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Sunday, July 19, 2015

The Top 5 Tax Paper Downloads

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

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

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

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

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

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

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

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

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

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

The IRS Scandal, Day 801

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

Imagine having a vision for your country.

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

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

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

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

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

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

Welcome to the very real tyranny of modern America.

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

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

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

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

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

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

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

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

Saturday, July 18, 2015

Dan Markel Deserves Justice

MarkelTallahassee Democrat editorial, Dan Markel Deserves Justice:

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

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

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

This Week's Ten Most Popular TaxProf Blog Posts

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

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

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

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

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

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

The IRS Scandal, Days 701-800

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

The IRS Scandal, Day 800

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

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

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

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

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

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

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

Friday, July 17, 2015

Tax Prof Wedding: Allen Madison

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

Madison

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

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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

Taylor: Should Payroll Taxes Be Repealed?

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

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

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

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

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

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

Chicago Chart

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

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

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

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

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

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

The IRS Scandal, Day 799

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, July 16, 2015

Osofsky: Tax Administration And Tax Scholarship

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

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

The Contemporary Tax Journal Publishes New Issue

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

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

Chodorow: The Tax Consequences Of Catalyzed Fans

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

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

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

Taylor: Law School Scholarships Foist Surtax On The Neediest Students

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

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

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

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

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

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

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

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

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

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

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

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

Taxing Meat To Fight Climate Change

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

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

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

The IRS Scandal, Day 798

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, July 15, 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chorvat: Taxation And Liquidity — Evidence From Retirement Savings

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

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

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

Luke: The Taxing Problem of Debt Principal

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

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

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

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

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

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

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

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July 15, 2015 | Permalink | Comments (0)

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

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

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

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

The IRS Scandal, Day 797

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

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

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

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

Tuesday, July 14, 2015

Browde: The Need For Increased Penalties To Deter Tax Identity Theft

Florida Tax ReviewPippa Browde (Montana), Many Unhappy Returns: The Need for Increased Tax Penalties for Identity Theft-Based Refund Fraud, 18 Fla. Tax Rev. ___ (2015):

The growing problem of fraudulent tax returns being submitted based on stolen identities is a “tsunami of fraud,” and victims, lawmakers, and law enforcement are struggling with how to deal with the fallout. The issues surrounding identity theft-based tax fraud are complex. Current IRS efforts to stem the tide involve pouring resources into assisting victims, updating IRS processes to detect and prevent refund fraud, and increasing the number of criminal investigations and prosecutions it pursues. The IRS’s approach and pending proposed legislation are not enough to address the problems created by identity theft-based tax fraud. This article argues the IRS and Congress must use a holistic approach to attack this specie of tax fraud. To that end, this article supports enhanced criminal penalties and proposes new civil tax penalties aimed specifically at identity theft tax fraud.

This article pursues two goals. First, it documents and explains the problem of identity theft-based refund fraud, highlighting particular issues with respect to tax compliance. In so doing it analyzes existing civil and criminal tax penalties to punish and deter identity thieves, an analysis which reveals that existing criminal penalties are insufficient and that there is no directly applicable existing civil penalty. Second, to address the gaps in existing law, the article proposes standards for Congress to use in crafting a comprehensive penalty scheme to apply to identity theft-based refund fraud.

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

Manhire: Beyond The U.S. News Index — A Better Measure Of Law School Diversity

2016 U.S. News RankingsJ.T. Manhire (Texas A&M), Beyond the U.S. News Index: A Better Measure of Law School Diversity, 101 Iowa L. Rev. Online ___  (2015):

The U.S. News & World Report publishes a diversity index along with its annual ranking of U.S. law schools. Race and ethnicity are the only factors the magazine uses to measure law school diversity. But is this a meaningful measure of student difference? Are race and ethnicity all that count or are there other differences that contribute to a richer educational experience for students and better outcomes for law schools? In a 2011 Iowa Law Review article, Kevin Johnson argues that law school diversity is not limited to only race and ethnicity. He further argues that law school diversity, defined broadly, is critical to the success of legal education; both for the students and the institutions that serve them.

Yet, the epistemological question remains: how do law schools know how diverse their student bodies are? If law student diversity is more than just racial diversity, the current U.S. News index is incomplete and fails to provide a meaningful law school diversity measure. This essay proposes an improved diversity index that captures more of the differences that matter to the success of both law students and law schools. The essay begins by very briefly recapping some of Dean Johnson’s compelling arguments for why law school diversity (in its broader conception) is critical, and why measuring it is so important. It then examines the types of differences shown to produce better outcomes in heterogeneous groups, and explains the methodology behind the proposed cognitive diversity index.

July 14, 2015 in Law School Rankings, Legal Education | Permalink | Comments (3)

Merritt: New Data Reveal That ExamSoft, NCBE To Blame For Lower July 2014 Bar Pass Rates

LogoFollowing up on my previous posts (links below): Deborah Jones Merritt (Ohio State), ExamSoft: New Evidence from NCBE:

Almost a year has passed since the ill-fated July 2014 bar exam. As we approach that anniversary, the National Conference of Bar Examiners (NCBE) has offered a welcome update.

Mark Albanese, the organization’s Director of Testing and Research, recently acknowledged that: “The software used by many jurisdictions to allow their examinees to complete the written portion of the bar examination by computer experienced a glitch that could have stressed and panicked some examinees on the night before the MBE was administered.” This “glitch,” Albanese concedes, “cannot be ruled out as a contributing factor” to the decline in MBE scores and pass rates.

More important, Albanese offers compelling new evidence that ExamSoft played a major role in depressing July 2014 exam scores. He resists that conclusion, but I think  the evidence speaks for itself. Let’s take a look at the new evidence, along with why this still matters.

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July 14, 2015 in Legal Education | Permalink | Comments (2)

Moody's: Financial Outlook Brightens For Public And Private Universities

Moody'sMoody's Investor Services, Fiscal 2014 Medians Show Easing Pressures at Public and Private Universities:

Fiscal year 2014 medians for public and private universities show much of the higher education sector stabilizing into balanced operations, increased liquidity, and slowly strengthening balance sheets, Moody's Investors Service says in two new reports. Nonetheless, approximately 20% of universities continue to confront material revenue growth pressures.

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

Hillary Clinton's Tax Plan

LSAT Is Poor Predictor Of Law School Grades: 6 LSAT Points = 0.1 LGPA

LSAT (2015)Alexia Brunet Marks (Colorado) & Scott A. Moss (Colorado), What Makes a Law Student Succeed or Fail? A Longitudinal Study Correlating Law Student Applicant Data and Law School Outcomes:

Despite the rise of "big data" empiricism, law school admission remains heavily impressionistic; admission decisions based on anecdotes about recent students, idiosyncratic preferences for certain majors or jobs, or mainly the Law School Admission Test (LSAT). Yet no predictors are well-validated; studies of the LSAT or other factors fail to control for college quality, major, work experience, etc. The lack of evidence of what actually predicts law school success is especially surprising after the 2010s downturn left schools competing for fewer applicants and left potential students less sure of law school as a path to future success. We aim to fill this gap with a two-school, 1400-student, 2005-2012 longitudinal study. After coding non-digitized applicant data, we used multivariate regression analysis to predict law school grades ("LGPA") from many variables: LSAT; college grades ("UGPA"), quality, and major; UGPA trajectory; employment duration and type (legal, scientific, military, teaching, etc.); college leadership; prior graduate degree; criminal or discipline record; and variable interactions (e.g., high-LSAT/low-UGPA or vice-versa).

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July 14, 2015 in Legal Education, Scholarship | Permalink | Comments (9)

Baylor Prof Replaces Exams With 'Celebrations Of Learning'

BaloonsInside Higher Ed, Celebrations, Not Tests:

Students entering a classroom to take a test can be filled with a sense of dread. But in one classroom at Baylor University, students in some sections of Introduction to Sociology are greeted by balloons, streamers, bright lights and loud music.

Their professor isn’t administering an exam, they’re told. Instead, they are there to celebrate what they’ve learned.

Kevin Dougherty, an associate professor of sociology at Baylor University, is trying to reframe the way both students and faculty members approach assessments by changing the environment in which students are evaluated, relabeling quizzes and exams as “learning checks” and “learning celebrations.” ...

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

The IRS Scandal, Day 796

IRS Logo 2Fox News, IRS Ignores Deadline to Hand Over Lerner Emails:

The Internal Revenue Service is ignoring a court-imposed deadline to turn over newly found Lois Lerner email documents essential to investigations of the IRS tax-exempt scandal.

U.S. District Court Judge Emmet Sullivan last week ordered the agency to turn over 1,800 new emails from Lerner, who ran the tax exempt unit which decided which organizations could receive tax exempt status. The government watchdog group Judicial Watch has sought the emails in a Freedom of Information Act (FOIA) request. Monday, a spokesperson told  FOXBusiness.com that the group would not oppose the IRS producing something this Wednesday and every 2 weeks thereafter, assuming the Court agrees. At the time of publication there was no word from the IRS on this development or an amended order from the court. 

Judicial Watch President Tom Fitton said his organization has agreed to receive the information this week, but as of today no information has been received. Lerner is at the center of a scandal in which conservative groups, especially those that identified themselves as Tea Party groups, were denied tax exempt status.

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July 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, July 13, 2015

Yin: Preventing Congressional Violations Of Taxpayer Privacy

ABA Tax LawyerGeorge K. Yin (Virginia), Preventing Congressional Violations of Taxpayer Privacy, 68 Tax Law. ___ (2015):

This article claims that the U.S. House Ways & Means Committee violated the law in 2014 when it voted (strictly along party lines) to release to the public the tax return information of 51 taxpayers. The committee acted under the belief that an obscure tax law provision authorized its action. But the provision required the committee to have a legitimate purpose for the disclosures and — incredibly — the committee failed to satisfy this almost trivial, common-sense restriction. Although the disclosures occurred in connection with the committee’s allegations of possible criminal misconduct by a high-ranking IRS official (Lois Lerner), most of the return information released was completely unrelated to the oversight objective and none of it was necessary for the committee’s claims. In fact, there does not appear to have been any purpose whatsoever for the disclosures other than possibly providing a partisan political advantage to the committee majority. Because the Speech or Debate Clause of the Constitution insulated the committee from prosecution for the violation, the incident reveals a serious gap in taxpayer privacy protections. A future tax committee, for no legitimate reason, might release with impunity the return information of any taxpayer, including a political opponent of those who control the committee at the time.

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July 13, 2015 | Permalink | Comments (0)

Multiple Choice Exam Twist: The Prisoner's Dilemma

ScantronKTVB, Professor Asks Cruelest Extra Credit Question Ever:

For most college students, extra credit opportunities usually come in the form of essay questions at the bottom of the test, additional assignments, or a detail hidden in the exam instructions.

So when a group of University of Maryland students got a multiple choice prompt for an extra credit question (that required no additional information they needed to study), it seemed like a dream come true.

But instead they saw this:

Maryland

In short, the entire class would get at least two points of extra credit, but only if less than 10 percent of students took the six points option.

It's a college exam sized version of "The Prisoner's Dilemma" ...

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July 13, 2015 in Legal Education | Permalink | Comments (2)

Brophy: The Coming Age Of Micro Law Schools

MicroAl Brophy (North Carolina), The Micro Law School:

Maybe what we’ll see are micro law schools — schools with entering classes of 50 or fewer students. Appalachian School of Law in Grundy, Virginia, seems headed in that direction now — with about a dozen full-time faculty and a first year class of 48 in fall 2014.  Micro law schools will permit schools that serve geographically remote communities, like Appalachian School of Law, to continue to provide an education to people who might not be able to travel far from home.  This will work well for the communities and those students, both.

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

The Relative Value of $100: Lowest In D.C. ($85), Highest In Mississippi ($115)

Tax Foundation, The Relative Value of $100: Which States Offer the Biggest Bang For Your Buck?:

Tax Foundation

The Bureau of Economic Analysis has been measuring this phenomenon for two years now; it recently published its data for prices in 2013. Using this data, we have adjusted the value of $100 to show how much it buys you in each state.

July 13, 2015 in Tax, Think Tank Reports | Permalink | Comments (3)

Brooklyn Law School Offers 15% Tuition Refund For Students Who Don't Find Full-Time Jobs 9 Months After Graduation

Brooklyn (2015)New York Times, Brooklyn Law School Offers a Safety Net for New Students:

Beginning with students entering this year — whether in two-, three- or four-year programs — Brooklyn Law School is offering to repay 15 percent of total tuition costs to those who have not found full-time jobs nine months after graduating. That, according to school officials, is how long it typically takes graduates to get such jobs and, if necessary, to obtain the requisite licenses. ...

The introduction of the program, called Bridge to Success, comes as law school graduates across the country face increasing competition in a depressed job market that is only slowly recovering from the economic downturn. ...

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July 13, 2015 in Legal Education | Permalink | Comments (7)

20 Schools Are Responsible for 20% Of All Graduate School Debt

Washington Post, These 20 Schools Are Responsible for a Fifth of all Graduate School Debt:

A new study from the Center for American Progress (CAP) found that 20 universities received one-fifth, or $6.5 billion, of the total amount of loans the government gave graduate students in the 2013-2014 academic year. Those schools, however, only educate 12 percent of all graduate students.

WaPo

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July 13, 2015 in Legal Education | Permalink | Comments (6)

The IRS Scandal, Day 795

IRS Logo 2Tribune-Review, Another IRS 'Oops': Hardly Credible:

It was “an unbelievable set of circumstances” that led to the erasure of backup tapes of Lois G. Lerner's emails after a congressional subpoena sought these records in an investigation of the tax agency's targeting of tea party and conservative groups. Or so says the IRS' deputy inspector general.

In literature and in cinema, this would be referred to as suspension of disbelief. For the Obama administration in its dealings with Congress, it's business as usual.

As the script goes, Ms. Lerner formerly led the IRS agency accused in the targeting scandal. Once an investigation commenced, the IRS informed Congress that, by golly, her computer had suffered a debilitating hard drive crash and that her emails were lost.

Backup computer tapes of the sought emails later turned up. But — oops! — about 24,000 emails might have been permanently lost to erasure, The Washington Times reports. Of the 1,000 recovered emails that the IRS didn't turn over to Congress, none pertain to the targeting, according to the IG. Imagine that.

Why, nobody “did anything intentionally to hinder our investigation,” said Democrat Rep. Elijah E. Cummings.

A crashed hard drive. Now erased backup tapes. It is not unreasonable to suspect the destruction of evidence amid a succession of excuses during a two-year investigation. Congress must redouble its efforts to get to the bottom of this.

Newsmax, Judicial Watch's Fitton: More Lois Lerner Emails on the Way:

The IRS is dragging its feet on the court-ordered release of newly-discovered emails to and from Lois Lerner, the ex-agency official who allegedly targeted tea party groups seeking tax-exempt status, Tom Fitton, president of the government watchdog Judicial Watch, tells Newsmax TV.

"The government found 1,400-plus new Lois Lerner emails. Remember those emails that were deleted and weren't recoverable on backup tapes? Well, they weren't deleted, they were recoverable and they were on backup tapes," Fitton said Friday on "The Steve Malzberg Show." ...

Fitton said other Lerner emails that have been released thus far are "astonishing." "They provide an exhaustive account of a meeting that Lois Lerner and other IRS folks had with the Department of Justice.... It wasn't just the IRS stalling tea party applications, it was the Justice Department and the FBI talking about prosecuting these very groups," he said.

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July 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, July 12, 2015

Brunson: Churches And Religiously-Affiliated Schools That Oppose Same-Sex Marriage Will Not Lose Their Tax Exemption After Obergefell

White House Same Sex MarriageFollowing up on my previous posts:

Sam Brunson (Loyola-Chicago), Tax Exemption, Post-Obergefell:

There’s been a lot of Sturm und Drang recently over what will happen to the tax exemptions of churches and religiously-affiliated schools that oppose same-sex marriage. The specter of loss of exemption has been bandied about. ...

[C]could the church or BYU lose its tax exemption as a result of their policies on homosexuality? Yes. ... Just because the government could, though, doesn’t mean that it’s likely. And, based on historical and current practice, revoking the church’s exemption is virtually impossible, and revoking BYU’s is tremendously unlikely. 

Sam Brunson (Loyola-Chicago), The Church Will Not Lose Its Tax-Exempt Status:

Do I seriously have to say this? Again? Look, Obergefell does not mark the end of churches’ tax-exempt status. It’s just not going to happen. ...

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July 12, 2015 in Tax | Permalink | Comments (3)

The Wealthiest ZIP Codes In America

Wealthiest ZIP Codes in America:

America

(Hat Tip: Francine Lipman.)

July 12, 2015 in Tax, Think Tank Reports | Permalink | Comments (3)