comments (0)

The Top Five New Tax Papers

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

  1. [588 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [327 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  3. [218 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)
  4. [146 Downloads]  Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation, by George Yin (Virginia)
  5. [142 Downloads]  Distributive Justice and Donative Intent, by Alexander A. Boni-Saenz (Chicago-Kent)

September 17, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 16, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Should The United States Have A National Investment Authority?

On Tuesday, Boston College Law School welcomed Professor Saule Omarova (Cornell) as the first presenter in our inaugural Regulation and Markets Workshop Series. The paper (with Robert Hockett, also of Cornell) is entitled “Private Wealth and Public Goods: A Case for a National Investment Authority.” It’s available on SSRN.

In brief, the paper makes a two pronged contribution: First, a policy proposal for the creation of a National Investment Authority (NIA), a hybrid, public-private entity that directs private financial capital to fund long-term infrastructure and development projects; and second, a theoretical re-envisioning of what public goods are and how to provide them.

What is quite interesting from a tax and public finance perspective is that the NIA proposal aims to fill an institutional gap between the classic Treasury function and that of the central bank (the Fed). As Omarova and Hockett characterize it, the standard response to the public goods problem is to have Treasury, as the fiscal authority, collect tax payments (or borrow) and use the proceeds to finance public goods. However, they argue that political budget fights have rendered Treasury unable to advance large-scale and long-term public infrastructure investments. While the Fed has partially attempted to fill the gap and to encourage infrastructure investment using monetary policy tools, these tools are insufficient. As a result of the policy gap between the Treasury and Fed mandates, economic growth and development suffer.

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September 16, 2017 in Colloquia, Conferences, Scholarship, Tax | Permalink | Comments (0)

ABA Tax Section Fall CLE Meeting

CLE 2The ABA Tax Section concludes its three-day joint Fall CLE meeting with the ABA Real Property, Trust and Estate Law Section today in Austin, TX.  The full program is here.  Today's highlight is the keynote luncheqon address by  Michael J. Graetz (Columbia). Other Tax Profs with speaking roles include:

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September 16, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

Texas A&M Names Jack Manhire Assistant Dean And Chief of Staff Of The I-School, And Assistant Vice President For Entrepreneurship And Economic Development

Manhire (2017)Jack Manhire, former Director of Program Development and Senior Lecturer in Law at the Texas A&M University School of Law in Fort Worth, is taking on new roles in College Station as Assistant Dean and Chief of Staff for Texas A&M’s new School of Innovation (“I-School”) and Assistant Vice President of Operations for Entrepreneurship and Economic Development.

Manhire’s positons prior to entering academe include National Chair of the Executive Education Program for the Treasury Executive Institute, Chief of Legal Analysis for the IRS Office of Professional Responsibility, Director of Technical Analysis & Guidance for the IRS Taxpayer Advocate Service, and Attorney-Advisor to the IRS National Taxpayer Advocate. Before entering full-time government service, he practiced law privately for over a decade and was Division Chief, Tax Law for the U.S. Coast Guard Auxiliary National Office.

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September 16, 2017 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (1)

Friday, September 15, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (Arizona State) reviews a new working paper by Leslie Book (Villanova), David Williams (Intuit) and Krista Holub (Intuit), Insights from Behavior Economics Can Improve Administration of the EITC.  

Scharff (2017)The problems of our dysfunctional Congress are legion. This dysfunction not only affect Congress’ ability to get the basic work of government done, but it shrinks the space available to have rational conversations about improving public policy. We see this in the debate over the Earned Income Tax Credit (EITC). The EITC retains bipartisan support. Nevertheless, it regularly comes under criticism for the high error rates in the program.

At the high end, the IRS estimates the overclaim percentage at a high of 39.1%, but even the IRS’s low estimate of 28.5% represents about $14 billion a year.  Conservative commentators use these estimates to argue the program is riddled with fraudLiberals, on the other hand, stress that the complexity of the program’s eligibility requirements makes inadvertent mistakes likely and note that methodological problems may lead the IRS to overstate the improper payment rate.  

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September 15, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

WaPo: The GOP's War On The EITC

EITCIn this op-ed in the Washington Post, columnist Catherine Rampell comments on a proposal in the Budget Committee Report 115-240 explaining the current budget legislation.  It's a proposal to tighten up processing of tax returns claiming the Earned Income Tax Credit (ETIC).  She writes:

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September 15, 2017 in Gov't Reports, News, Tax, Tax Policy in the Trump Administration, Tax Practice And Procedure | Permalink | Comments (7)

Emory Law Profs: Law Deans May Go To Jail For Submitting False Data To U.S. News

Morgan Cloud (Emory) & George Shepherd (Emory) have posted Law Deans In Jail, 77 Mo. L. Rev. 931 (2012), on SSRN:

A most unlikely collection of suspects — law schools, their deans, U.S. News & World Report and its employees — may have committed felonies by publishing false information as part of U.S. News' ranking of law schools. The possible federal felonies include mail and wire fraud, conspiracy, racketeering, and making false statements. Employees of law schools and U.S. News who committed these crimes can be punished as individuals, and under federal law the schools and U.S. News would likely be criminally liable for their agents' crimes.

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September 15, 2017 in Legal Education | Permalink | Comments (11)

Online Sales Tax Case Is Headed To The Supreme Court

Bloomberg Technology: Internet Tax Ruling Worth Billions Poised for Supreme Court Review, by Jef Feeley:

The South Dakota Supreme Court brought the question of whether online retailers should pay sales tax back into sharp focus.

The Mount Rushmore state’s highest court ruled Thursday that companies selling wares over the Internet can’t be forced to collect South Dakota’s 4.5 percent tax on purchases, laying the groundwork for a U.S. Supreme Court appeal that could change law across the country. A decision forcing online retailers to collect such taxes could be worth billions in revenue to state and local governments.The court backed an appeal by online retailers Overstock.comWayfair and NewEgg challenging a state law that required companies that do more than $100,000 worth of business in online sales in the state to collect sales taxes.

The law ran afoul of the U.S. Supreme Court’s 1992 decision in Quill Corp v. North Dakota, which forbade states from requiring retailers without a physical presence to collect sales tax. Justice Anthony Kennedy has suggested in later rulings that the court reconsider the decision.

Daniel Hemel (Chicago), The Common Law and the Commerce Clause

South Dakota’s highest court, in a unanimous decision released this morning, struck down a 2016 state law requiring out-of-state retailers to collect sales taxes on transactions with state residents.

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September 15, 2017 in New Cases, Tax | Permalink | Comments (0)

ABA Tax Section Fall CLE Meeting

CLE 2The ABA Tax Section continues its three-day joint Fall CLE meeting with the ABA Real Property, Trust and Estate Law Section today in Austin, TX.  The full program is here.  Today's highlight is the Teaching Taxation program on Best Practices in Drafting and Interpreting IRS Guidance:

Tax regulators communicate with taxpayers and their advisors through various means including regulations, notices, rulings, publications, and the IRS website. Not surprisingly, taxpayers and their advisors parse these communications in order to understand the applicable law and conduct their affairs accordingly. This panel will critically analyze two high profile modes of communication: examples in Treasury regulations and IRS public pronouncements. One key question taxpayers and their advisors face is how regulation examples should be interpreted, and how new legal content in examples should be reconciled with the broader regulatory and statutory scheme. Another major debate regarding IRS guidance concerns the trend and pressure for the IRS to use plain language in written communications with the public. Although “plain language” sounds compelling, there are downsides to this drafting approach. Panelists will discuss the benefits and risks associated with plain language explanations of tax law in these communications.

  • Terri Helge (Texas A&M) (moderator)
  • Joshua Blank (NYU)
  • Nina E. Olson (National Taxpayer Advocate)
  • Susan Morse (Texas)
  • Kerry Ryan (St. Louis)
  • Eric Solomon (EY, Washington, D.C.)

Other Tax Profs with speaking roles include:

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September 15, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

TIGTA: 64% Of The IRS's Information Technology Is Beyond Its Useful Life

TIGTAThe Treasury Inspector General for Tax Administration has released Sixty-Four Percent of the Internal Revenue Service's Information Technology Hardware Infrastructure Is Beyond Its Useful Life (2017-20-051):

The overall objective of this review was to determine the efficiency and effectiveness of key ongoing or planned activities aimed at addressing the IRS operational challenge of replacing its aged hardware infrastructure.

While the Sustaining Infrastructure Program spends on average nearly 99.7 percent of its allocated budget each year, the IRS has not yet achieved its stated objective of reducing its aged information technology hardware to an acceptable level of 20 to 25 percent. In fact, this percentage has steadily increased from 40 percent at the start of Fiscal Year 2013 to 64 percent at the start of Fiscal Year 2017. The IRS estimates that the current replacement cost for its aged information technology hardware is approximately $430 million.

Figure 1

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September 15, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

Thursday, September 14, 2017

Net Tuition Trends By LSAT Category, 2010-2014: Net Tuition Rose In Highest (165+) And Lowest (<145) Bands, Fell In Middle (145-164) Bands

I have a new article entitled Net Tuition Trends by LSAT Category from 2010 to 2014 with Thoughts on Variable Return on Investment that is forthcoming in the Autumn issue of the Journal of Legal Education. I am very grateful for the research grant I received from Access Group (now AccessLex Institute) to support this project.  Here is the abstract:

The “macro” discussion of legal education highlights that law school is expensive. This general point fails to highlight the extent to which differences exist at a “micro” level due both to geography and LSAT profile. First, some regions of the country are more expensive than others. Second, where one is on the LSAT distribution profile influences the average net tuition because of scholarship patterns associated with institutional efforts to preserve or improve ranking. As a result, law school is not equally expensive across the entire LSAT distribution.

This article begins in Section I by briefly summarizing the geographic differences in tuition, which are not insignificant. Then, in Section II, this article briefly describes a dynamic net tuition model I developed for calculating net tuition trends by LSAT category and describes the results of that dynamic net tuition model. The results demonstrate that the variability of average net tuition by LSAT category increased significantly between 2010 and 2014 after accounting for inflation, with two LSAT categories seeing increases of 9.1% and 11.9% and four seeing decreases ranging from 2.8% to 13%. Section III looks at various outcome measures—specifically, bar passage rates, “bad news” employment outcomes, and imputed average first-year income—and demonstrates that, on average, the short-term return on investment varies significantly depending upon where someone is in the LSAT distribution. Section IV concludes with some thoughts on what this might mean for prospective law students and for law schools.

The dynamic net tuition model I developed is explained in detail in the Appendix to the article.  I have included below two of the figures from the article that summarize the data generated from my dynamic net tuition model.  
Thumbnail

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September 14, 2017 in Legal Education | Permalink | Comments (0)

State Bar Releases California Bar Exam Cut Score Study

California Bar ExamThe California State Bar has released Report to the Supreme Court of the State of California: Final Report on the 2017 California Bar Exam Standard Setting Study:

The report, which identifies options for a statistically reliable CBX cut score, includes findings from the Standard Setting Study, the second of four studies that the State Bar has undertaken to comprehensively explore the issues outlined by the Court

According to the psychometric literature, the purpose of any licensure examination like the CBX is to distinguish minimally competent candidates from those that could do harm to the public; the purpose is not to evaluate mastery of content, ensure employability, or evaluate training programs. Licensure exams are also not intended to be predictive of career success or possible future misconduct. With this doctrinal understanding of the purpose of a licensing exam, the attached report provides the Court with an analysis of the continued validity of the current CBX cut score of 1440, as well as the potential impact of the implementation of two alternate lower cut scores, 1414 and 1390.

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September 14, 2017 in Legal Education | Permalink | Comments (0)

Kleinbard: We Can’t Afford The Tax Reform Many Want (Tax Cuts), And Many Don't Want The Tax Reform We Need (Business Tax Overhaul)

Los Angeles Times op-ed:  A Business Tax System That's Both Fair and Competitive? It's Possible, by Edward Kleinbard (USC):

You can’t escape talk of tax reform. It remains the one demand that keeps the business community firmly engaged with President Trump. And in a crowded legislative calendar, it’s the one must-pass item that would constitute a really new policy initiative.

But we can’t afford the tax reform many of us want, and many of us don’t accept the importance of the tax reform we need.

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September 14, 2017 in Tax | Permalink | Comments (0)

Move Over California, Japan Has A 26% Bar Passage Rate

From Rob Anderson (Pepperdine):  Nikkei Asian Review, Fewer Prospective Lawyers Clearing the Bar in Japan:

A lower number of candidates passed the Japanese bar examination this year, new statistics show, with the tally barely topping the government's annual target of 1,500. Passers declined by 40 from 2016 to 1,543, according to Ministry of Justice figures out Tuesday.

Test takers numbered 5,967 this year, down 932. But the pass rate rose 2.91 percentage points to 25.86%.

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September 14, 2017 in Legal Education | Permalink | Comments (1)

When Sharia Law And The U.S. Tax Law Collide

Virginia La Torre Jeker, When Sharia and U.S. Tax Law Collide, 87 Tax Notes Int'l 787 (Aug. 21, 2017):

Sharia law impacts the US tax analysis of transactions arising in any Muslim-majority country or in any country when Muslim persons are involved in the transaction. Neither the US courts nor the Internal Revenue Service have provided guidance as to how the matter should be resolved when US tax and Sharia laws collide.

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September 14, 2017 in Scholarship, Tax | Permalink | Comments (2)

ABA Tax Section Fall CLE Meeting

CLE 2The ABA Tax Section kicks off its three-day joint Fall CLE meeting with the ABA Real Property, Trust and Estate Law Section today in Austin, TX.  The full program is here.  Tax Profs with speaking roles include:

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September 14, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

NY Times: More On The Feds' Criminal Investigation Of Charlotte Law School

Charlotte Logo (2016)New York Times, Federal Inquiry of Charlotte Law School Is Disclosed by Suit:

Barbara Bernier arrived at Charlotte School of Law four years ago to teach constitutional and other law courses.

But what she found at the for-profit law school was different from her prior teaching experiences, so she quit her tenured post in August 2016. A few months earlier, she had filed a federal claim that the school and its owner, the InfiLaw Corporation, defrauded taxpayers of $285 million over a five-year period.

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September 14, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1589: The Better IRS Reform

IRS Logo 2

Wall Street Journal editorial, The Better IRS Reform:

The long saga of Lois Lerner is coming to a close. Ms. Lerner was the infamous Obama Administration cat’s paw at the Internal Revenue Service, which harassed conservative political groups in the Tea Party era. Now the Trump Justice Department has decided there is no cause to pursue criminal charges against Ms. Lerner, and Congressional Republicans are howling. ...

Republicans are furious. But this mess happened because the Obama Administration used federal bureaucracies for raw political purposes. If Mr. Sessions’s Justice Department has found no way to prove criminal intent beyond a reasonable doubt, Republicans could begin the road back to accountability by respecting that decision.

What House Republicans should do now is create a structure that will stop assaults by bureaucrats on political activity. They’ve been putting riders in spending bills to bar the IRS from imposing restrictions on nonprofit speech. But this thumbs-in-the-dike approach does nothing about powers that IRS functionaries already have over political activity.

The solution is to get the IRS out of the political arena by limiting its role to the most basic administrative task of giving initial approval to nonprofits. Transfer to the Federal Election Commission the job of deciding whether a nonprofit is abiding by the existing rules governing political spending. The FEC’s commissioners would decide if complaints against the political activities of nonprofits had merit.

Democrats will rebel because the design of the FEC makes it difficult to sic the commission on political enemies. That’s why they made the IRS their political enforcer. Legislators designed the FEC to prevent partisans from turning it into a political weapon.

It takes a majority vote among its six bipartisan FEC commissioners to proceed with a judgment. Commissioners are confirmed by the Senate and operate in the open. The status quo gives this job—and power—to the IRS’s unconfirmed, unseen federal bureaucrats.

Campaign-finance fights make Republicans nervous, but they’ve got a political self-interest in permanently transferring this job to the FEC. Once back in power, Democrats will mobilize a crackdown against their single biggest obsession—“dark money.” Meaning the conservatives who fund their opposition.

Lois Lerner’s IRS operation was the swamp at its worst. The GOP would do the country’s politics a favor by draining these bureaucrats of partisan political power.

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September 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, September 13, 2017

Diamond: Does The California State Bar Have A Race Problem?

California State Bar (2014)Stephen Diamond (Santa Clara), Does the California State Bar Have a Race Problem?:

A recent meeting of the State Bar’s Committee of Bar Examiners (CBE) suggests to me that the California Bar may have a problem with race. That is, its leaders do not understand or are not willing to accept that they are putting up a barrier to minorities who wish to practice law. The evidence of this potential problem is found in the tape of the hearing which you can view here as well as a report prepared by the Bar Association’s staff on the bar exam. ...

[W]hile we do not know why the cut score is so much higher than needed to meet the primary mandate of the CBE (protection of the public), we do know that by setting it at 144 the Bar has put up a wall over which minority law school graduates have difficulty climbing with the inevitable outcome: a disparate impact on those hopeful new law school graduates. ...

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September 13, 2017 in Legal Education | Permalink | Comments (12)

Herzig & Brunson: Let Prophets Be (Non) Profits

David Herzig (Valparaiso) & Samuel D. Brunson (Loyola-Chicago), Let Prophets Be (Non) Profits,  52 Wake Forest L. Rev. ___ (2017):

In this article, we take a step back and ask whether the Supreme Court’s application of the fundamental public policy rule as espoused in the Bob Jones case is the normatively correct position. In our analysis, we conclude that using fundamental public policy as a filter in granting tax exemption gets both tax and public policy wrong. Our conclusion is informed by the history of the role played by public charities espousing minority views. We believe that a legitimate space in society should exist and populated by nonprofits to both espouse popular and unpopular minority views. But it is also informed by tax policy: applying the fundamental public policy rule to qualification for tax exemption misunderstand how exemption fits into the corporate income tax.

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September 13, 2017 in Scholarship, Tax | Permalink | Comments (2)

California Accredited Law Schools Support Reducing Bar Exam Cut Score

California Bar ExamTaxProf Blog op-ed:  The California Supreme Court Should Lower The Bar Exam Cut Score, by Mitch Winick (President & Dean, Monterey College of Law):

The California Accredited Law Schools filed the attached letter brief with the California Supreme Court in support of an adjustment of the minimum passing score on the California Bar Exam from 1440 to 1390. 

The CALS joined with the following sources and resources that now identify or support 1390 as a valid interim or final cut score: the State Bar Standard Setting Study, the State Bar Board of Trustees, the State Bar Office of Research & Institutional Accountability, the Assembly Judiciary Committee staff and Committee Chair Mark Stone, the Law School Council, and 56 California law school deans (19 ABA, 13 CALS, and 14 Registered). Further, it is also important to note at the outset that a score of 1390 falls within the national norm (1330 to 1390) of the largest ten jurisdictions (other than California).

These findings support the CALS position that adjusting the cut score to 1390 can significantly moderate the disparate impact of the current disproportionately high minimum passing score of 1440.

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September 13, 2017 in Legal Education | Permalink | Comments (4)

Privatizing Tax Collection: The Idiocy Continues

Congress seems to be on an unceasing quest to undermine effective tax collection (for why I choose those words see my rant here).  In what can only be described as yet another boneheaded move,  Congress included a provision in the Fixing America’s Surface Transportation (FAST) Act in 2015 that required the Service to out-source collection work to private collection agencies (PCA's).

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September 13, 2017 in ABA Tax Section, Tax, Tax Practice And Procedure | Permalink | Comments (0)

Sixth Circuit Rejects Law Prof's Claim That 'Satanic' $666 Merit Pay Raise Was Retaliation For His Union Activities

Cleveland StateFollowing up on my previous posts (links below): Lifter v. Cleveland State University, Nos. 16-4084/4086 (6th Cir. Sept.12, 2017):

This is a First Amendment retaliation case. Married plaintiffs Sheldon Gelman and Jean Lifter were employees of the Cleveland-Marshall College of Law. When, after the 2008 financial crisis, the law school faced mounting pressure to trim class sizes and reduce enrollment, Gelman, a tenured professor, spearheaded a successful union-organizing campaign among the law faculty. The following spring, Gelman and several other pro-union faculty received a low and allegedly symbolic $666 merit raise. Just over a year later, Lifter’s employment was terminated. Both filed claims against the university and law-school dean Craig Boise under 42 U.S.C. § 1983, alleging that Gelman’s raise, his being deprived of committee appointments, and Lifter’s termination constituted retaliation for Gelman’s protected First Amendment conduct. The defendants filed a motion for summary judgment, which the court granted. The plaintiffs appeal the district court’s decision, and the defendants have filed a cross-appeal. For the following reasons, we affirm the district court as to Gelman, dismiss Lifter’s claim for lack of standing, and dismiss the defendants’ cross-appeal as moot. ...

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September 13, 2017 in Legal Education | 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 September 1, 2017) 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):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

71,502

Reuven Avi-Yonah (Mich.)

12,589

2

Michael Simkovic (USC)

37,095

Lily Batchelder (NYU)

9108

3

Paul Caron (Pepperdine)

33,494

D. Dharmapala (Chicago)

3828

4

D. Dharmapala (Chicago)

31,694

Michael Simkovic (USC)

3519

5

Louis Kaplow (Harvard)

28,524

Richard Ainsworth (BU)

3307

6

Vic Fleischer (San Diego)

23,957

Michael Graetz (Columbia)

3086

7

Ed Kleinbard (USC)

23,528

David Gamage (Indiana)

2863

8

James Hines (Michigan)

23,124

Andy Grewal (Iowa)

2830

9

Richard Kaplan (Illinois)

22,216

David Weisbach (Chicago)

2572

10

Ted Seto (Loyola-L.A.)

22,199

Ed Kleinbard (USC)

2569

11

Richard Ainsworth (BU)

21,867

Daniel Shaviro (NYU)

2115

12

Katie Pratt (Loyola-L.A.)

20,482

Louis Kaplow (Harvard)

2089

13

David Weisbach (Chicago)

19,694

Darien Shanske (UC-Davis)

2018

14

Robert Sitkoff (Harvard)

19,183

William Byrnes (Texas A&M)

1816

15

Brad Borden (Brooklyn)

18,659

Steven Bank (UCLA)

1710

16

Carter Bishop (Suffolk)

18,312

Omri Marian (UC-Irvine)

1707

17

Chris Sanchirico (Penn)

17,996

Bridget Crawford (Pace)

1646

18

Francine Lipman (UNLV)

17,822

Jordan Barry (San Diego)

1625

19

Daniel Shaviro (NYU)

17,813

Jeffrey Kwall (Loyola-Chicago)

1580

20

Jen Kowal (Loyola-L.A.)

17,680

Paul Caron (Pepperdine)

1509

21

Bridget Crawford (Pace)

17,519

Stephen Shay (Harvard)

1502

22

Dennis Ventry (UC-Davis)

16,615

Cliff Fleming (BYU)

1455

23

David Walker (BU)

15,739

Brad Borden (Brooklyn)

1453

24

Steven Bank (UCLA)

15,512

Yariv Brauner (Florida)

1431

25

Gregg Polsky (Georgia)

14,227

Francine Lipman (UNLV)

1424

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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September 13, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Baltimore Plans To Offer $2,500/Year Property Tax Discount For Police, Firefighters

Baltimore Sun, Baltimore Plans to Offer $2,500 a Year Property Tax Discount for Police and Firefighters:

Baltimore’s leaders plan to offer local police officers, firefighters and sheriff's deputies a property tax break of $2,500 a year if they own a home in the city.

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September 13, 2017 in Tax | Permalink | Comments (2)

Reforming Tax Administration

The current discussion about tax reform is focused on reforming substantive tax law and not tax administration.  Last April, however, a group of tax practitioner organizations put out a paper calling for tax administration reform.  You can find the proposal on the AICPA website here.

The nine practitioner organizations include the AICPA, the National Association of Enrolled Agents, and the National Association of Tax Professionals.  Notably absent from the list of practitioner groups are the main tax lawyer organization, the ABA Section on Taxation.

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September 13, 2017 in ABA Tax Section, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (1)

Tuesday, September 12, 2017

2018 U.S. News College Rankings

US NewsU.S. News & World Report today released its 2018 College Rankings. Here are the Top 25 National Universities and Liberal Arts Colleges (along with their 2015-2017 rankings):

2018

Rank

 

National Universities

2017

Rank

2016

Rank

2015

Rank

1

Princeton

1

1

1

2

Harvard

2

2

2

3

Chicago

3

3

4

3

Yale

3

3

3

5

Columbia

5

4

4

5

MIT

7

7

7

5

Stanford

5

4

4

8

Penn

8

9

9

9

Duke

8

8

8

10

Cal-Tech

12

10

10

11

Dartmouth

11

12

11

11

Johns Hopkins

10

10

12

11

Northwestern

12

12

13

14

Brown

14

14

16

14

Cornell

15

15

15

14

Rice

15

18

19

14

Vanderbilt

15

16

17

18

Notre Dame

15

18

18

18

Washington (St. Louis)

19

15

15

20

Georgetown

20

21

21

21

Emory

20

21

21

21

UC-Berkeley

20

20

20

21

UCLA

24

23

23

21

USC

23

22

25

25

Carnegie Mellon

24

23

25

25

Virginia

24

26

23

Pepperdine is ranked #46 (tied with Lehigh, Miami, UC-Davis, Villanova, and Wisconsin).

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September 12, 2017 | Permalink | Comments (2)

Shobe: Private Benefits In Public Offerings — Tax Receivable Agreements In IPOs

Gladriel Shobe (BYU), Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, 71 Vand. L. Rev. ___ (2017):

Historically, an initial public offering was a process whereby a company sold all of its underlying assets to the public. A new tax innovation, the “tax receivable agreement” (TRA), creates private tax benefits in public offerings by allowing pre-IPO owners to effectively keep valuable tax assets for themselves while selling the rest of the company to the public.

Ten years ago, TRAs were almost never used in IPOs. Today they have become commonplace, changing the landscape of the IPO market in ways that are likely to become even more pronounced in the future. This Article traces the history of various iterations of TRAs and shows that a new generation of more aggressive TRAs has recently developed. Although TRAs were historically used only for a small subset of companies with a certain tax profile, the new generation of innovative and aggressive TRAs can be used by virtually any company conducting an IPO, making it likely that TRAs will continue to spread across the IPO market.

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September 12, 2017 | Permalink | Comments (0)

Why American Workers Pay Twice As Much In Taxes As Wealthy Investors

Bloomberg Politics, Why American Workers Pay Twice as Much in Taxes as Wealthy Investors:

Let’s say you and I are neighbors. You’re an emergency room doctor, and I don’t work, thanks to a pile of money my grandparents left me.

You spend your days and nights stitching up gunshot wounds and helping children survive asthma attacks. I’ve gotten really good at World of Warcraft, winning EBay auctions, and frying shishito peppers to just the right crispiness.

Let’s also say we both report $300,000 in income to the Internal Revenue Service this year. Who pays more in taxes?

You do, by a lot. You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. I also have more flexibility to lower my burden with tax planning strategies and other tricks, and I get to skip about $24,000 in payroll taxes that you and your employer must fork over each year.

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September 12, 2017 in Tax | Permalink | Comments (6)

University Of North Carolina Law School's Civil Rights Center Closes Following Board Of Governors Vote

North Carolina LogoFollowing up on my previous posts (links below):  Legal Times, Civil Rights Center at UNC Law School Shut Down:

University leaders on Friday voted to strip the Center for Civil Rights at the University of North Carolina School of Law of its ability to litigate cases.

The move caps a months-long fight between the predominately Republican board of governors for the University of North Carolina and supporters of the center, who say the board’s push was motivated by politics.

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September 12, 2017 in Legal Education | Permalink | Comments (2)

Politico: The U.S. News Rankings Fuel Inequality

U.S. News Logo (2018)Politico, How U.S. News College Rankings Promote Economic Inequality on Campus:

America’s universities are getting two report cards this year. The first, from the Equality of Opportunity Project, brought the shocking revelation that many top universities, including Princeton and Yale, admit more students from the top 1 percent of earners than the bottom 60 percent combined. The second, from U.S. News and World Report, is due on Tuesday — with Princeton and Yale among the contenders for the top spot in the annual rankings.

The two are related: A POLITICO review shows that the criteria used in the U.S. News rankings — a measure so closely followed in the academic world that some colleges have built them into strategic plans — create incentives for schools to favor wealthier students over less wealthy applicants.

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September 12, 2017 in Law School Rankings, Legal Education | Permalink | Comments (0)

How Perceived Influence Over Laws Affects Tax Evasion

Paul Mason (Baylor), Steven Utke (Connecticut) & Brian Williams (Indiana), Why Pay Our Fair Share? How Perceived Influence Over Laws Affects Tax Evasion:

We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects taxpayers’ tax evasion decisions. We argue that taxpayers are less willing to comply with tax laws when they perceive the influence over their government to be unfavorable to them or the result of an unfair policymaking process.

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September 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Florida's 12 Law Schools Are Closed Through Wednesday

IrmaLegal Times, Florida's 12 Law Schools Closed Until Wednesday, At Least:

Florida's 12 law schools remained closed Monday as the remnants of Hurricane Irma churned northward out of the Sunshine State.

It was unlikely that any of those schools would reopen before Wednesday, and several have already announced class cancellations for the remainder of the week.

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September 12, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1587: Judicial Watch Says Trump Should Overrule His DOJ And Order A Full Review Of The IRS Scandal

IRS Logo 2

Town Hall, Judicial Watch: DOJ Giving Lerner a Pass is Bogus and Trump Should Order a Full Review of the Scandal:

Last week the Department of Justice, led by Attorney General Jeff Sessions, announced prosecutors will not pursue charges against former IRS official Lois Lerner. Lerner is infamous for her deliberate targeting of conservative tea party groups between 2010 and 2012 while leading the tax exempt department inside the agency.

The news was immediately met with outrage by House Ways and Means Chairman Kevin Brady, who said the failure to reopen the case against Lerner (which was closed without charges under the Obama administration) only proves that Washington bureaucrats are held to a much lower standard than every day Americans living outside the protective D.C. bubble. ...

Judicial Watch, which is still pursuing documents related to the IRS targeting scandal and has for years, proving Lerner was at the heart of the targeting, is buying none of it and calling on President Trump to intervene.

"I have zero confidence that the Justice Department did an adequate review of the IRS scandal. In fact, we’re still fighting the Justice Department and the IRS for records about this very scandal. Today’s [Friday's] decision comes as no surprise considering that the FBI collaborated with the IRS and is unlikely to investigate or prosecute itself," Judicial Watch President Tom Fitton released in a statement. "President Trump should order a complete review of the whole issue. Meanwhile, we await accountability for IRS Commissioner Koskinen, who still serves and should be drummed out of office."

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September 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, September 11, 2017

Schmalbeck Presents Nonprofit Organizations And Political Campaigns At Northwestern

Schmalbeck (2016)Richard L. Schmalbeck (Duke) presented Nonprofit Organizations and Political Campaigns at Northwestern as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

This story involves three organizational forms, and two broad policy considerations. There are more than a score of different nonprofit organizational categories described in the IRC, but only three are relevant here: the organizations described in sections 501(c)(3), 501(c)(4), and 527. All are exempt from federal income taxes on any excess of revenue over expense that they might experience in any tax year. The first category (charitable organizations under section 501(c)(3)) allows use of deductible contributions to advance its programmatic ends, and also permits anonymous donations. The second (social welfare organizations under section 501(c)(4)) allows anonymous donations (but no deduction for contributions). The third (political organizations under section 527) is subject to rules that compel disclosure of the names of contributors and amounts of their contributions.

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September 11, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Brookings Symposium On Business Tax Reform

Contesting Tax Liability In A Collection Due Process Hearing

Broadly speaking, tax administration (as currently structured) consists of two main functions:  determining tax liability and collecting the tax liabilities so determined.   There is, however, some overlap because taxpayers sometimes have the opportunity during the tax collection process to get a re-determination of the underlying tax liability.  The main opportunity comes in the Collection Due Process (CDP) hearing.  This is an administrative hearing conducted by the IRS Office of Appeals and is subject to judicial review by the Tax Court.   Two recent Tax Court cases — Mohamed v. Commissioner (TC Sum. Op. 2017-69) and Bruce v. Commissioner (TC Memo. 2017-172) — illustrate just how narrow this opportunity is for taxpayers.  To me, they teach the take-home lesson that the best shot taxpayers have at getting the most favorable result is to respond early and often to tax notices.  Taxpayers who wait are the taxpayers who cry.  For a lesson that Mohamed teaches about tax return preparer penalties see Les Book's great post here.  More below the fold.

 

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September 11, 2017 in New Cases, Tax Practice And Procedure | Permalink | Comments (3)