TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Saturday, January 7, 2017

Law Students Performed 2.2 Million Pro Bono Hours Worth $52 Million In 2016

Pro BonoNational Law Journal, Law Students Performed 2.2 Million Pro Bono Hours Last Year:

In between reading cases and studying for exams, law students found time in 2016 to take on volunteer legal work — a lot of it.

The law class of 2016 performed more than 2.2 million hours of pro bono work while on campus, which is valued at more than $52 million.

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January 7, 2017 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 1339:  House GOP Reactivates 'Holman Rule,' Would Have Permitted Reducing Lois Lerner's Pay To $1

IRS Logo 2Washington Post, House Republicans Revive Obscure Rule That Allows Them to Slash the Pay of Individual Federal Workers to $1:

House Republicans this week reinstated an arcane procedural rule that enables lawmakers to reach deep into the budget and slash the pay of an individual federal worker — down to $1 — a move that threatens to upend the 130-year-old civil service.

The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to propose amending an appropriations bill to single out a government employee or cut a specific program.

The use of the rule would not be simple; a majority of the House and the Senate would still have to approve any such amendment. At the same time, opponents and supporters agree that the work of 2.1 million civil servants, designed to be insulated from politics, is now vulnerable to the whims of elected officials. ...

Democrats and federal employee unions say the provision, which one called the “Armageddon Rule,” could prove alarming to the federal workforce because it comes in combination with President-elect Donald Trump’s criticism of the Washington bureaucracy, his call for a freeze on government hiring and his nomination of Cabinet secretaries who in some cases seem to be at odds with the mission of the agencies they would lead.

Weekly Standard, House GOP Revives Rule Allowing Them To Slash Salaries of Corrupt Federal Workers:

[T]here can be no question that federal workers have far too many civil service protections. After the IRS held a press conference admitting that they had improperly targeted conservative groups, Lois Lerner, the IRS official deemed most responsible, didn't face any meaningful consequences. Instead it was revealed that she recently received $129,000 in bonuses and retired with an annual pension that could possibly exceed $100,000.

Even after Lerner left, John Koskinen, the new interim head of the IRS, ignored congressional subpoenas as the IRS destroyed evidence relating to the investigation of Lerner and engaged in egregious stonewalling. It's pretty clear that the IRS was in no way fearful of suffering any consequences for persecuting thousands of ordinary Americans and flouting Congress.

Western Journalism, GOP House Revives 140-Year-Old Rule That Has Swamp-Dwelling Bureaucrats Sweating Bullets:

The rule would let lawmakers target civil servants who abuse their posts but still have union protections. The rule could, for instance, have been used on former Internal Revenue Service official Lois Lerner, locus of the IRS’ intimidation scandal.

While Lerner faced minimal consequences for her wide-ranging role in the scandal — she refused to reveal much of anything to congressional investigators — The Weekly Standard pointed out that she received $129,000 in bonuses and a yearly pension that could top $100,000.

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January 7, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (12)

Friday, January 6, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) uses a recent IRS ruling to discuss how the accumulated earnings tax on C corporations may take on increased importance in a reformed tax code emerging from the Trump Administration and the 115th Congress. 

KristanLiving fossil tax bites cashless C corporation

The accumulated earnings tax on C corporations is one of the more obscure items in the tax law. Designed to force corporations to distribute earnings as taxable dividends, it rarely comes up even in tax nerd get-togethers. A few years ago some populist politicians talked of strengthening it to force corporations to pay more dividends as a perverse form of economic stimulus, but interest soon faded.

The new administration may make C corporations much more attractive and more popular. If so, this living fossil may again rise from obscurity to bite taxpayers and their advisors. That makes a legal memorandum recently released by the IRS timely.

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January 6, 2017 in IRS News, Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (ASU) reviews a new paper by Jeffrey L. Hoopes (UNC), Leslie A. Robinson (Dartmouth), and Joel B. Slemrod (Michigan), Public Tax-Return Disclosure.

Scharff (2017)Calls for corporations to pay their fair share of taxes assume that corporations aren’t ponying up the way they should. But when it comes to individual companies, it can be hard to know what they are paying at all.

As a step toward reforming the system, reformers have called for increasing the public disclosure of corporate tax-return information. Jeffrey Hoopes, Leslie Robinson, and Joel Slemrod suggest reformers hope disclosure will achieve two goals. First, making this information public might limit tax evasion. Second, such disclosures might also provide information useful to investors.

As a result of reforms enacted in 2013, the Australian Tax Office (ATO) began releasing tax-return data (total income, taxable income, and tax payable) for about two thousand of Australia’s largest firms, as defined by income in 2015. The initial disclosures were all released on two specific dates. For large multinational corporations and Austrialian-owned public corporations, the ATO released tax information on December 17, 2015.

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January 6, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Rethinking Faculty Hiring At Fourth-Tier Law Schools

Meat MarketPhilip L. Merkel (Western State), Scholar or Practitioner? Rethinking Qualifications for Entry-Level Tenure-Track Professors at Fourth-Tier Law Schools, 44 Cap. U. L. Rev. 507 (2016):

[M]any fourth-tier law schools have lost their way. Rather than embracing their responsibility to educate practitioners, they are trying to look, act, and spend like elite schools. They operate as if they are research centers whose purpose is to produce academic scholarship, not places where future lawyers learn their trade. The research center model creates costs for fourth-tier law schools that ultimately fall on the students. Because most fourth-tier schools rely on tuition for operating expenses and capital budgets, students are paying more tuition and taking on more debt to support their professors’ scholarship. Students subsidize these activities but receive little benefit. They are further short-changed when they graduate and discover their professors taught them little about the actual practice of law.

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January 6, 2017 in Legal Education, Scholarship | Permalink | Comments (12)

Today's AALS Annual Meeting Highlight

AALS (2018)Today's highlight at the 2017 AALS Annual Meeting in San Francisco:

Section on Taxation, Fiscal Federalism: Balancing Tax Policies at the Federal, State, and Local Levels:

A new administration signals the prospect of a host of tax reform proposals. Accomplishing tax reform at the federal level is challenging enough and rarely are the effects of those reforms on state and local governments taken into account. That remains true even though federal tax policies have ripple effects at the state and local levels that often are not felt uniformly among the states.

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January 6, 2017 in Conferences, Tax | Permalink | Comments (0)

Kysar:  Republicans’ Dangerous Tax Reform Plan

Slate op-ed:   Republicans’ Dangerous Tax Reform Plan, by Rebecca Kysar (Brooklyn):

Fundamental tax reform has always been a bipartisan undertaking. Until now.

All eyes are on Congress this week, as its Republican majorities seek to make good on long-standing promises to repeal the Affordable Care Act. They may finally get the job done, using a contentious legislative tool, known as reconciliation—the same tool the Obama administration used to pass elements of the law. Less discussed is the Republican plan to use reconciliation to overhaul the tax code as well, which would allow the party to pass its sweeping tax reforms without a single Democratic vote. Unlike in the health care reform context, however, the move would be unprecedented. It would also produce extreme and unstable tax policy.

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January 6, 2017 in Tax | Permalink | Comments (3)

The IRS Scandal, Day 1338:  Commissioner Koskinen Says Trump Transition Team Has No 'Axes To Grind' Against IRS

IRS Logo 2The Hill, IRS Chief: Agency's Discussions With Trump Team 'Very Positive':

IRS Commissioner John Koskinen said Thursday that his agency has had “very positive discussions” with the Trump transition team.

“They’ve been very straight-forward, very factual ... productive discussions,” Koskinen told reporters.

Republicans have frequently criticized the IRS, particularly in the wake of 2013 revelations that the agency had subjected conservative groups’ applications for tax-exempt status to extra scrutiny.

But Koskinen said there’s been no indication that transition officials have “any axes to grind” or any focus other than learning about how the IRS operates.

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January 6, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, January 5, 2017

Chicago-Kent Symposium:  Nonprofit Oversight Under Siege

Chicago-KentSymposium, Nonprofit Oversight Under Siege, 91 Chi.-Kent. L. Rev. 843-1114 (2016) (table of contents and abstracts):

Dana Brakman Reiser (Brooklyn), Introduction, 91 Chi.-Kent. L. Rev. 843 (2016)

The View from the U.S.:

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January 5, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

2016 NALP Report On Diversity In U.S. Law Firms

NALPNALP, 2016 Report on Diversity in U.S. Law Firms:

Women and Black/African-Americans made small gains in representation at major U.S. law firms in 2016 compared with 2015, according to the latest law firm demographic findings from the National Association for Law Placement (NALP). However, representation of both these groups remains below 2009 levels. NALP’s recent analyses of the 2016-2017 NALP Directory of Legal Employers (NDLE) — the annual compendium of legal employer data published by NALP — shows that although women and minorities continue to make small gains in their representation among law firm partners in 2016, the overall percentage of women associates has decreased more often than not since 2009, and the percentage of Black/African-American associates has declined every year since 2009, except for the small increase in 2016.

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January 5, 2017 in Legal Education | Permalink | Comments (0)

Charlotte Law School Works On Transfer Plan With Florida Coastal As Rumors And Lawsuits Swirl After Feds Cut Off Student Loans

Charlotte Logo (2016)Following up on my previous posts (links below) on the ramifications of the Department Of Education's decision to cut off federal student loans for Charlotte Law School:  

Prior TaxProf Blog coverage:

January 5, 2017 in Legal Education | Permalink | Comments (3)

Tax Profs Join Over 1,300 Law Profs In Opposing Jeff Sessions For Attorney General

DOJ Logo (2016)Statement From Law School Faculty Opposing Nomination of Jeff Sessions for the Position of Attorney General:

We are 1330 faculty members from 177 different law schools in 49 states across the country. We urge you to reject the nomination of Senator Jeff Sessions for the position of Attorney General of the United States.

In 1986, the Republican-controlled Senate Judiciary Committee, in a bipartisan vote, rejected President Ronald Reagan’s nomination of then-U.S. Attorney Sessions for a federal judgeship, due to statements Sessions had made that reflected prejudice against African Americans. Nothing in Senator Sessions’ public life since 1986 has convinced us that he is a different man than the 39-year-old attorney who was deemed too racially insensitive to be a federal district court judge.

Some of us have concerns about his misguided prosecution of three civil rights activists for voter fraud in Alabama in 1985, and his consistent promotion of the myth of voter-impersonation fraud. Some of us have concerns about his support for building a wall along our country’s southern border. Some of us have concerns about his robust support for regressive drug policies that have fueled mass incarceration. Some of us have concerns about his questioning of the relationship between fossil fuels and climate change. Some of us have concerns about his repeated opposition to legislative efforts to promote the rights of women and members of the LGBTQ community. Some of us share all of these concerns.

All of us believe it is unacceptable for someone with Senator Sessions’ record to lead the Department of Justice.

The Attorney General is the top law enforcement officer in the United States, with broad jurisdiction and prosecutorial discretion, which means that, if confirmed, Jeff Sessions would be responsible for the enforcement of the nation’s civil rights, voting, immigration, environmental, employment, national security, surveillance, antitrust, and housing laws.

As law faculty who work every day to better understand the law and teach it to our students, we are convinced that Jeff Sessions will not fairly enforce our nation’s laws and promote justice and equality in the United States. We urge you to reject his nomination.

Tax Prof signatories include:

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January 5, 2017 in Legal Education, Tax | Permalink | Comments (10)

Jones:  The University of Oregon, Nancy Shurtz, And The Racial Rules That Keep Us Apart

JonesFollowing up on my previous posts (links below): TaxProf Blog op-ed: The Racial Rules That Keep Us Apart, by Darryll K. Jones (Florida A&M):

What are Nancy Shurtz’ colleagues of color, particularly her African American colleagues, to think about (1) her having dressed up as a “Black Man in a White Coat,” and (2) the reaction to what she did?  She has a friendly smile with genuine eyes, and she teaches Tax.  But I only know that from picture and her bio.  If we ever met I don’t remember.  But I accept, as has her University and even her colleagues who want her out, that she intended no offense and indeed is a strong supporter of diversity and other issues generally thought to involve restorative justice for America’s racism. 

Somehow, I am made to feel defensive by calls for her punishment.  It just makes me very uncomfortable and I don’t want her stoned in the public square for my vindication.  If I were on the faculty at Oregon I would feel compelled to protest the crowd’s outrage ostensibly expressed in recognition of my heritage and feelings.  But I might just sit, quietly grinding my teeth and hoping that the whole thing would just die down.  It is the punishment, the demand for this poor woman’s head on a platter that makes me uncomfortable.  There are clear dangers in an African American saying so.  I imagine that some colleagues might shake their heads in disgust at my own lack of outrage.  There is always the danger of being labeled an “uncle tom” or an apologist for racists if one doesn’t adopt the hot tone of indignation.  Or just plain ignorant. 

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January 5, 2017 in Legal Education, Tax | Permalink | Comments (8)

Tax Profs Lily Batchelder, Ed Kleinbard Are 2016 Tax Person Of The Year Honorees

BKDonald Trump is Tax Analysts' 2016 Tax Person of the Year. Tax Prof Lily Batchelder (NYU) is one of nine other honorees:

Seeing that then-candidate Donald Trump's tax plan seemed to raise taxes on many families, New York University School of Law professor and former Senate Finance Committee and White House tax counsel Lily Batchelder conducted research to predict the size of the impact [Trump Plan Raises Taxes For Millions Of Low- And Middle-Income Families].

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January 5, 2017 in Tax | Permalink | Comments (3)

Today's AALS Annual Meeting Highlight

AALS (2018)Today's highlight at the 2017 AALS Annual Meeting in San Francisco:

Section on Trusts & Estates, Sex, Death, and Taxes: The Unruly Nature of the Laws of Trusts and Estates:

Trusts and Estates is a broad-based discipline that impacts private citizens’ decisions about sex, death, and taxes. In individuals’ lives, this field is like an operating system that quietly runs in the background, but in reality organizes and informs the end user’s experience, often without the end user’s full awareness. In practice, the field sits at the crossroads of other legal disciplines such as family law, property law, elder law, and tax law. In the academy, it is caught between the practical and theoretical—a microcosm of the questions at the heart of debates about the value and normative objectives of a legal education. Yet, T&E seems to be under–theorized and marginalized in the academy. Therefore, this panel will interrogate T&E’s unruly nature, entertaining inquiries about the intersectionality of gender, race, sexual orientation, and class; the pervasiveness of succession law in aligned fields; its history of adaptation to changing social norms; and the development and evolution of law reform in this area. The panel will explore new visions for the field and frameworks that disrupt and reimagine the field.

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January 5, 2017 in Conferences, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1337:  The IRS Is The Third Biggest 'Tax Offender Of 2016'

IRS Logo 2Taxable Talk: The 2016 Tax Offender of the Year, by Russ Fox:

Every year I hope that I won’t find any deserving individuals of the Tax Offender of the Year Award. To win this award, you need to do more than cheat on your taxes; it has to be a Bozo-like action or actions. As usual, we had plenty of nominees.

Coming in third this year is the Internal Revenue Service. What did the IRS do to deserve this award? Well, we have the IRS Scandal; it’s still unresolved. If we were to believe the IRS nothing untoward happened! I’m sure that’s why Commissioner Koskinen faced an impeachment resolution. And remember the data breaches? It wasn’t 104,000 people who were victimized back in 2015 (the “Get Transcript Hack) nor was it 334,000 taxpayers. There were over 700,000 people impacted (and over 500,000 unsuccessful attempts)! As Joe Kristan says, “The IRS: Protecting your identity since 1913.” Or not.

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January 5, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, January 4, 2017

Kuehn:  Law Schools Do Not Adequately Prepare Students For Legal Practice

KuehnTax Prof Blog op-ed:  Do Law Schools Adequately Prepare Students For Practice? Surveys Say . . . No!, by Robert Kuehn (Associate Dean for Clinical Education, Washington University):

Under ABA Accreditation Standard 301, law schools have two educational objectives: prepare their students “for admission to the bar and for effective, ethical, and responsible participation as members of the legal profession.” There has been much concern lately over declining bar passage rates, focusing attention on whether some schools are admitting students who may not be capable of passing the bar exam and whether a school’s program of legal education adequately prepares its graduates for the exam.

In focusing on the bar exam, it’s important not to lose sight of legal education’s primary duty of ensuring that law school prepares students for entry into the legal profession and a successful career. If studies of practicing lawyers and recent law graduates matter, it is clear that law schools are failing, even worse than in preparation for bar admission, to adequately prepare their students for legal practice.

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January 4, 2017 in Legal Education | Permalink | Comments (10)

9th Circuit Affirms Tax Court's Denial Of California Law Firm's Claimed $3.4 Million Travel Expense Deduction For 24-Hour Standby Use Of Private Jets

Gulfstream IVNational Law Journal, Plaintiffs Firm Stuck With $1M Tax Bill After Trying to Deduct Private Jet Travel:

California plaintiffs firm Engstrom, Lipscomb & Lack owes more than $1 million in federal corporate taxes and penalties relating to business expenses from two personal aircraft, according to a federal appeals court’s ruling this week.

The U.S. Court of Appeals for the Ninth Circuit on Wednesday upheld a finding by a U.S. Tax Court judge that Los Angeles-based Engstrom owed $1.12 million after claiming unsubstantiated travel expense deductions relating to 119 flights taken from 2008 to 2010 [Engstrom, Lipscomb & Lack v. Commissioner, No. 15-70591 (9th Cir. Dec. 28, 2016), aff'g T.C. Memo. 2014-221].

Engstrom founding partner Walter Lack and Thomas Girardi, of Los Angeles plaintiffs firm Girardi Keese, made payments to a corporation they set up called G&L Aviation in order to split the cost of a Gulfstream IV and a Beechcraft King Air 350 turboprop. Lack and Girardi have partnered on several cases including the litigation portrayed in the 2000 film “Erin Brockovich.”

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January 4, 2017 in New Cases, Tax | Permalink | Comments (1)

Yoon:  Law Profs Continue To Publish After Tenure, But In Less Competitive Outlets

Albert Yoon (Toronto), Academic Tenure, 13 J. Empirical Legal Stud. 428 (2016):

In academia, a subset of faculty has tenure, which allows its beneficiaries to retain their professorships without mandatory retirement and with only limited grounds for revocation. Proponents of tenure argue it protects intellectual freedom and encourages investment in human capital. Detractors contend it discourages effort and distorts the academic labor market. This Article develops a framework for examining academic tenure in the context of U.S. law schools. We construct a unique dataset of tenured U.S. law professors who began their careers between 1993 through 2002, and follow their employment and scholarship for the first ten years of their career. Across all journal publications, tenured faculty publish more frequently, are cited with roughly the same frequency, and place in comparable caliber of journal. These productivity gains, however, largely disappear when excluding solicited publications. These results suggest that legal academics continue to produce after tenure, but channel more of their efforts towards less competitive outlets.

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January 4, 2017 in Legal Education, Scholarship | Permalink | Comments (1)

NY Times:  Tax Cuts Designed For People Like Trump

New York Times op-ed: 2016 in Charts. (And Can Trump Deliver in 2017?), by Steven Rattner:

NYT 1
NYT 2

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January 4, 2017 in Tax | Permalink | Comments (2)

Dent:  Conservatives Are Not Welcome At AALS

AALS (2018)National Association of Scholars: Association of American Law Schools: Conservatives Not Welcome, by George Dent (Case Western):

As appropriate to its quasi-governmental status, the AALS nods toward non-partisanship. Its by-laws state that it “expects its member schools to value . . . diversity of viewpoints.” Unfortunately, this commitment has been pure window-dressing. In its law school inspections the AALS often criticizes schools for lack of racial or gender diversity, and it makes a big issue of sexual-orientation diversity, but it never criticizes schools for lack of political diversity.

This is not because law faculties reflect the political diversity of the nation. Empirical evidence confirms the obvious; law faculties tilt overwhelmingly to the left [John O. McGinnis et al., The Patterns and Implications of Political Contributions by Elite Law School Faculty, 93 Geo. L.J. 1167 (2005)]. And in its own programs the AALS displays the same bias. An announcement about the 2016 annual meeting included a list of thirteen scheduled “Speakers of Note.” One or two of them might be considered moderate or non-political, but all others were liberals or radicals; not one was a conservative or libertarian.

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

Today's AALS Annual Meeting Highlight

AALS (2018)Today's highlight at the 2017 AALS Annual Meeting in San Francisco:

Section on Balance in Legal Education:
Understanding and Connecting the Student Experience
Moderating and Speaking: Joseph Bankman (Stanford), Rhonda Magee (San Francisco)

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January 4, 2017 in Conferences, Legal Education | Permalink | Comments (0)

Reinventing The Liberal Arts: College In One Year For $5

ReinventingTuck Newport, Reinventing the Liberal Arts: College in One Year for $5:

Hardly a week passes without some luminary decrying the exorbitant cost of higher education and the sorry state of the liberal arts. But none of them explain, in detail, how to obtain a liberal arts education better than that offered by colleges and universities–in less than a year and at a fraction of the cost. "Reinventing the Liberal Arts: College in One Year for $5" provides a comprehensive science and humanities curriculum, with key elements field tested at a well-known liberal arts college over the past two decades. It includes an interdisciplinary survey of crucial concepts in physics, geology, molecular biochemistry, neuroscience, history, literature, ethics, politics, language, information technology, and management.

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January 4, 2017 in Book Club, Legal Education | Permalink | Comments (10)

The IRS Scandal, Day 1336:  Fragmented Oversight Of Nonprofits In The United States

IRS Logo 2Lloyd Hitoshi Mayer (Notre Dame), Fragmented Oversight of Nonprofits in the United States: Does It Work? Can It Work?, 91 Chi.-Kent. L. Rev. 937 (2016):

The United States is well known for its distinctive, although not unique, division of political authority between the federal government and the various states. This division is particularly evident when it comes to oversight of nonprofit organizations. The historical focus of federal government oversight has been limited primarily to qualification for tax exemption and other tax benefits, with more plenary power resting with state authorities. Over time, however, the federal government’s role has come to overlap significantly with that of the states, and many nonprofits have become subject to regulation by multiple states as their operations and donor bases expand across state lines.

This Article draws on the growing literature addressing fragmentation of oversight in other contexts to identify possible advantages and disadvantages of such fragmentation with respect to nonprofits. It concludes that the current allocation of responsibilities between the states and the federal government, including the limited areas of overlap, results in relatively effective oversight given the resource and other constraints under which these governments operate. It further concludes, however, that there are certain areas where improvement is possible. More specifically, it recommends federal consolidation of information gathering and financing of oversight, increased coordination between the federal government and the states with respect to enforcement actions, and increased coordination among states with respect to regulation of charitable solicitations. It also recommends that the federal government should both halt and consider rolling back its encroachment into the legal requirements for governance of nonprofits as they relate to the primarily state law fiduciary duty of

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January 4, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 3, 2017

Martha Minow To Step Down As Harvard Law School Dean

MinowHarvard Gazette, Minow to Step Down as Law School Dean:

Harvard Law School (HLS) Dean Martha Minow announced today that she will step down from that post at the end of this academic year. A legal scholar and human rights expert, Minow has led the diversification of the School’s faculty, staff, and student body, and has overseen significant growth in clinics and research programs, along with record fundraising. She will remain on the faculty and return to active participation in public dialogue and legal policy.

Minow, the Morgan and Helen Chu Dean and Professor of Law, took over in 2009 in the wake of the global financial crisis. She steered the School through the resulting economic challenges to a period of program and faculty growth, strengthened commitment to public service, and campus renewal, with construction of the Wasserstein Hall, Caspersen Student Center and Clinical Wing Building (WCC), and creation of the campus courtyard. She has continued to teach, write, and advise students throughout her tenure as dean.

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January 3, 2017 in Legal Education | Permalink | Comments (1)

Weisbach:  A Guide To The GOP Tax Plan — The Way To A Better Way

House Better WayDavid Weisbach (Chicago), A Guide to the GOP Tax Plan – the Way to a Better Way:

The tax reform plan — A Better Way — put forward by the chairman of the House Ways and Means Committee Kevin Brady and the Speaker of the House, Paul Ryan would be the most substantial tax reform in the United States since the enactment of the income tax in 1913. At the corporate level, the reform would allow immediate expensing of investments, deny deductions for net interest expense, and eliminate the taxation of income from sales in foreign countries while taxing the full value of imports (together shifting the tax base to a destination basis). At the individual level, the system would tax capital income including interest, dividends, and capital gains at half the rate that wages and salaries are taxed. It would also repeal the estate and generation skipping taxes. These changes would go a long way toward shifting the tax system to taxing consumption rather than income.

This paper considers the implementation of the House GOP tax plan and addresses issues that will need to be resolved if the plan is to work as intended. The plan is based on, and builds off of, a long history of thinking about consumption taxes. To understand the basic choices made in the plan, it is helpful to understand this history and how consumption taxes work in general.

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January 3, 2017 in Congressional News, Scholarship, Tax | Permalink | Comments (0)

Kysar:  Trump’s Tariff Plan Is Unconstitutional — Tariffs (Like Taxes) Must Originate In The House

New York Times op-ed: Is Trump’s Tariff Plan Constitutional?, by Rebecca Kysar (Brooklyn):

Among the first steps being floated by the incoming Trump administration is a 5 to 10 percent tariff on imports, implemented through an executive order. It’s the sort of shoot-first, ask-questions-later action that President-elect Donald J. Trump promised during the campaign. It’s also unconstitutional.

That’s because the path to imposing tariffs — along with taxes and other revenue-generating measures — clearly begins with Congress, and in particular the House, through the Origination Clause. When presidents have raised (or lowered) tariffs in the past, they have tended to do so using explicit, if sometimes wide-ranging, authority from Congress.

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January 3, 2017 in Congressional News, Tax | Permalink | Comments (3)

Volokh:  University Of Oregon's Punishment Of Tax Prof Nancy Shurtz May Signal The End Of Free Speech For All Professors At All Universities

Shurtz

Following up on last week's post, Volokh: Punishment Of Tax Prof Nancy Shurtz Means The End Of Free Speech At The University of Oregon: Washington Post (The Volokh Conspiracy): Silencing Professor Speech to Prevent Students From Being Offended — Or From Fearing Discrimination by the Professors, by Eugene Volokh (UCLA):

People often support disciplining and even firing professors who say things that are perceived as racist on the grounds that 1) those professors can’t be trusted to evaluate minority students fairly, 2) students will be afraid that they won’t be judged fairly, or 3) students will more broadly lose confidence in the professors (or just couldn’t stand to be in the room with them) or even in the institution, and won’t learn as effectively. I’ve seen these arguments made often, most recently as to the University of Oregon controversy. ...

I appreciate the force of these arguments, and indeed, if all you care about is maximum teaching effectiveness and reliability, you might take such a view. But, if accepted, these arguments really will be the end of freedom of expression — both casual and more formally academic — on university professors’ part, because they reach far beyond black makeup in Halloween costumes.

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January 3, 2017 in Legal Education, Tax | Permalink | Comments (4)

Grinberg:  The New International Tax Diplomacy

Itai Grinberg (Georgetown), The New International Tax Diplomacy, 104 Geo. L.J. 1137 (2016):

International tax avoidance by multinational corporations is now frontpage news. At its core, the issue is simple: the tax regimes of different countries allow multinational corporations to book much of their income in low-tax or no-tax jurisdictions, and many of their expenses in high-tax jurisdictions, thereby significantly reducing their tax liabilities. In a time of public austerity, citizens and legislators around the world have been more focused on the resulting erosion of the corporate income tax base than ever before. In response, in 2012, the G-20—the gathering of the leaders of the world’s twenty largest economies—launched the Base Erosion and Profit Shifting (BEPS) project, the most extensive attempt to change international tax norms since the 1920s.

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January 3, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Top 10 Legal Education Stories Of 2016

Top 10

National Law Journal, ABA's Spanking, Law Dean's Ouster Among Top 10 Law School Stories of 2016:

The legal education beat was a wild ride in 2016. Law schools continued to face pressure from the market and regulators, and dust ups involving everything from a handsy dean to a law school's unfortunate new acronym caught the public's attention. We've rounded up the year's top 10 law school stories.

DOEC1.  The U.S. Department of Education cracks down on the American Bar Association and law schools

TaxProf Blog coverage:

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January 3, 2017 in Legal Education | Permalink | Comments (0)

Hemel & Herzig:  ‘Reconciliation’ Could Roll Back Obamacare But Roil Senate

Wall Street Journal op-ed: ‘Reconciliation’ Could Roll Back Obamacare but Roil Senate, by Daniel J. Hemel (Chicago) & David J. Herzig (Valparaiso):

The effort by the GOP to peel away parts of the Affordable Care Act could also lead to a showdown over how the Senate runs, due to Republicans’ use of a special Senate rule that allows certain legislation to move through with a simple majority, rather than the 60-vote supermajority typically required.

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January 3, 2017 in Tax | Permalink | Comments (3)

The IRS Scandal, Day 1335:  Politics, Disclosure, And State Law Solutions For 501(c)(4) Organizations

IRS Logo 2Linda Sugin (Fordham), Politics, Disclosure, and State Law Solutions for 501(c)(4) Organizations, 91 Chi.-Kent. L. Rev. 895 (2016):

In 2013, the Internal Revenue Service (IRS) suffered its worst scandal in a generation over its treatment of tea-party related organizations. Some of the facts are undisputed: Following the Supreme Court's 2010 Citizens United decision, people rushed to organize section 501(c)(4) organizations that would be active in politics. The IRS was overwhelmed by applications, and the regulatory standard provided little guidance. The agents, who were not lawyers, used a shorthand to identify organizations that might not meet the standard of being “operated exclusively for the promotion of social welfare.” The Treasury watchdog found that “[t]he IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions.” Instead of identifying possible ineligible organizations by their names (including “Patriots” and “9/12”), the IRS should have determined eligibility for exemption by analyzing whether the organizations satisfied the regulatory requirements concerning political activity. Since that time, the IRS has been paralyzed in this area, and the Federal Election Commission has been deadlocked.

The post-Citizens United explosion of (c)(4) political activity—and the federal government's dysfunction—did not go unnoticed by the states. While the federal government was at an impasse, some states attempted to bridge the gap. Federal law determines tax exemption, but state law defines charitable and noncharitable nonprofit organizations and regulates their governance. If nonprofit organizations are operated to the detriment of the public interest, state attorneys general have the power to investigate and discipline them. New York and California have both attempted to address the same concerns about secret money in politics that led to the IRS scandal and proposed regulations.

This article asks whether the states can (and should) use state nonprofits law to solve the problem of dark money spent by nonprofit non-charitable organizations. Since the problem of (c)(4) politicking is not a revenue issue, the Internal Revenue Service is clearly not the ideal regulator. Dark money may be solely an election law problem, in which case it would be exclusively in the domain of the FEC and state election regulators, and not in the purview of state nonprofits law. However, if there are concerns about nonprofit organizations in politics that implicate the policies relating to nonprofits, there might be something beyond election law at issue that state nonprofit law might address. There are three reasons why state charity regulators might intervene in this area: (1) to protect charities, (2) to protect voters, and (3) to protect donors to nonprofit organizations. If dark money is damaging the reputation and integrity of the nonprofit sector as a whole, states may legitimately regulate noncharitable nonprofits to protect charities from negative consequences. The general public seems to confuse 501(c)(3) with 501(c)(4) organizations, failing to appreciate their legal distinction. Consequently, states have an interest in preventing reputational damage to charitable organizations on account of bad behavior by noncharitable nonprofit organizations. In addition, states may be justified in regulating politicking nonprofits to protect the public itself, either as donors or as voter. Much of state nonprofit law is designed to protect donors, so if regulating political speech is designed to protect donors who might unwittingly support political activity, then state nonprofits regulators are in a familiar institutional role. Donor confusion is understandable since 501(c)(4) organizations are categorized as “social welfare” organizations; donors may reasonably expect that their donations support social welfare activities, rather than politicking.

The final state policy, protecting the public as voters, veers away from nonprofits law into clear election law territory. Nevertheless, state attorneys general have an interest in preventing the public from being misled. State nonprofits law is already concerned with preventing fraud perpetrated by bogus charities and unscrupulous solicitors. If it is fraudulent to pretend to be someone else or to speak anonymously in a political communication, then nonprofit regulators might approach the problem as analogous to charitable solicitation. Both political campaign activity and charitable solicitations raise First Amendment issues. The Supreme Court has repeatedly struck down statutory limits on charitable solicitation under the First Amendment, but it has allowed states to prosecute charitable fundraisers for misleading potential donors.

This article proceeds as follows: The next Part provides a brief background to the current situation and explains why federal tax law is not the appropriate locus of regulation. After that, I describe the steps that California and New York have taken to reduce the influence of dark money in their elections. Both states were motivated by specific incidents involving out-of-state interests, and both states faced substantial pressures from constituencies opposed to regulation. Part IV considers possible state law policies for regulating dark money, and Part V considers the regulatory solutions that correspond to those policies. Part VI steps back to assess the desirability of state nonprofit law regulation, considering the legal and practical problems with states undertaking this regulation. Although the states can achieve some important goals, the conclusion in Part VII expresses skepticism at the states' ability to solve the (c)(4) politicking mess.

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January 3, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Holiday Weekend Roundup

Monday, January 2, 2017

NY Times Op-Ed:  Let's Resolve This New Years To Finally Ban Laptops In The Law School Classroom

No LaptopFollowing up on my previous posts (links below): New York Times op-ed: Leave Your Laptops at the Door to My Classroom, by Darren Rosenblum (Pace Law School):

When I started teaching, I assumed my “fun” class, sexuality and the law, full of contemporary controversy, would prove gripping to the students. One day, I provoked them with a point against marriage equality, and the response was a slew of laptops staring back. The screens seemed to block our classroom connection. Then, observing a senior colleague’s contracts class, I spied one student shopping for half the class. Another was surfing Facebook. Both took notes when my colleague spoke, but resumed the rest of their lives instead of listening to classmates.

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January 2, 2017 in Legal Education | Permalink | Comments (8)

Brunson:  More On Hate Groups And Tax Exemptions

Following up on Saturday's post, Volokh: The IRS May Not Deny Tax Exemptions To ‘Hate Groups’:  Sam Brunson (Loyola-Chicago), More on Hate Groups and Tax Exemptions:

Over at the Volokh Conspiracy, Eugene Volokh asserts that the IRS cannot constitutionally deny tax exemptions to “hate groups” based on their views, abhorrent that they may be. ... Since he name-checks me and fellow Surly blogger Phil Hackney, I figured it was worth responding to his piece. ... I don’t intend to be comprehensive here, but I want to make five main points: ...

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January 2, 2017 in Tax | Permalink | Comments (1)

Tom Arnold Calls On 'Gamers' To Get Trump's Taxes

The 10 Most Important Legal Technology Developments Of 2016

Robert Ambrogi, The 10 Most Important Legal Technology Developments of 2016:

1.  The legal industry gets smart about artificial intelligence.  In my top 10 list last year, I considered it big news that AI had come to legal research in the form of ROSS Intelligence, a startup that uses IBM’s Watson platform to answer lawyers’ natural-language legal research questions. Just as last year closed out, another AI company, Premonition — which says it is applying AI to the largest legal database in the world — announced a seed round at a $100 million valuation.

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January 2, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1334:  The IRS’s Diminished Role In Overseeing Tax-Exempt Organizations

IRS Logo 2Evelyn Brody (Chicago-Kent) & Marcus Owens (Loeb & Loeb, Washington, D.C.), Exile to Main Street: The I.R.S.’s Diminished Role in Overseeing Tax-Exempt Organizations, 91 Chi.-Kent. L. Rev. 859 (2016):

The Chicago-Kent conference on charity oversight took place on Day 924 of the TaxProf blog's “IRS Scandal”—Day 1 being the Friday two-and-a-half years ago that the Internal Revenue Service's Lois Lerner apologized for inappropriate use of Tea Party and other names in selecting applicants for Internal Revenue Code § 501(c)(4) status for further review. This article examines the IRS's role in administering the regime for federally tax-exempt organizations. Our focus, however, should not obscure the very real corrosive impact, whether deserved or pretextual, that the IRS's exempt-organization imbroglio has had on the health of the entire agency, and thus to the revenue needs of the federal government.

The IRS—an agency which in the best of times suffers from a siege—is now starved for resources both financial and political. The IRS has predictably and understandably responded to the “scandal” by retreating into a shell of bureaucratic reshuffling, management mumbo-jumbo, and paper moving. There has never been a better time to apply for tax-exempt status or push the boundaries of permissible activities.

Will the IRS's decision to exile the Exempt Organization Division from Washington, D.C. to Cincinnati save the agency as well as the exempt-organization function by removing its operations from the glare of Washington's perpetual partisan politics? Or will this attempt to jettison the albatross from the sinking ship instead stifle the effectiveness of the IRS's role in charity and nonprofit oversight, suggesting—as co-author Marcus Owens has written about at length—the need for a new and independent agency to carry out that role?

This article proceeds in three parts. Part I describes the framework for federally tax-exempt organizations engaged in advocacy and political activity, and recites the sorry saga of the recent unpleasantness. Part II summarizes the IRS's managerial reaction. Part III focuses on the IRS's new procedure for granting speedy recognition of tax-exemption to new small charities—perhaps setting the agency up for the next debacle. Our conclusion sets out the not-so-great choices, mindful that the goal is to avoid making the wrong mistake. ...

On July 21, 2015, President Barack Obama commented to Jon Stewart, host of The Daily Show on Comedy Central: “When there was that problem with the IRS, everyone jumped . . ., saying, ‘Look, you've got this back office, and they're going after the Tea Party.’ Well, it turned out, no, Congress had passed a crummy law that didn't give people guidance in terms of what it was they were trying to do. They did it poorly and stupidly.” The president added: “The truth of the matter is that there was not some big conspiracy there. They [(the IRS)] were trying to sort out these conflicting demands. You don't want all this money pouring through not-for-profits, but you also want to make sure everybody is being treated fairly.” Alluding to the bigger problem, he emphasized: “Now, the real scandal around the IRS right now is that it has been so poorly funded that they cannot go after these folks who are deliberately avoiding tax payments . . . .”

Jon Stewart, of course, did not point out to the president that ambiguous concepts—such as “unrelated business activity” and “educational”—are the hallmark of the federal tax rules applicable to tax—exempt organizations, and have defied specific definition since their enactment.

The IRS has taken a series of major organizational and procedural steps, clearly moving as quickly as it can to address the May 2013 TIGTA Report's recommendations and to align the Exempt Organizations Division (and the Employee Plans Division) with the organizational structures of the rest of the IRS National Office. These changes, though, are being developed by an entirely new cadre of senior management, virtually all of whom lack significant experience in the function or with the tasks required to administer the relevant substantive sections of the Internal Revenue Code.

In addition, the agency is proceeding piecemeal, focusing initially on the exemption-application processing function, to be followed at some point by a review of the examination function. In view of the huge amounts of funds flowing into the nonprofit sector, particularly to social welfare organizations exempt under section 501(c)(4), the IRS's sense of urgency is understandable. However, this emphasis on granting recognition of exemptions now and (possibly) asking questions later does not seem sustainable. The nonprfit sector and practitioners should be alert to developments to target noncompliance, as they are likely to occur quickly, and without an opportunity for public comment and discussion. In addition, the decoupling of the enforcement function from the interpretative function, now located in a different organization unit (the Office of Chief Counsel), suggests that there may be a greater risk for inconsistent or incorrect positions being taken in IRS audits.

As for small charities, regardless of whether Congress or the IRS adopts the five-year provisional-exemption proposal described in Part III, the agency should expand information collection. Importantly, a charity that grows sufficiently—which could happen even before five years pass—will have to file a Form 990-EZ or even a Form 990. Thus, the IRS should require a successful Form 1023-EZ applicant, when it first files one of those information returns, to submit the organizational documents and certain other information (notably, about activities and related party transactions and relationships) that would have been required on a full Form 1023 application. In addition, the IRS should continue sampling to ensure the eligibility of 1023-EZ applicants.

The bigger question—should the IRS be the locus of federal regulation of charities?—might more usefully be narrowed to “should the IRS be the locus of regulation for political activity by tax-exempt organizations?” If significant abuse arises, particularly if due even in part to the reduction in scrutiny of applications for tax-exempt status and in audit enforcement, one of us has proposed that it might be appropriate to move the entire regulatory function over tax-exempt organizations to a different governmental or quasi-governmental structure.

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January 2, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, January 1, 2017

NY Times:  The Evangelical Scion Who Stopped Believing — The Son Of A Famous Pastor, Bart Campolo Is Now A Rising Star Of Atheism As Humanist Chaplain At USC

BartNew York Times: The Evangelical Scion Who Stopped Believing: The Son of a Famous Pastor, Bart Campolo Is Now a Rising Star of Atheism — Using the Skills He Learned in the World He Left Behind:

For most of his life, [Bart] Campolo had gone from success to success. His father, Tony, was one of the most important evangelical Christian preachers of the last 50 years, a prolific author and an erstwhile spiritual adviser to Bill Clinton. The younger Campolo had developed a reputation of his own, running successful inner-city missions in Philadelphia and Ohio and traveling widely as a guest preacher. An extreme extrovert, he was brilliant before a crowd and also at ease in private conversations, connecting with everyone from country-club suburbanites to the destitute souls he often fed in his own house. He was a role model for younger Christians looking to move beyond the culture wars over abortion or homosexuality and get back to Jesus’ original teachings. ...

Though Marty, his wife, had long entertained doubts about Christianity, Campolo had always done his job and, in his words, “brought her back.” But the truth was, he had been breaking up with God for a long time. ... It had been years since he made God or Jesus or the resurrection the centerpiece of the frequent fellowship dinners he and Marty hosted. Talk instead was always about love and friendship. In 2004, he performed a wedding for two close lesbian friends, and in 2006, he began teaching that everybody could be saved, that nobody would go to hell. To evangelicals, he already sounded more like a Unitarian Universalist than like any of them.

Now, after his near-death experience, his wife told him — more bluntly than she ever had — what she thought was going on. “You know,” Marty said, “I think you ought to stop being a professional Christian, since you don’t believe in God, and you don’t believe in heaven, and you don’t believe Jesus rose from the dead three days after dying — and neither do I.” He knew that she was right, and he began telling friends that he was a “post-Christian.” They treated him like an obviously gay man coming out of the closet. “People were like, ‘Yeah, we’ve known this a long time,’ ” he says. “ ‘Why did it take you so long to figure it out?’ ”

For Campolo, admitting that he had totally lost his faith was oddly comforting — he could stop living a lie — but also confusing. He loved talking to people, caring for them, helping them. He loved everything about Christian ministry except the Christianity. Now that he had crossed the bridge to apostasy, he needed a new vocation.

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January 1, 2017 in Legal Education, Tax | Permalink | Comments (5)

The Top 10 TaxProf Blog Tax Posts Of 2016

The Top 10 TaxProf Blog Legal Education Posts Of 2016

The Top 5 Tax Paper Downloads

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

  1. [361 Downloads]  Problems with Destination-Based Corporate Taxes and the Ryan Blueprint, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Kimberly A. Clausing (Reed College)
  2. [313 Downloads]  IRS Issues Final and Temporary Debt-Equity Regulations Under Section 385, by David S. Miller (Proskauer, New York) & Janicelynn Asamoto Park (Proskauer, New York)
  3. [209 Downloads]  Apple State Aid Ruling: A Wrong Way to Enforce the Benefits Principle?, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Gianluca Mazzoni (S.J.D. 2017, Michigan)
  4. [187 Downloads]  Is Something Rotten in the Grand Duchy of Luxembourg?, by Omri Marian (UC-Irvine)
  5. [129 Downloads]  Protecting Trump's $916 Million of NOLs, by Steve Rosenthal (Tax Policy Center)

January 1, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1333:  Republicans Weasel Out Of Impeaching IRS Commissioner John Koskinen

IRS Logo 2Canada Free Pass, Republicans Weasel Out of Impeaching IRS Boss John Koskinen:

Republican leaders managed to derail a measure to impeach IRS Commissioner John Koskinen ..., sending the debate back to a committee for more study, where it will die when the Congress adjourns at the end of this year.

Conservatives had pushed for impeaching Mr. Koskinen, saying he cannot be allowed to get away with having misled Congress on the investigation into the IRS’s tea party targeting.

But GOP leaders, eager to clean up business and shut down for the year, ahead of a busy 2017, led the push to shunt the impeachment aside. Joined by Democrats, the House voted 342-72 to send the debate back to the Judiciary Committee.

“Members have different opinions about what to do,” said Rep. Bob Goodlatte, Virginia Republican and committee chairman, as he asked lawmakers to give him a chance to sort things out. But with lawmakers looking to clear out of town this week, the move essentially kills the impeachment drive in this Congress. Democrats had tried to expunge the impeachment resolution altogether, but lost a test vote on a near party-line tally.

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January 1, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, December 31, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Oregon Law Prof's Op-Ed:  Did Administration Fuel Outrage Over Prof's Halloween Costume Because She Was One Of Seven Faculty Who Complained To University About Performance Of Dean?

Oregon

Ofer Raban (Oregon), who was not one of the 23 law professors who signed a letter demanding that Nancy Shurtz resign her tenured faculty position for wearing blackface to a Halloween party in her home, has published an op-ed in The Oregonian, A Setback for Free Speech at University of Oregon:

Last week, the University of Oregon released and officially adopted a legal report regarding a law professor who donned a Halloween costume representing an African-American doctor. University leaders suspended the professor and commissioned the report from a Portland law firm, which worked under the "direction and guidance" of university lawyers.

The report recognized that the professor, who has a history of advocacy for minority rights, donned the costume at a party at her home in order to honor an African-American author and call attention to the scarcity of African-Americans in medical schools. The report also noted that she was genuinely shocked and surprised at the negative reactions to her costume, and promptly apologized.

But the report concluded that the costume constituted racial discrimination and harassment in violation of university rules. It goes on to claim that the professor's expression is not shielded by university rules protecting free speech and academic freedom, nor by the Constitution's freedom of speech.

This is a deeply flawed report, and the university has made a legal and moral mistake in adopting it.

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December 31, 2016 in Legal Education | Permalink | Comments (7)

Volokh:  The IRS May Not Deny Tax Exemptions To ‘Hate Groups’

Following up on my previous posts (links below):  Washington Post (The Volokh Conspiracy): No, The IRS May Not Deny Tax Exemptions on the Grounds That a Group Is a Supposed ‘Hate Group’, by Eugene Volokh (UCLA):

[T]he IRS can’t deny tax exemptions on the grounds that a group “hold[s] views that millions of Americans may find abhorrent” — or “espouse[s] values that are incompatible with most Americans” — whether those views are socialist, Islamist, pro-abortion, anti-abortion, pro-illegal-immigrant, anti-immigrant, pro-gay-rights, anti-gay-rights, white nationalist, black nationalist or anti-nationalist. It can’t deny exemptions to groups that engage in “hate speech” against blacks, gays, evangelical Christians or Donald Trump supporters, while allowing exemptions to groups that praise blacks, gays, evangelical Christians or Donald Trump supporters.

Indeed, the Supreme Court has made this clear: The government may not discriminate against groups based on the viewpoint of their speech. See Rosenberger v. Rector (1994) (discussing Regan v. Taxation With Representation (1983)). As the D.C. Circuit put it in Z Street v. Koskinen (2015) (itself a 501(c)(3) tax exemption case), “in administering the tax code, the IRS may not discriminate on the basis of viewpoint.”

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December 31, 2016 | Permalink | Comments (2)

IRS Cracks Down On Syndicated Conservation Easements

IRS Logo 2Notice 2017-10, 2017-4 I.R.B. 1 (Dec 23, 2016):

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) are aware that some promoters are syndicating conservation easement transactions that purport to give investors the opportunity to obtain charitable contribution deductions in amounts that significantly exceed the amount invested. This notice alerts taxpayers and their representatives that the transaction described in section 2 of this notice is a tax avoidance transaction and identifies this transaction, and substantially similar transactions, as listed transactions for purposes of § 1.6011-4(b)(2) of the Income Tax Regulations (Regulations) and §§ 6111 and 6112 of the Internal Revenue Code (Code). This notice also alerts persons involved with these transactions that certain responsibilities may arise from their involvement.

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December 31, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1332:  The House GOP's Ridiculous Impeachment Crusade

IRS Logo 2MSNBC The MaddowBlog, Congress Holds IRS Impeachment Vote as Trump Eyes New Commissioner:

The 114th Congress is, mercifully, nearly over, but as we saw yesterday, lawmakers aren’t quite done considering ridiculous ideas. The Wall Street Journal reported:

The House of Representatives turned aside an attempt by conservative hard-liners to impeach IRS Commissioner John Koskinen for his handling of congressional investigations into the tax agency.

Instead, in a 342-72 vote, the House sent the issue back to the Judiciary Committee, which hasn’t held a formal impeachment hearing or voted on the matter.

The vote effectively ends the impeachment crusade, at least for a while. The House’s GOP majority could start the process anew next year, but there wouldn’t be any point. The fact that this even reached the House floor yesterday is something of an embarrassment. Circling back to our previous coverage, the IRS “scandal” was discredited years ago — Koskinen wasn’t even at the tax agency when the imaginary controversy unfolded — and as Rep. Elijah Cummings (D-Md.) documented in May, charges that Koskinen was part of some kind of after-the-fact cover-up don’t make any sense.

Koskinen took on the job of improving the IRS out of a sense of duty — the president asked this veteran public official to tackle a thankless task, and Koskinen reluctantly agreed. For his trouble, a sizable group of far-right House Republicans have tried to impeach him, for reasons even they have struggled to explain.

Of course, whether or not Congress approves, Koskinen won’t lead the IRS much longer. As the Journal’s article added, Koskinen, who’s now 77, “serves a fixed term that ends in November 2017. [Donald Trump] could force him out or could wait until the end of Mr. Koskinen’s term and appoint his successor, who must be confirmed by the Senate.”

And that raises some interesting possibilities. Politico reported a couple of weeks ago that Trump will be in a position to nominate Koskinen’s successor, and there’s nothing to stop the Republican president “from appointing an IRS chief who will go easy on him.” ...

Trump may soon name the head of an agency that’s examining whether Trump broke the law. What could possibly go wrong?

Postscript: One more relevant tidbit from the Politico piece: “The IRS also reviews the president’s and vice president’s returns each year, but those audits aren’t required by law, and Trump could stop them.”

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December 31, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)