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Wednesday, April 15, 2015

Chodorow: What It Would Mean For The IRS If Scientists Defeat Mortality

WilliamsSlate, Death and Taxes: What It Would Mean for the IRS If Scientists Defeat Mortality, by Adam Chodorow (Arizona State):

It has long been said that the only things certain in life are death and taxes. If you still haven’t filed your taxes, or if you were hit with a big bill this year, the former might seem more appealing than the latter right now. However, the aphorism is death and taxes, not death or taxes. Even kicking the bucket cannot provide an escape.

But what if death isn’t so certain? How would that affect taxes? In a 2012 law review article titled “Death and Taxes and Zombies,” I considered the important question of whether those who die and come back as zombies should be considered dead for estate tax purposes. The answer to this question is important both for the government, which will need significant revenues to protect the living, and for individual taxpayers, who may be tempted to escape the estate tax by becoming zombies.

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April 15, 2015 in IRS News | Permalink | Comments (0)

IRS in Space: How Will We Tax a Mars Mission?

ESASpace.com, IRS in Space: How Will We Tax a Mars Mission?:

Paying taxes is an inescapable reality — even in space.

Taxes are going to play a big role in a Mars mission, both in getting there and upon arrival, Adam Chodorow, a law professor at Arizona State University in Tempe, said April 9 at an event hosted by Future Tense, a partnership of Slate, the nonprofit New America Foundation and Arizona State University.

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April 15, 2015 in Tax | Permalink | Comments (1)

A Dozen University of Texas Law Profs Are Victims of Tax Identity Theft

Texas LawAustin American-Statesman, UT Law School Faculty Members Fall Victim to ID Theft, Tax Scam:

University of Texas officials are investigating whether a data breach may have led to the identity theft of at least a dozen Law School faculty members who appear to be victims of a tax scam.

The identity theft was discovered when faculty members attempted to file their federal tax returns only to have the Internal Revenue Service reject the submissions, stating that their returns had already been filed, Law School spokesman Christopher Roberts said Tuesday.

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April 15, 2015 in Legal Education | Permalink | Comments (1)

NY Times: Would You Let The IRS Prepare Your Taxes?

Turbo Tax (2015)New York Times, Would You Let the I.R.S. Prepare Your Taxes?:

Around this time every year, Joseph Bankman, a professor of tax law at Stanford Law School and a longtime advocate of using technology to simplify tax filing, gets on the phone with reporters to explain what is wrong with how we do our taxes in the United States. Every year he says pretty much the same thing: No other industrialized country asks its citizens to jump through as many hoops to calculate their taxes as ours.

It isn’t just lawmakers or the hapless-seeming Internal Revenue Service that is perpetuating the annoyance of tax time, he adds. Instead it is the private sector — specifically, the software company Intuit, which makes TurboTax, the most popular tax program in the country.

For more than a decade, Mr. Bankman and a small group of tax experts have called on the government to create a tax preparation method that they say would vastly reduce the time and cost of tax-filing for most people. Intuit has been a primary obstacle to the effort.

The reform plan would work like this: Today, employers, banks, brokerage firms and pretty much every other financial organization in the country send the federal government detailed records about our economic activity every year. These organizations also send you, the taxpayer, a similar set of documents, which are forms with names like W2 and 1098. After you file your taxes, the government matches its two sets of documents to make sure you have filed correctly.

To Mr. Bankman, this double documentation doesn’t make much sense. If the government is already collecting financial data from employers and banks, why can’t the I.R.S. use that information to precalculate our tax returns for us? At the very least, why can’t tax software just connect to the government’s database to download all the information that the government has collected, saving us all that record-keeping and data entry?

“Imagine if your vehicle registration fee was done the same way,” Mr. Bankman asked in a recent interview. “Imagine if the state said, ‘Go to your car, find your VIN number and then look at this table that has different tax rates to find out how much you owe.’ If they did, people would probably need to hire an expert for that too.”

The idea of the government filling our tax returns for us, known as “return-free filing,” has been met with much opposition from several groups, including conservatives suspicious of the I.R.S. And as the investigative news organization ProPublica reported in 2013 and 2014, some of the most intense opposition has come from Intuit, which has spent millions lobbying to oppose methods for the I.R.S. to create a tax-filing system that might free us from having to use software like TurboTax. ...

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April 15, 2015 in Tax | Permalink | Comments (3)

World Premiere of Loopholes, A Pain In The I.R.S.

Tonight is the world premiere of Loopholes, A Pain In The I.R.S. at the Hudson Mainstage Theatre in Hollywood, Calijfornia

Loopholes

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April 15, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Call for Book Reviews: Michigan Law Review

Michigan The Michigan Law Review has asked me to post its solicitation of book reviews for its 2016 Survey of Books Related to the Law:

The Michigan Law Review publishes an Annual Survey of Books. These book reviews are not included in any other issue of the Law Review. Typically, the Survey includes only reviews of books published in the past year. The Volume 114 Book Review issue will be published in spring 2016.

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April 15, 2015 in Book Club, Legal Education, Scholarship, Tax | Permalink | Comments (1)

GE's Effective Tax Rate To Double (To 20%) Once It Sheds Its Capital Business

GE 2016Following up on Monday's post, GE Bites Tax Bullet, Repatriates $36 Billion in Foreign Profits: Wall Street Journal, GE to Lose Tax Breaks As It Sheds Capital Unit:

In cutting loose its banking business, General Electric Co. isn’t just shedding a profitable lending operation. It’s also losing a rich source of tax breaks.

GE has long used the financial operations of GE Capital to hold down its overall tax rate, a strategy that has allowed the conglomerate to pay taxes at a lower rate than its peers. The impact has been significant enough that GE discusses it in its securities filings and was deterred for a long time from seriously considering a spinoff.

But the company will lose access to some of those tax efficiencies as it sells off the bulk of GE Capital’s business over the next two years. An early hit will come from the decision to repatriate $36 billion in GE Capital profit that it had been sheltering overseas—a move that will bring a $6 billion tax bill—but the full impact will be broader. GE says its effective tax rate could rise to 20% or more in the future, roughly double last year’s rate of just over 10%. That rate would put the company in line with other industrial businesses and would be likely to hold relatively steady, analysts who cover the company said.

GE

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April 15, 2015 in Tax | Permalink | Comments (1)

Camp: Overlooked Costs of IRS Budget Cuts Will Hit Taxpayers Hardest

IRS Logo 2Bryan Camp (Texas Tech), Overlooked Costs of IRS Budget Cuts Will Hit Taxpayers Hardest:

The Internal Revenue Service takes a lot of hits, both from those who are paid to be critics like the National Taxpayer Advocate and from those who just pile on for the fun of it – politicians, pundits and the public.

The nastiest hit has come from Congress in the form of relentless budget cuts for the past five years. While there has been a fair bit of commentary on the effect of these cuts, commentators have missed two important points: (1) the cuts are deeper than most people think, and (2) their effect is both more subtle and insidious.

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April 15, 2015 in IRS News | Permalink | Comments (2)

The IRS Scandal, Day 706

IRS Logo 2Forbes, Lois Lerner Emails Defend Targeting, Warn IRS Employees Emails Can Be Seen By Congress, by Robert W. Wood:

At tax time, is it any wonder that Americans are afraid of the IRS? Talk of secret emails, and political targeting criteria are worrisome. President Obama said there was not a smidgen of corruption at the IRS. He said any missteps were innocent and entirely the fault of bonehead decisions in local offices. If you are still not convinced it is all so innocent, just in time for your April 15 tax filing, a new batch of IRS documents has been released.

One email from former IRS firebrand Lois Lerner is particularly revealing. Sure, she said she did nothing wrong, she was the victim, and she still took the Fifth. But in February 2012, she wanted to “put together some training points to help them [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress. This is the IRS version of don’t tell.

The documents also contain a Lerner email from 2013 in which she says she is willing to take the blame on some aspects of the scandal. Of course, she would later take the Fifth, something the Justice Department just said was OK despite Congress’ contempt citation. Ms. Lerner also wrote in one of those sticky emails that she “understands why the IRS criteria” leading to the targeting of Tea Party and other opponents of the President Obama “might raise questions.”

Just questions? The documents were released in the case of Judicial Watch v. IRS. Although the latest release still does not reveal all of Lerner’s actions, it is Lerner’s most extended public discussion, including her defenses.

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April 15, 2015 in IRS Scandal | Permalink | Comments (0)

Tuesday, April 14, 2015

Eissa Presents The Technology of Tax Collection and Compliance Today at Georgetown

EissaNada Eissa (Georgetown) presents The Technology of Tax Collection and Compliance: Electronic Billing Machines and The VAT at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John BrooksItai Grinberg, and David Schizer:

The expansion of the tax base in developing countries is increasingly recognized as an important policy goal, as an increase in domestic revenue sources promises to reduce aid dependence and reduce distortionary consequences of taxes on externally traded goods. This paper analyzes the adoption rate and tax compliance impacts of an innovative program in Rwanda, which introduced Electronic Billing Machines to strengthen VAT compliance. To do so, we combine quarterly data on all VAT payments from 2012 through 2014q3 with data on EBM activation over the same period.

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April 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Zelenak Presents The Differing Income Tax Treatments of Marriage at Different Income Levels Today at NYU

Zelenak (2014)Lawrence Zelenak, (Duke) presents For Better And Worse: The Differing Income Tax Treatments of Marriage at Different Income Levels, 93 N.C. L. Rev. 783 (2015), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

Although both marriage penalties and marriage bonuses exist at all income levels under the federal income tax, the system is tilted toward penalties for lower-income couples, toward bonuses for middle-income couples, and back toward penalties for upper-income couples. This Article begins by explaining how the tax rules produce these differing treatments of marriage at different points in the income distribution. It then argues that the increase in recent decades in the social acceptability and prevalence of cohabitation makes tax marriage effects a more serious concern—in terms of both behavioral effects and fairness—than in earlier decades.

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April 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

NY Times Debate: The Worst Tax Breaks

NY Times Room for DebateNew York Times Room for Debate, The Worst Tax Breaks:

The pain of last-minute tax filing is compounded by the thought not just of what you’re paying but what others aren’t. Each year the federal government essentially spends more on individual breaks for things like housing, education, retirement and savings than on all nondefense discretionary spending. That’s not to mention corporate tax breaks. What are the most useless, unfair or counterproductive personal tax breaks?

April 14, 2015 in Tax | Permalink | Comments (0)

The Temperature Rises In Law School Crisis Debate

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April 14, 2015 in Legal Education | Permalink | Comments (31)

Organ Projects 2.6% Decline in Fall 2015 1L Enrollment, With 12.4% Decline in 165+ LSATs, 4.1% Increase in <150 LSATs

The Legal Whiteboard:  Projections for Law School Enrollment for Fall 2015, by Jerry Organ (St. Thomas):

This blog posting is designed to do three things.  First, following up on recent discussions regarding trends in applicants by Al Brophy at The Faculty Lounge and Derek Muller at Excess of Democracy, I provide a detailed analysis to project the likely total applicant pool we can expect at the end of the cycle based on trends from March through the end of the cycle in 2013 and 2014 [54,000, down 3.1% from 2014].  Second, using the likely total pool of applicants, I estimate the number of admitted students and matriculants, but also question whether the estimates might be too high given the decline in quality of the applicant pool in this cycle [36,975, down 2.6% from 2014].  Third, building on the second point, I suggest that law schools in the lower half of the top tier are likely to see unusual enrollment/profile pressure that may then have a ripple effect down through the rankings.

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April 14, 2015 in Legal Education | Permalink | Comments (1)

Ten Percent of S&P 500 Companies Avoid Paying U.S. Taxes

Bloomberg, Ten Percent of S&P 500 Companies Avoid Paying U.S. Taxes:

When it comes to taxes, corporate America is getting a bit less corporate. And a bit less American.

Fueled by a wave of inversions, a record 54 companies in the Standard & Poor’s 500 Index of leading U.S. firms are now at least partially exempt from the corporate income tax. That’s more than twice the number four years ago.

Bloomberg

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April 14, 2015 in Tax | Permalink | Comments (0)

Tax Court: A Snickers Bar Is Not a Deductible Business Expense

SnickersIn Cvancara v. Commissioner, T.C. Memo. 2013-20, the Tax Court disallowed a business expense deduction for a Snickers bar consumed while working.

 

April 14, 2015 in Tax | Permalink | Comments (7)

Graetz: How Do We Fix America’s Tax System?

Michael Graetz (Columbia), How Do We Fix America’s Tax System?:

The United States hobbles itself in today’s international economy by continuing to rely so heavily on income taxation. The truth is that we need a tax reform that is considerably bolder than either Congress or the president is now contemplating. We need to rebalance our federal tax system to take advantage of our status as a low-tax country by relying less rely less heavily on income taxation. To create a simple, internationally competitive and viable long-term solution to our fiscal requirements, we should return the income tax to its original purpose: the collection of a simpler tax on high-income earners who tend to have multiple income sources. In order to do that, we need to tax consumption—that is, sales of goods and services. By enacting a broad-based tax on sales of goods and services now used by more than 150 countries worldwide, we could use the revenues to finance an income-tax exemption of $100,000 of family income and to lower substantially the individual income-tax rate on income above that amount—freeing over 150 million Americans from ever having to deal with the IRS. Through payroll-tax cuts and debit cards to be used at checkout counters, we can protect low- and middle-income families from any tax increase.

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April 14, 2015 in Tax | Permalink | Comments (0)

Tacha: Who Needs a Lawyer Anyway?

Deanell Reece Tacha (Dean, Pepperdine), Who Needs a Lawyer Anyway?, 66 Rutgers L. Rev. 729 (2014):

You are the people who must be the spokespersons for the enduring and essential need for well-trained lawyers who can guide the nation and the world through the challenging and exciting issues and disputes that lie ahead. The lawyers’ ability to focus on germane issues, negotiate reasoned practical resolutions, and settle and litigate disputes, will be in high demand in this complex society. The debate about the value of legal education goes to the core of our understanding of what it is to prepare legal professionals for a world we cannot see with any particularity. That is what lawyers do. What we must foresee clearly, is that the legacy of freedom and of people governed by the rule of law is our highest calling and the source of our professional responsibility. The modes of delivering legal services, and even the understanding of what is a legal service, will change. What will not change is the need for lawyers who are problem solvers, client servers, articulators of the American ideal of self-government, models of the rule of law, and servants of the common good. We will always need lawyer-patriots.

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April 14, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 705

IRS Logo 2Letter From Orrin Hatch (Chair, Senate Finance Committee) to John Koskinen (Commissioner, IRS) (Apr. 13, 2015):

At a recent Senate Finance Committee hearing, I noted the long, historic relationship of the Internal Revenue Service and the Senate Finance Committee. The challenges of the IRS in the coming years will be great, as your agency struggles with the implementation of new federal programs and doing more with limited resources. The next chapter in our relationship is a critical one, and I hope a good one, but as I noted at the hearing, that is ultimately up to you.

I also warned that attempts to limit political speech through the tax code would not be tolerated, and would only serve to “further entangle your agency in political debate and controversy.” Two years ago, your agency put forth proposed regulations that would upend half-century-old rules regarding get out the vote drives, voter registration, and other activities by tax exempt organizations. This rule was withdrawn after intense opposition across the political spectrum. You recently announced that the IRS would seek to broaden the rule, restricting the speech and activities of an even wider range of tax exempt organizations. You are starting down a very dangerous road.

You have explained that this attempt to restrict the rights of groups to organize and speak out was in response to the IRS’s targeting of conservative groups and 2013 recommendations by the Inspector General. You have also explained that new rules were necessary to prevent further targeting. Both claims are false.

Congressional investigations have established that the Treasury Department began work on the proposal in 2011, long before the Inspector General’s recommendations and during the height of the political targeting, rather than in response to it. Furthermore, interviews with front-line IRS employees established that those workers were processing applications from conservative groups in a timely fashion and without difficulty, until political officials in Washington, DC intervened. The problem was not the rules governing tax exempt entities – the problem was officials at IRS and Treasury Department headquarters further involving your agency into the political speech of Americans across the country. Rather than preventing further targeting, the new proposal – should you proceed with it – will be the systemization of targeting through law.

As it is, the IRS faces seemingly insurmountable challenges in implementing the President’s health care overhaul and the Foreign Account Tax Compliance Act with limited resources. The IRS is just beginning to recover its reputation, and your agency is just beginning to regain trust from lawmakers. Do not throw all of that away in a quixotic and bizarre mission to regulate the political activity of Americans. If you do so, in light of your agency’s recent history, your actions will be viewed with the presumption of political bias and bad faith. If you issue this proposed rule, Congress will have no choice but to investigate the reasons behind this power grab, be it political motivation or orders from officials at the Treasury Department or the White House. To that end, and in anticipation of the Administration moving ahead on this issue, I ask that you begin putting in place document retention policies for all documents and communication related to your agency’s work regarding these proposals. This retention should include, but is not limited to, all handwritten notes, memoranda, and electronic communication on the matter.

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April 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, April 13, 2015

Republicans Seek to Repeal Estate Tax, Preserve Step-Up In Basis At Death

Estate Tax LogoBloomberg, Why Republicans Want a Bigger U.S. Estate Tax Repeal Than Ever:

Congressional Republicans have narrowed the estate tax so much that it affects only about 5,500 wealthy American households a year. Now they want to eliminate the tax altogether -- with a bonus for heirs.

Under the latest plan, backed by farmers and business groups, estates would pay no taxes. Furthermore, heirs wouldn’t owe any capital gains taxes on the increased value of assets over the deceased’s life.

That move -- simpler and more generous than previous repeal efforts -- would let billions of dollars in income and assets escape all U.S. taxes. The plan would cost the U.S. government $269 billion in lost revenue over a decade. ...

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April 13, 2015 in Tax | Permalink | Comments (1)

WaPo Fact Checker: Who Wrote the 'IRS Code'?

WaPo Fact CheckerWashington Post Fact Checker, Who Wrote the ‘IRS Code’? Hint: It Wasn’t the Internal Revenue Service:

On tax reform, we, right now, have more words in the IRS code than there are in the Bible — not a one of them as good.
–Sen. Ted Cruz (R-Texas), speech at International Association of Fire Fighters legislative conference, March 10, 2015

The Fact Checker previously wrote that Cruz’s comparison was ultimately meaningless — not worthy of a Geppetto Checkmark nor a Pinocchio — because saying one piece of text has more words than another doesn’t really tell you anything. A lot of readers responded to us via e-mail and social media — some critical, some appreciative and a few amused.

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April 13, 2015 in Congressional News, IRS News, Tax | Permalink | Comments (3)

Blair-Stanek: Crisis-Proofing Tax Law

Andrew Blair-Stanek (Maryland), Crisis-Proofing Tax Law, 57 Wm. & Mary L. Rev. __ (2016):

While Congress and the Federal Reserve battled the 2008-09 financial crisis with high-profile bailouts, the IRS fought a parallel, little-noticed battle to ensure that many harsh tax rules did not deepen the crisis. Remarkably, the IRS’s crisis responses cost the government more money than the bailouts, with a handful of companies receiving huge tax windfalls. Yet the IRS also kept its responses too narrowly tailored, causing preventable layoffs and foreclosures.

This Article proposes a novel framework for tax law to handle future crises efficiently and equitably, using the law-and-economics concept of property rules and liability rules.

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April 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

John Oliver and Michael Bolton Defend The IRS

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

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April 13, 2015 in IRS News, Tax | Permalink | Comments (0)

GE Bites Tax Bullet, Repatriates $36 Billion in Foreign Profits

GE 2016Wall Street Journal, GE Bites Tax Bullet in Move to Help Share Buybacks:

As General Electric Co. unveiled a reshaping of its balance sheet and operations, the company’s decision to repatriate $36 billion in foreign cash brings a large tax bill and raises concerns about whether multinationals’ efforts to minimize taxes are taking too heavy a toll back home.

The U.S. tax system, with one of the world’s highest corporate rates, has led U.S. companies with significant overseas operations to park much of their cash offshore. But that decision comes with its own cost in the form of lost opportunities at home, and GE’s decision suggests more companies may be reaching a tipping point, some observers said.

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April 13, 2015 in Tax | Permalink | Comments (0)

HeinOnline Law Faculty Scholarly Influence Rankings

HeinMy colleague Rob Anderson blogs the new HeinOnline faculty scholarship rankings called ScholarCheck, which counts how often your articles have been:

  • Cited in cases
  • Cited in law review articles
  • Accessed on HeinOnline over the past 12 months

Rob notes that measuring the number of times each author's papers have been accessed on HeinoOnline "reduce[s] the 'lag time' between the time a scholar is active and the time that citations accumulate."

Your ScholarCheck ranking is the average of your ranking in each of these three categories.  HeinOnline has released the Top 250 Authors; individual faculty rankings outside the Top 250 are available here.

Two tax professors are in the Top 250:

Kaplow, Louis:

Cited by Cases 23 (Rank 1703)
Cited By Articles 3285 (Rank 80)
Accessed (Past 12 Months) 1219 (Rank 191)
Scholar Check Rank 213

Asimow, Michael:

Cited by Cases 45 (Rank 649)
Cited By Articles 747 (Rank 1002)
Accessed (Past 12 Months) 860 (Rank 421)
Scholar Check Rank 233

Here are the Top 50 law faculty authors:

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April 13, 2015 in Legal Education | Permalink | Comments (0)

Top 20% of Earners Pay 84% of Income Tax

Wall Street Journal Tax Report, Top 20% of Earners Pay 84% of Income Tax:

The tables show just how progressive the income tax is. The three million people in the top 1% of earners pay nearly half the income tax.

Why is the share of income taxes negative for 40% of Americans? In recent decades Congress has chosen to funnel important benefits for lower-income earners through the income tax rather than other channels. Some of these benefits, such as the Earned Income Tax Credit and the American Opportunity Credit for education, make cash payments to people who don’t owe income tax. ...

The share of tax paid by the top 20% of Americans also changes when such social-insurance levies are included: It drops from more than 80% of income taxes to about 67% of all federal taxes.

WSJ

WSJ 2

Bloomberg, How Much Americans Really Pay in Taxes:

The average American pays an income tax rate of 10.1 percent, the Joint Committee shows, although that varies quite a bit depending on income:

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April 13, 2015 in Tax | Permalink | Comments (2)

Kerr: New (And Free) Legal Research Tool From Google

Google Scholar (2015)Orin Kerr (George Washington), New (and Free) Legal Research Tool:

If you use the Google Chrome browser, and you do legal research online, you should add the new Google Scholar Button to your browser. It’s really easy to do. Just click here and add the button. At that point you can use the button to research academic articles using Google Scholar’s database.

 

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April 13, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 704

IRS Logo 2CNS News, Lerner Email Warned IRS Employees of Emails That ‘Can Be Seen By Congress’:

Lois Lerner, former director of the Exempt Organizations Unit at the Internal Revenue Service (IRS), warned other IRS officials that lower-level employees “are not as sensitive as we are to the fact that anything we write can be public--or at least be seen by Congress,” according to documents obtained by Judicial Watch and released on Thursday.

In the latest batch of documents the IRS released to Judicial Watch under the Freedom of Information Act (FOIA), which the agency heavily redacted before handing over, Lerner proposed training to help IRS employees “understand the pitfalls” of discussing “specific Congress people, practitioners and political parties” in emails that could be "seen by Congress" or the public.

“We are all a bit concerned about the mention of specific Congress people, practitioners and political parties. Our filed folks are not as sensitive as we are to the fact that anything we write can be public--or at least be seen by Congress,” Lerner wrote in an email to Holly Paz, former director of the IRS Office of Rulings and Agreements, on Feb. 16, 2012.

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April 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, April 12, 2015

WSJ: Airbnb, The Masters, And Policing The Short-Term Rental Tax Boondoggle

AMWall Street Journal, Airbnb Income May Be Tax-Free–But There’s a Catch:

It is one of the tax code’s best freebies: a provision allowing people to rent out their homes for fewer than 15 days a year and pocket the income-tax-free. This break is often called the Masters exemption because of its popularity in Augusta, Ga., during the famous April golf tournament.

Now services such as Airbnb, HomeAway, Onefinestay and FlipKey are making it easier for people to take advantage of the Masters exemption by offering short-term rentals of their homes. Airbnb alone had more than one million listings at the end of 2014, more than triple the number it had at the end of 2012.

But this boon also is putting some so-called hosts on a collision course with the Internal Revenue Service, tax experts say.

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April 12, 2015 in Tax | Permalink | Comments (0)

Going Clear Filmmaker: Scientology Abuses Its Tax-Exempt Status

Scientology 2Los Angeles Times op-ed:  Going Clear Filmmaker: Scientology Abuses its Tax-exempt Status, by Alex Gibney:

When I made the film Going Clear: Scientology and the Prison of Belief, which aired on HBO on March 29, I assumed that the response from the Church of Scientology would be vitriolic. I was right; but I hold out hope that this reaction may lead to the reform of an organization that has harassed its critics and, in my view, abused its tax-exempt status. ...

A number of articles have even raised the question of whether the church should be permitted to maintain its tax-exempt status in the face of so many alleged or documented civil rights abuses, such as the videotaped harassment of ex-Scientologist Marty Rathbun and his wife, Monique. It's an important question, since it implicates all of us.

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April 12, 2015 in Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

The IRS Scandal, Day 703

IRS Logo 2Washington Examiner, Lerner Pushed Treasury Watchdog to Back Off 'Targeting' Charge in Probe:

Former IRS senior executive Lois Lerner appeared to be pressuring Treasury Department inspector general investigators to back off their conclusion that the federal tax agency had improperly targeted conservative and Tea Party nonprofit tax exemption applicants.

In an email on Jan. 31, 2013, Lerner encouraged Troy Patterson of the Treasury Inspector General for Tax Administration to back off of his investigators' view that the tax agency was targeting political groups for excessive attention.

"We feel your folks are being too narrow in their view and have decided that because of the language on the earlier BOLO list regarding Tea Party, everything that followed was tainted. They seem to believe that if a case was initially sent to the advocacy group, but ultimately determined to be an approval, that our action in putting it into the advocacy group in the first place is incorrect, and illustrates 'targeting,'" she said.

"BOLO" was the tax agency's abbreviation for categories of nonprofit applicants to "be on the lookout" for as they were received.

PJ Media, Lerner Email Shows Attempt to Pressure IG Conclusions in IRS Targeting Scandal:

About 5 months before former director of the IRS exempt division Lois Lerner casually let slip the revelation that her department had been targeting conservative organizations for special scrutiny, she sent an email to the inspector general investigating the matter, accusing the IG of being “too narrow” in their scope of the targeting investigation, claiming that she was just doing her job.

It is unusual for the subject of an investigation to plead their case so directly with the inspector general. But the email also shows that Lerner was well aware of the problems in her office with targeting and was looking for a break from the IG in reaching his conclusions.

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April 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 11, 2015

Obama and Biden Release Their 2014 Tax Returns

2014 Obama Tax Return

President Obama and Vice-President Biden yesterday released their 2014 tax returns. Here are charts putting the 2014 returns in context with their earlier returns:

Obama:

Year

AGI

Tax

Charitable Gifts

Gifts/AGI

2014

$477,383

$93,362

$70,712

14.8%

2013

$481,098

$98,169

$59,251

12.3%

2012

$608,611

$112,214

$150,034

24.7%

2011

$789,674

$162,074

$172,130

21.8%

2010

$1,728,096

$453,770

$245,075

14.2%

2009

$5,505,409

$1,792,414

$329,100

6.0%

2008

$2,656,902

$855,323

$172,050

6.5%

2007

$4,139,965

$1,396,772

$240,370

5.8%

2006

$983,826

$277,481

$60,307

6.1%

2005

$1,655,106

$545,614

$77,315

4.7%

2004

$207,647

$40,426

$2,500

1.2%

2003

$238,327

$51,856

$3,400

1.4%

2002

$259,394

$68,958

$1,050

0.4%

2001

$272,759

$86,072

$1,470

0.5%

2000

$240,505

$63,732

$2,350

1.0%

Biden:

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April 11, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

75% of Harvard Law Students Do Not Matriculate Right Out Of College

Harvard Crimson, Law School Admissions ‘Actively Preferences’ Work Experience:

In the last five years, work experience has played an increasing role in Harvard Law School admissions.

Harvard

In 2009, 40 percent of Harvard Law School’s entering class, according to data provided the school’s Admissions Office, arrived directly from their senior year of college, maybe even still sporting the odd T-shirt from last year’s big rivalry football game.

It was the continuation of a years-long trend: From 2005 to 2009, between 39 and 45 percent of each incoming class were just recently undergraduates, with the remainder having spent at least one year working or studying elsewhere. But the next year, in 2010, the young students matriculating straight from undergrad only constituted 28 percent of the entering Law School class. More than two-thirds had post-graduate experience.

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April 11, 2015 in Legal Education | Permalink | Comments (0)

Joint Tax Committee: Choice Of Business Entity

The Joint Committee on Taxation yesterday released Choice Of Business Entity: Present Law And Data Relating To C Corporations, Partnerships, And S Corporations (JCX-71-15 ):

This document, prepared by the staff of the Joint Committee on Taxation, provides information about present law and data relating to C corporations, partnerships (including LLCs), and S corporations. Part A of this document provides background information on the choice of business entity in the United States, describes sole proprietorships and their Federal tax treatment, summarizes present law governing the Federal tax treatment of C corporations, partnerships, and S corporations, and presents a table of the principal differences in tax treatment of these three types of business entities. Part B of this document presents data concerning the distribution of business entities by number, size, industry, and net income.

Figure 1

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April 11, 2015 in Congressional News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 702

IRS Logo 2The Blaze, ‘America Is Fed Up’: GOP Schedules Votes on Major IRS Reforms Next Week:

The House next week is expected to pass several bills aimed at reforming the IRS, in

particular the way the IRS handles applications for groups seeking tax-exempt status.

That issue has been highly controversial since it was revealed that the IRS applied extra scrutiny to conservative groups seeking tax-exempt status just before the 2012 election. The resulting scandal forced former IRS official Lois Lerner to leave the agency, although Lerner has so far dodged any punishment for her role.

For example, the Justice Department just said it won’t prosecute Lerner for her decision not to testify before Congress about her actions in the targeting scandal.

GOP leaders say the IRS needs real reform, and quickly, to ensure it doesn’t become a political weapon for whichever party runs the executive branch.

“The IRS has maliciously targeted individuals and groups simply because of their personal beliefs,” House Majority Leader Kevin McCarthy (R-Calif.) told his colleagues on Thursday. “The current system is unfair and America is fed up.”

Three of the bills up next week deal with the targeting scandal. One of these, from Rep. George Holding (R-N.C.), would try to to ensure the IRS can no longer play politics with tax exempt applications by allowing groups to declare tax-exempt status on their own, without having to wait for the IRS.

Another from Rep. Jim Renacci (R-Ohio) calls for the firing of any IRS worker that delays their tasks for political reasons, such as slow-walking the tax-exempt status of a political group. And the third, from Rep. Pat Meehan (R-Pa.), would require the Treasury Department to issue regulations allowing groups to appeal decisions by the IRS not to grant them tax-exempt status.

The bills are being considered long after the targeting scandal broke, which shows a lingering resentment among conservatives, and a feeling that reforms are still needed at the tax collection agency. Just last month, some Republicans accused the IRS of quietly working to undo some of the reforms Congress has tried to impose on it, by putting forward a budget plan that doesn’t include language related to ending the political targeting of tax-exempt groups.

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April 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, April 10, 2015

Merritt: Law School Statistics

Deborah Jones Merritt (Ohio State), Law School Statistics:

Earlier this week, I noted that even smart academics are misled by the manner in which law schools traditionally reported employment statistics. Steven Solomon, a very smart professor at Berkeley’s law school, was misled by the “nesting” of statistics on NALP’s employment report for another law school.

Now Michael Simkovic, another smart law professor, has proved the point again. Simkovic rather indignantly complains that Kyle McEntee “suggests incorrectly that The New York Times reported Georgetown’s median private sector salary without providing information on what percentage of the class or of those employed were working in the private sector.” But it is Simkovic who is incorrect–and, once again, it seems to be because he was misled by the manner in which law schools report some of their employment and salary data. ...

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April 10, 2015 in Legal Education | Permalink | Comments (1)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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April 10, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

NY Times: Past Drug Charges Derail a Law Student’s Education

New York Times, Past Drug Charges Derail a Law Student’s Education:

David Powers came out of a drug rehabilitation program about 15 years ago hungry to swing his life in a significantly different direction. And that he did.

He went back to college and graduated with a 3.9 grade point average. He was hired at a major accounting firm, worked in senior positions at three hedge funds, and was accepted to the law school at St. John’s University.

Mr. Powers still calls the day of his arrest, when he was pulled off a destructive path, the “best day of my life.”

Halfway through his coursework, while trying to get ahead on his application to the bar, he acknowledged to St. John’s how far he had come. Not only had he been convicted of drug possession, a fact he disclosed on his application, but he had also originally been charged with selling drugs, a fact he had not. St. John’s then rescinded his acceptance — kicked him out — saying that if it had known his complete history, it would never have admitted him in the first place.

Mr. Powers sued the school, taking the case all the way to the state’s highest court, the New York Court of Appeals. Last week, the court handed down the final word in a 5-to-1 decision: Mr. Powers would not return to St. John’s.

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April 10, 2015 in Legal Education | Permalink | Comments (2)

Tax Presentations at Today's Indiana Symposium on Living Without in America

Indiana (2015)The Indiana Journal of Law and Social Equality hosts a symposium today on Living Without in America.  Tax Prof Ajay Mehrotra is moderating a panel on Economics and Poverty, with two tax presentations:

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April 10, 2015 in Conferences, Tax | Permalink | Comments (0)

Grewal: The Un-Precedented Tax Court

Tax Court Logo 2Andy Grewal (Iowa), The Un-Precedented Tax Court:

Around the turn of this century, a "highly-charged" debate erupted over unpublished federal appellate court opinions. Some argued that the common prohibition against citation to those opinions posed no constitutional problems, while others argued that no-citation rules improperly eliminated a significant check on the judicial power.

This debate might have been expected to reach, but has not yet reached, issues related to the purportedly nonprecedential nature of most Tax Court opinions. Under court practices, Memorandum Opinions nominally lack precedential value. And by Congressional fiat, Summary Opinions cannot be cited as precedent.

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April 10, 2015 in Scholarship, Tax | Permalink | Comments (0)

Brunson: Tax and Utopia

UtopiaSamuel Brunson (Loyola-Chicago), Accommodating (Economic) Diversity: Applying the Income Tax to Utopian Communities:

Communalism has a long history in the United States. Throughout the nineteenth century, the country was seemingly dotted with utopian groups. Most were Christian groups, trying to follow the New Testament model of a body of believers that held all property in common. While these groups generally fell apart quickly, in response to inside or outside pressures, several large groups survived the turn of the century.

In the early twentieth century, though, these religious communal groups had to contend with something new: an income tax. Communalism did not fit into the individualistic economic system envisioned by the drafters of the income tax. So Congress designed a special tax regime, now codified in section 501(d) of the Internal Revenue Code, which exempts religious communal holding companies from tax, while imputing the holding companies’ income to the members of the group. Section 501(d) provides communitarian groups with flexibility to reflect their unusual economics.

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April 10, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 701

IRS Logo 2Judicial Watch Press Release, IRS Documents Reveal Lerner Knew Targeting Criteria of Nonprofit Groups ‘Might Raise Questions’:

Judicial Watch today released a new batch of Internal Revenue Service (IRS) documents, including an email from former IRS official Lois Lerner in February 2012 asking that a program be set up to “put together some training points to help them [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress.  The documents also contain a Lerner email from 2013 in which she says she is willing to take the blame on some aspects of the scandal.  She also indicates that she “understands why the IRS criteria” leading to the targeting of Tea Party and other opponents of the President Obama “might raise questions.”

The documents were released under court order in one of the Judicial Watch’s ongoing Freedom of Information Act (FOIA) lawsuits about the Obama IRS’ abuses (Judicial Watch v. IRS (No. 1:13-cv-1559).

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April 10, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, April 9, 2015

Kahng Presents The Taxation of Women in Same-Sex Marriages Today at Fordham

Kahng (2015)Lily Kahng (Seattle) presents The Not-So-Merry Wives of Windsor: The Taxation of Women in Same-Sex Marriages, 101 Cornell L. Rev. __ (2015), at Fordham today as part of its Faculty Workshop Series:

In United States v. Windsor, the Supreme Court invalidated the Defense of Marriage Act definition of marriage as “between one man and one woman” and is now poised to recognize a constitutional right to same-sex marriage. Windsor cleared the way for same-sex couples to be treated as married under federal tax laws, and the Obama administration promptly announced that it would recognize same-sex marriages for tax purposes. Academics, policymakers, and activists lauded these developments as finally achieving tax equality between gay and straight married couples. This Article argues that the claimed tax equality of Windsor is illusory and that the only way to achieve actual equality is to eliminate taxation on the basis of marital status.

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April 9, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Muller: Number Of Law School Applicants Has Bottomed Out, But Quality Of Applicants Continues To Plummet

Derek Muller (Pepperdine), The Wrong Sort of Law School Applicants, Visualized:

There's good news and bad news for law schools. The good news is that total law school applicants appear to be reaching the bottom. After projections last year that the worst may be yet to come, it appears that the Class of 2018 will have only slightly fewer applicants than the Class of 2017. Current projections are about a 2.8-point drop in applicants, and that gap may narrow if recent trends of late applicants continue. ...

Muller

But the bad news is [] the quality of the applicants. In short, the wrong sort of applicants are applying. ... 

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April 9, 2015 in Legal Education | Permalink | Comments (3)

Judges Are Far Less Biased Than Law Students

Dan Kahan (Yale), David Hoffman (Temple), Danieli Evans (Yale), Neal Devins (William & Mary), Eugene Lucci (Judge. Ohio Court of Common Pleas) & Katherine Cheng (Yale), 'Ideology' or 'Situation Sense'? An Experimental Investigation of Motivated Reasoning and Professional Judgment, 163 U. Pa. L. Rev. ___ (2015):

This paper reports the results of a study on whether political predispositions influence judicial decisionmaking. The study was designed to overcome the two principal limitations on existing empirical studies that purport to find such an influence: the use of nonexperimental methods to assess the decisions of actual judges; and the failure to use actual judges in ideologically-biased-reasoning experiments. The study involved a sample of sitting judges (n = 253), who, like members of a general public sample (n = 800), were culturally polarized on climate change, marijuana legalization and other contested issues. When the study subjects were assigned to analyze statutory interpretation problems, however, only the responses of the general-public subjects and not those of the judges varied in patterns that reflected the subjects’ cultural values. The responses of a sample of lawyers (n = 217) were also uninfluenced by their cultural values; the responses of a sample of law students (n = 284), in contrast, displayed a level of cultural bias only modestly less pronounced than that observed in the general-public sample. Among the competing hypotheses tested in the study, the results most supported the position that professional judgment imparted by legal training and experience confers resistance to identity-protective cognition — a dynamic associated with politically biased information processing generally — but only for decisions that involve legal reasoning. The scholarly and practical implications of the findings are discussed.

Wall Street Journal Law Bog, Study: Judges Are Far Less Biased Than Law School Students:

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April 9, 2015 in Legal Education, Scholarship | Permalink | Comments (0)