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Wednesday, June 10, 2015

TIGTA: IRS Can’t Verify Qualifications For Obamacare Subsidies

TIGTAThe Treasury Inspector General for Tax Administration yesterday released Affordable Care Act: Assessment of Internal Revenue Service Preparation for Processing Premium Tax Credit Claims (2015-43-043):

The Patient Protection and Affordable Care Act created a refundable tax credit, referred to as the Premium Tax Credit (PTC), to assist individuals with the cost of their health insurance premiums. Individuals may elect to receive the PTC in advance as partial payment for their monthly premiums (referred to as the Advance Premium Tax Credit (APTC)) or receive the PTC as a lump sum credit on their annual Federal income tax return. Beginning in January 2015, individuals are required to reconcile the APTC and can claim additional PTC on their annual tax return beginning with Tax Year 2014. ...

The overall objective of this review was to assess the status of the IRS’s preparations for verifying the accuracy of PTC claims during the 2015 Filing Season. ...

In response to the delays in receiving required Exchange Periodic Data submissions, the IRS developed contingency plans in an effort to improve its ability to ensure the accuracy of PTC claims.  However, without the required enrollment data from the Exchanges, the IRS will be unable to ensure that all taxpayers claiming the PTC bought insurance through an Exchange as required.

June 10, 2015 in Gov't Reports, IRS News, Tax | Permalink | Comments (2)

George Mason Offers $2,000 Honorarium For Law Profs To Attend Economics Of Public Pension Reform Workshop

GMThe George Mason Law & Economics Center is offering a $2,000 honorarium (plus free tuition, hotel, and meals) for law professors to attend its Workshop for Law Professors on the Economics of Public Pension Reform in Palo Alto, CA on September 17 - 20:

The goal of the Workshop for Law Professors on the Economics of Public Pension Reform is to introduce law professors to the looming financial and structural crises facing state pensions systems across the nation in order to improve their research and teaching.  With several dozen states adopting modest to major reforms, the economic impact on plan beneficiaries will be substantial and at least twenty-five jurisdictions are facing lawsuits due to the reforms adopted.

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June 10, 2015 in Conferences, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 762

IRS Logo 2USA Today op-ed:  The IRS Can Still Silence Political Dissent, by Allison R. Hayward:

Two years ago, Lois Lerner of the IRS revealed that it unfairly targeted and delayed Tea Party applications for tax exemption. While the IRS has apologized and promised reform, the agency has not fixed the vague rules that allowed this scandal to happen. As we enter the 2016 election cycle, political activists remain in danger of selective IRS audits, penalties and approvals.

As troubling as this is, we have seen this before. The tax regulation of non-profit advocacy groups has not had a happy history. One pattern repeats: Congress passes a tax law, often to score short-term political points. The IRS then interprets the law aggressively, often against groups with controversial views. Federal courts may soften that blow case by case. Eventually, Congress passes another law and this cycle starts again. ...

We need to learn several lessons from this history. First, the IRS, while effective at collecting taxes, is a poor agency to task with regulating advocacy organizations, especially those, such as the advocacy groups covered under 501(c)(4), that cannot offer donors a tax deduction. At most, only trivial amounts of revenue are at stake from the activity. Whether a certain message, or viewpoint, or advertisement, or tone is proper should not be a concern of the revenuer.

Second, Congress must resist the temptation to even political scores through tax legislation. Not only is it poor governance, it rarely works.

Finally, the courts should remain vigilant in protecting groups from IRS overreach and congressional mischief. Courts should feel free to identify and excise laws, even tax laws, that abridge political freedom.

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June 10, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, June 9, 2015

NY Times: Obama’s Corporate Tax Blunder — BEPS Is A Loser (In Jobs, Revenue) For The United States

BEPSNew York Times op-ed:  Obama’s Corporate Tax Blunder, by Michael Mandel (Progressive Policy Institute):

You probably haven’t heard of the BEPS project — but you soon will. Short for Base Erosion and Profit Shifting, the BEPS Project is the focus of a rapidly moving effort by the Group of 20 countries to create a new set of international tax principles designed to better capture tax revenue from multinational companies like Apple, Google and Starbucks.

The Obama administration signed on to the BEPS Project in the expectation that it would strengthen the American tax base and enable Washington to hold on to more corporate tax revenues. But as the project heads for its end-of-year deadline and the basic shape of the BEPS principles becomes clear, nobody in Washington is paying attention to a simple fact: The United States lost, and lost big.

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June 9, 2015 in Tax | Permalink | Comments (3)

Why The Mortgage Interest Deduction Should Disappear, But Won't

MortgageMoney and Banking, Why the Mortgage Interest  Tax Deduction Should Disappear, But Won't:

In the run-up to the 2012 U.S. Presidential election, Planet Money asked five economists from across the political spectrum for proposals that they would like to see in the platform of the candidates. The diverse group agreed, first and foremost, on the wisdom of eliminating the tax deductibility of mortgage interest. 

The vast majority of economists probably agree. We certainly do. But it won’t happen, because politicians with aspirations for reelection find it toxic.

What inspires us to discuss this now? An important anniversary in our profession’s understanding of economic policy. Forty years ago, in his celebrated book Equality and Efficiency: The Big Tradeoff, Arthur Okun explained how many policy choices involve a tradeoff between the distribution of income and the size of the economy. That is, the more redistributional a policy, the more of a drag it is on growth.

While much of tax policy works this way, the tax deductibility of mortgage interest does not: it both raises inequality and reduces economic efficiency.

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June 9, 2015 in Tax | Permalink | Comments (6)

Concordia Law School Awarded Provisional ABA Accreditation; Its 11 Graduates Can Take July Bar Exam

ConcordiaNational Law Journal, Concordia Law Secures Provisional ABA Accreditation:

Concordia University School of Law’s inaugural graduating class will be eligible to sit for the July bar examination in Idaho after all.

The American Bar Association’s Council of the Section of Legal Education and Admissions to the Bar voted over the weekend to provisionally accredit the Boise law school—clearing the way for its 11 expected graduates to take the exam. Graduates of schools not accredited by the ABA are ineligible to take the test.

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

Borden: Rethinking The Tax-Revenue Effect Of REIT Taxation

Florida Tax ReviewBradley Borden (Brooklyn), Rethinking the Tax-Revenue Effect of REIT Taxation, 17 Fla. Tax Rev. 527 (2015):

Real estate investment trusts (REITs) have recently made headlines in major media outlets and have caught the attention of lawmakers and analysts because they erode the corporate tax base. REITs are not subject to the entity-level tax that typically applies to corporations. To avoid being taxed on real-estate income, some corporations spin off real estate into REITs. After a REIT spinoff, such corporations rent the real estate from the REIT and continue to use it in their operations. Thus, a mere change in corporate form removes taxable income from the corporation (i.e., erodes the corporate tax base) and eliminates the entity-level tax on income from the spun-off real estate. This erosion of the corporate tax base concerns lawmakers (who have proposed prohibiting tax-free REIT spinoffs), some economists, and the media. Another concern is that the IRS has extended REIT classification to entities that hold non-traditional real estate, such as telecommunications infrastructure, billboards, oil and gas pipeline systems, timber, casinos, prisons, and data centers.

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

Roig: The Case For Retaining Law Faculty Tenure

Jorge R. Roig (Charleston), The First Thing We Do, 47 J. Marshall L. Rev. 1275 (2014):

There is currently a concerted effort to dumb down America. In the midst of this, the American Bar Association’s Council of the Section on Legal Education and Admissions to the Bar recently agreed to propose that tenure for law professors be eliminated as a requirement for accreditation of law schools. This article analyzes the arguments for and against tenure in legal academia, and concludes that the main proposed justifications for eliminating tenure are highly questionable, at best. A lawyer is more than a legal technocrat. Lawyers are policy makers and public defenders. They are prosecutors and activists. And the development of a critical and independent mind is no more important in any area of human action than in the law. There is a concerted effort to turn law schools into automaton production lines. Practice-ready, skills-oriented legal education (quite meritorious in itself) has become code for the manufacture of attorneys capable only of following their corporate clients’ instructions to the tee. The goal of this concerted effort is not a truly practice-ready and skilled attorney. The endgame is a mindless legal machine. That is not what a legal education is about. The survival of critical thought is at stake. This is not just about law professors. This is but one salvo in a much larger war against independent minds.

June 9, 2015 in Legal Education, Scholarship | Permalink | Comments (2)

Obama Administration Opens Door For More Student-Debt Forgiveness, Including Law School Loans

Student LoansWall Street Journal, Obama Administration Opens Door for More Student-Debt Forgiveness:

The Obama administration said it would forgive federal student loans owed by Americans who can show they were lured to colleges by fraudulent recruiting, a move that potentially could involve billions of dollars and is one of the most aggressive measures yet to ease student debt.

The move, announced Monday, is designed first of all to help former students of Corinthian Colleges Inc., a big for-profit chain that collapsed into bankruptcy reorganization this spring. Federal officials accused the company in 2014 of lying to prospective students about its graduates’ job success. ...

The forgiveness push, though, would reach far beyond Corinthian and even the for-profit school sector. Officials said that under the emerging plan, the government will consider forgiving any loans made directly by the government—those held by the majority of the 43 million Americans with student debt—so long as the borrower can document a school persuaded him or her to take out the loan under conditions that would violate state laws.

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June 9, 2015 in Legal Education | Permalink | Comments (4)

Hellwig: The United States Tax Court – An Historical Analysis

HellwigPress Release, W&L Law’s Brant Hellwig Publishes Book on U.S. Tax Court:

Washington and Lee law professor and incoming dean Brant Hellwig recently completed a manuscript detailing the historical evolution and jurisdiction of the United States Tax Court.

The text, titled The United States Tax Court – An Historical Analysis, is an expanded second edition of the seminal Tax Court history published by Professor Harold Dubroff in the late 1970s. Dubroff’s edition was written shortly after Congress established the Tax Court as a court of record under Article I of the Constitution.  The Tax Court commissioned Hellwig to update Dubroff’s work in light of the considerable expansion in the Tax Court’s statutory jurisdiction in recent years.

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June 9, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (0)

ABA Approves Paid Externships, 10% LSAT-Free Classes For Notice And Comment

ABA Logo 2ABA Journal, Proposal to Allow Academic Credit for Paid Externships Moves Forward in ABA:

A proposed change to law school accreditation standards eliminating the current ban on students receiving academic credit for paid externships has been approved for notice and comment by the governing council of the ABA Section of Legal Education and Admissions to the Bar.

Under the proposal, a law school could decide for itself whether a student should receive academic credit for a paid externship or field placement—but only if the school can demonstrate that it has maintained enough control over the student experience to ensure that the requirements of the standards are being met.

The council, which met Friday and Saturday in Minneapolis, also approved for notice and comment two alternative proposed changes to the current rule allowing most law schools to fill up to 10 percent of their entering class with students who haven’t taken the Law School Admission Test. One of the proposals would do away with the rule altogether. The other would make it applicable to all schools.

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

Federal Taxation Of Non-resident Aliens' Wagering Gains From Slot Machines

Denis M. McDevitt, Michael D. McDevitt (Hancock & Dana, Omaha), & Drew M. BouchardMr. Park Goes to D.C.: Federal Taxation of Non-resident Aliens' Wagering Gains from Slot Machines and the Per Session Rule, 48 Creighton L. Rev. 65 (2014):

Nonresident alien individuals who visit the United States and play slot machines in a state where slots are legal have always been subject to tax at a thirty percent rate, unless exempted by treaty, on *66 their U.S. source wagering gains as defined by I.R.C. § 871(a)(1)(A). This tax is enforced by a withholding system that requires casinos to withhold thirty percent of each slot jackpot of $1,200 or more and remit those funds to the United States government. The definition of wagering gains was first addressed in Barba v. United States. The Barba case instituted the per-bet rule that defined wagering gains to be equal to gross winnings taxable under I.R.C. § 871(a). Under the per-bet rule, all wagers and wagering losses were never considered in calculating the amount of tax due. The per-bet rule ignored the fact that gambling is by nature a series of individual bets and had the practical result that no foreign slot player could ever recover any of the taxes withheld by the casino on their jackpots. Between 1983 and 2011, no taxpayer ever questioned the per-bet rule and it was not until the case of Sang Park v. Commissioner, a case recently decided by the United States Court of Appeals for the District of Columbia Circuit, that a court revisited the issue of defining wagering gains for purposes of I.R.C. § 871(a).

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

The IRS Scandal, Day 761

IRS Logo 2Judicial Watch Press Release, Federal Court Issues Ruling Compelling IRS to Provide Answers on Lerner IRS Emails:

Judicial Watch announced that Judge Emmet Sullivan of the U.S. District Court for the District of Columbia granted a Judicial Watch request to issue an order requiring the IRS to provide answers by June 12, 2015, on the status of the Lois Lerner emails the IRS had previously declared lost.  Judicial Watch raised questions about the IRS’ handling of the missing emails issue in a court filing on June 2, 2015, demanding answers about Lois Lerner’s emails, which had been recovered from backup tapes.  Judge Sullivan issued the court order on June 4, 2015.

Judicial Watch has argued that the IRS misled the court and Judicial Watch by withholding the truth about the existence and content of the backup tapes.  In response to Judicial Watch’s litigation and pressure from Congress, some of Lerner’s emails had been recovered by the Treasury Inspector General for Tax Administration (TIGTA) despite testimony from the IRS Commissioner and representations to Judge Sullivan that Lerner’s emails had been irretrievably lost and destroyed. ...

“The Obama IRS obstructed and lied to a federal judge and Judicial Watch in an effort to hide the truth about Lois Lerner’s emails,” said Judicial Watch President Tom Fitton. “The IRS, including its top political appointees IRS Commissioner John Koskinen and General Counsel William J. Wilkins, has much to answer for over its contempt of court and of Congress.  And the Department of Justice officials enabling this cover-up in court need to be held accountable, as well.  The IRS is out of control and Judicial Watch is happy that Judge Sullivan has taken this key step to remind the agency that it is accountable to the rule of law and the American people.”

 

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June 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, June 8, 2015

Morse: Safe Harbors, Sure Shipwrecks

Safe HarborSusan C. Morse (Texas), Safe Harbors, Sure Shipwrecks, 49 UC Davis L. Rev. ___ (2016):

In law, a safe harbor describes behavior that will not be penalized, and leaves other facts that fall outside the safe harbor to be judged case-by-case. A sure shipwreck, as I call it, is the mirror image. It describes behavior that violates the law as a matter of rule, and leaves other conduct to be judged by a standard. Prior literature analyzes rules and standards at length. But it has largely missed safe harbors and sure shipwrecks, even though these hybrids are everywhere in statutory, regulatory and case law.

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June 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

NY Times: As FIFA Scandal Grows, Focus Turns To Auditor KPMG

FifakpmgNew York Times, As FIFA Scandal Grows, Focus Turns to Its Auditors:

Despite longstanding suspicion of corruption, world soccer’s governing body has received a clean bill of financial health for 16 consecutive years from KPMG, one of the world’s top auditing, accounting and consulting firms.

No one has challenged the accuracy of the annual reports of the body, FIFA, which are prepared according to international accounting standards by KPMG’s office in Zurich, where FIFA is based. But that only heightens the puzzling disconnect between the different pictures that are emerging of FIFA as an organization: riddled with bribes and kickbacks in the view of prosecutors, yet spotless according to the outsider most privy to its internal financial dealings.

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June 8, 2015 in Tax | Permalink | Comments (2)

WSJ: The New Rules Of Offshore Accounts

WSJWall Street Journal:  The New Rules of Offshore Accounts, by Laura Saunders:

Crucial deadlines are approaching for millions of U.S. taxpayers who live abroad or have offshore financial ties.

For expatriates, the annual income-tax filing deadline is normally June 15, instead of April 15. In addition, all U.S. taxpayers with offshore accounts totaling more than $10,000 in 2014—regardless of where they live—have until June 30 to file FinCen Form 114, known as Fbar, a report giving details of the accounts.

Despite the prospect of stiff penalties for nonfiling that can claim 50% or more of an offshore-account balance, many people who probably should be filing the necessary forms aren’t doing so. The U.S. State Department recently raised its estimate of the number of U.S. citizens living abroad to 8.7 million from 7.6 million, not including military personnel—yet fewer than one million people a year file forms that are often required for routine foreign accounts. ...

Taxpayers confronting these issues often face tough decisions, such as how or whether to come clean about past missteps and comply with especially onerous rules in the future. Some of them are even considering whether to retain their U.S. citizenship.

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June 8, 2015 in Tax | Permalink | Comments (0)

Joint Tax Committee Releases IRS Disclosures of Tax Return Information, 2014

Joint Tax CommitteeThe Joint Committee on Taxation has released Disclosure Report for Public Inspection Pursuant to Internal Revenue Code Section 6103(p)(3)(C) for Calendar Year 2014 (JCX-89-15):

Section 6103(p)(3)(C) provides that the Secretary of the Treasury shall, within 90 days after the close of each calendar year, furnish to the Joint Committee on Taxation for disclosure to the public a report which provides, with respect to each Federal agency and certain other entities, the number of: (1) requests for disclosure of returns and return information (as such terms are defined in § 6103(b)); (2) instances in which returns and return information were disclosed pursuant to such requests or otherwise; and (3) taxpayers whose returns, or return information with respect to whom, were disclosed pursuant to such requests. In addition, the report must describe the general purposes for which such requests were made.

Pursuant to § 6103(p)(3)(C), the IRS prepared a disclosure report for public inspection covering calendar year 2014. ... This document sets forth the report of the IRS, verbatim.

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June 8, 2015 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

NY Times: Why I Defaulted on My Student Loans

Student LoansNew York Times Sunday Review:  Why I Defaulted on My Student Loans, by Lee Siegel:

Years later, I found myself confronted with a choice that too many people have had to and will have to face. I could give up what had become my vocation (in my case, being a writer) and take a job that I didn’t want in order to repay the huge debt I had accumulated in college and graduate school. Or I could take what I had been led to believe was both the morally and legally reprehensible step of defaulting on my student loans, which was the only way I could survive without wasting my life in a job that had nothing to do with my particular usefulness to society.

I chose life. That is to say, I defaulted on my student loans.

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June 8, 2015 in Legal Education | Permalink | Comments (7)

Fleischer: How A Carried Interest Tax Could Raise $180 Billion

NY Times Dealbook (2013)New York Times Deal Book:  How a Carried Interest Tax Could Raise $180 Billion, by Victor Fleischer (San Diego):

When Hillary Rodham Clinton opened her campaign for the Democratic presidential nomination in Iowa, the first substantive issue she raised was a safe one: carried interest. “There’s something wrong when hedge fund managers pay lower tax rates than nurses or the truckers that I saw on I-80 as I was driving here,” she said.

President Obama also raised the issue at a recent forum on inequality, calling fund managers our society’s “lottery winners.” Taxing carried interest at a low rate is, for many of us, a simple issue of fairness. The richest among us should not pay tax at a low rate on labor income.

Private equity moguls and other defenders of the status quo object to the characterization of carried interest as labor income. But they also argue that there just isn’t that much money at stake.

Taxing carried interest at ordinary income rates would raise about $18 billion over 10 years, according to a Treasury estimate of President Obama’s recent budget proposal. The Joint Committee on Taxation, which scores congressional legislation, has made similar estimates in the past.

One or two billion dollars a year is more than most of us can find in between the seat cushions. It would roughly double what Congress gives the I.R.S. to spend on information technology. Still, the number is small enough that it makes raising the issue seem petty and vindictive. Referring to carried interest has become a badge of solidarity, a touchstone for measuring class allegiances.

We should not overlook the substance of the issue. By my calculations, the government’s estimate is low by an order of magnitude. Taxing carried interest at ordinary rates would generate about $180 billion in revenue over 10 years. ...

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June 8, 2015 in Tax | Permalink | Comments (2)

Death Of Len Terr

TerrLeonard B. Terr, a tax partner at Baker & McKenzie (Washington, D.C.), died last Tuesday at the age of 69.  Here part of the obituary in the Washington Post:

Len is survived by his wonderful family of which he was tremendously proud: his wife, Linda, his children, Jessica, Jeremy, Amanda and Ashley, and his two beautiful grandsons, Evan and Nate.

Len was born in Atlantic City, NJ, and grew up in Philadelphia where he graduated from LaSalle College in 1967. He went on to obtain his A.M. and Ph.D. from Brown University in 1968 and 1971 respectively. Before taking up law, he was an instructor in English at Brown University, and an assistant professor of English at Wayne State University and Elmira College. ... His poetry was published in numerous literary publications. Len consistently reflected in his daily life this diverse and deep background in the arts, and shared it with friends and colleagues through his charming wit and eloquence.

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June 8, 2015 in Obituaries, Tax | Permalink | Comments (0)

Crespi: The 'Tax Bomb' Facing Lawyers Who Enroll In Income-Based Student Loan Repayment Plans

IBRGregory Scott Crespi (SMU), Should We Defuse the "Tax Bomb" Facing Lawyers Who are Enrolled in Income-Based Student Loan Repayment Plans?:

Starting in the early-2030's each year thousands of mid-career lawyers who have previously incurred large student loan debts, and who unfortunately have been able to earn only relatively modest annual incomes in the 20 or 25 years following their law school graduation, will be subject to large cancellation of indebtedness-based federal and sometimes also state income tax obligations. These tax bills will often be in the neighborhood of $50,000 to $100,000 and in some instances even larger. Many of these lawyers will likely have failed to adequately provide for this large tax obligation and will find that it will impair or even devastate their retirement plans.

The phrase “tax bomb” is an apt one to describe this large tax obligation that will be imposed on income that is attributed to but not actually received by a relatively small group of taxpayers. It will result because a large portion of the student loan debts that have been incurred by many law school graduates will eventually be forgiven under one or another variant of the increasingly popular federal Income-Based Repayment Plan, and those forgiven debts will then be treated under the Internal Revenue Code as taxable income.

This article explains how this tax bomb was created and how the various statutes and regulations that define its scope and size have evolved over time, and how much but not all of its impact will be substantially reduced by the Department of Education’s proposed new Revised Pay as You Earn rules that will be in force as of December of 2015.

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June 8, 2015 in Legal Education, Scholarship, Tax | Permalink | Comments (14)

The IRS Scandal, Day 760

IRS Logo 2Forbes, IRS' Lois Lerner Got Pension, $129K Bonus, New Call For Criminal Charges, by Robert W. Wood:

 Many Republicans are still upset that Lois Lerner of the IRS got a pass from the Obama Justice Department. As the IRS scandal hit day 750, 24 Republicans sent a letter to Attorney General Loretta Lynch, who recently replaced Eric Holder as the nation’s top law enforcement officer. It seems unlikely that the new AG will upset the apple cart. Still, the 24 House members want the new AG to criminally prosecute Lois Lerner, the IRS official at the center–if not the top–if the agency’s targeting scandal. ...

Ms. Lerner will probably not face any further action. Yet while she presided over alleged discrimination against conservative nonprofits, Ms. Lois Lerner received $129,000 in bonuses. Some people have asked but for what.

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June 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, June 7, 2015

NY Times: The Tax Consequences Of Dennis Hastert's Payments To Alleged Child Abuse Victim

HastertNew York Times:  When It’s a Crime to Withdraw Money From Your Bank, by Josh Barro:

Dennis Hastert has not been indicted on a charge of sexual abuse, nor has he been indicted on a charge of paying money he was not legally allowed to pay. The indictment of Mr. Hastert, a former House speaker, released last week, lays out two counts: taking money out of the bank the wrong way, and then lying to the F.B.I. about what he did with the money. ...

Paul Caron, a tax law professor at Pepperdine University, noted that the person who was paid money by Mr. Hastert may have owed income tax on the payments, whether they constituted a settlement, extortion or something else. Yes, even proceeds from extortion are taxable income; there was a Supreme Court case about the matter in 1952.

New York Times:  If Hastert Was Extorted, He Could Deduct Some Losses From His Taxes, by Josh Barro:

When I was researching my article about Dennis Hastert’s indictment on charges that he improperly withdrew large sums of money from a bank, one question I had was whether any tax was owed on the payments Mr. Hastert was said to have made.

For tax purposes, were the payments gifts? Fees? A settlement? Hush money? Any of these options would have tax implications — implications that could provide additional justification for the prosecution, since one of the key motivations of anti-money laundering laws is to prevent people from evading taxation by making large payments in cash.

Tax experts I spoke with agreed that the payments would constitute a settlement or extortion. In either case, the responsibility for reporting the payments would lie not with Mr. Hastert but with the payments’ recipient, identified in the indictment as “Individual A.”

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June 7, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

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. [287 Downloads]  Taxation of E-Commerce, by Orkhan Abdulkarimli (Baku State)
  2. [206 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S. Treasury Department)
  3. [166 Downloads]  Reducing Inequality With A Retrospective Tax On Capital, by James Kwak (Connecticut)
  4. [144 Downloads]  Citizenship Taxation, by Ruth Mason (Virginia)
  5. [123 Downloads]  What Does Voluntary Tax Compliance Mean?: A Government Perspective, by J. T. Manhire (U.S. Treasury Department)

June 7, 2015 in Legal Education, Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

7 Reasons You Shouldn’t Go To Law School (Unless You Really, Really Want To Be A Lawyer)

Vox7 Reasons You Shouldn’t Go to Law School (Unless You Really, Really Want to be a Lawyer), by Amanda Taub:

I went to [Georgetown] law school. I loved all three years of it. Since then, I've had an interesting and fulfilling career: I practiced both human rights law and commercial law, clerked in federal court, taught law courses as an adjunct, and now spend my days writing about fascinating policy issues, many of which are law-related.

Perhaps that is why people expect me to reply with an enthusiastic "Yes, definitely!" when they ask me if they should go to law school.

And why they are surprised when, instead, my response is "Probably not — unless you're really sure you want to be a lawyer."

That's because over the years, I have realized that the people asking me that question aren't really asking for my advice about their careers in the law. Rather, their real question is almost always something else: will law school be a solution to my fears about the future?

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June 7, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 759

IRS Logo 2Fox News op-ed:  More IRS Outrage: Agency Used 'Hundreds of Lawyers' to Hide Information from Congress, by Jay Sekulow:

It’s been a very bad week for the Internal Revenue Service (IRS) – which translates into a very bad week for the American people. ...

Now, we learn that as Congress began its investigation into the unlawful scheme targeting conservative and Tea Party groups the IRS used “hundreds of attorneys” to hide critical information from Congress.

According to new bombshell testimony, the IRS set up a previously unknown “special project team” comprised of “hundreds of attorneys,” including the IRS Chief Counsel (one of only two politically appointed positions at the IRS).

The “special project” this team was given?  Concealing information from Congress.

The IRS’s director of privacy, governmental liaison, and disclosure division, Mary Howard, testified that soon after the IRS targeting scandal was revealed, the IRS “amassed hundreds of attorneys to go through the documents [requested by Congress] and redact them.” She told Congress that once the “special project team” was created and operational, she never saw requests for information.

Her testimony is clear: As soon as the IRS targeting scandal broke, the IRS set up a special team of hundreds of attorneys, including President Obama’s political head of the Chief Counsel’s office, to keep requests for publicly available information away from the person who would normally review those documents and turn them over to Congress and the public.  That “special” team then overly redacted, delayed, and determined which documents it wanted Congress to see.

After setting up a special “group” to target and delay applications by Tea Party groups for tax-exempt status, the IRS set up a new “special project team” to delay and redact information from Congress about that targeting.  Talk about a cover-up.

When asked about these revelations and the ongoing investigation by Congress into the IRS and former top IRS official Lois Lerner’s involvement, Howard testified, “I think that Lois Lerner was the tip of the iceberg.”

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June 7, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, June 6, 2015

This Week's Ten Most Popular TaxProf Blog Posts

Independent Commission For The Reform of International Corporate Taxation Calls For New Measures To Combat Global Tax Dodging

ICRICTThe Independent Commission For The Reform of International Corporate Taxation, a coalition of ten charities and human rights groups and Nobel Prize winning economist Joseph Stiglitz, has rejected the OECD's proposed measures to combat global tax dodging by multinational firms and instead called for a global minimum tax and eventually international formulary apportionment.

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June 6, 2015 in Tax, Think Tank Reports | Permalink | Comments (0)

Lawsuit: Infilaw Pays Low Performing Law Grads $5k To Defer Bar Exam To Pump Up School's Pass Rate

Arizona Summit Logo (2015)National Law Journal, Lawsuit: Infilaw Paying Law Grads To Put Off Bar Exam:

A former assistant director of financial aid at Arizona Summit Law School has sued the school, alleging it unlawfully fired her in 2013 after she refused to submit false state tax documents and complained of misleading information about student success.

Paula Lorona, who was also a part-time student at the Phoenix school and graduated in January, claimed that that Arizona Summit and the two other for-profit law schools owned by Infilaw Corp.—Florida Coastal School of Law and Charlotte School of Law—in May 2014 began paying poorly performing students $5,000 to delay taking the bar exam, to prop up declining bar-passage rates.

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June 6, 2015 in Legal Education | Permalink | Comments (6)

The IRS Scandal, Day 758

IRS Logo 2Wall Street Journal:  The Clinton ‘Charity’ Begins at Home, by Kimberley A. Strassel:

The scandal of the century at the IRS was that agency’s secret targeting of conservative nonprofits. Perhaps a close second is the scandal of what the IRS hasn’t been investigating: the Clinton Foundation.

The media’s focus is on Hillary Clinton’s time as secretary of state, and whether she took official actions to benefit her family’s global charity. But the mistake is starting from the premise that the Clinton Foundation is a “charity.” What’s clear by now is that this family enterprise was set up as a global shakedown operation, designed to finance and nurture the Clintons’ continued political ambitions. It’s a Hillary super PAC that throws in the occasional good deed.

That much is made obvious by looking at the foundation’s employment rolls. Most charities are staffed by folks who have spent a lifetime in nonprofits, writing grants or doing overseas field work. The Clinton Foundation is staffed by political operatives. It has been basically a parking lot for Clinton campaign workers—a comfy place to draw a big check as they geared up for Hillary’s presidential run. ...

This is typically Clinton, which means it is typically on the edge of legal. The foundation operates as a nonprofit, raising hundreds of millions as a “charity.” We know from foundation tax filings that it spends an extraordinary portion of its funds on travel and staff. How many donors are unaware that their money is going to keep Clinton friends in full employment? How many are aware and give precisely for that reason—to help elect a new president, one who will gratefully remember their help?

Lucky for the Clintons, nobody looks. As a charity (and unlike a super PAC), the foundation is subject to almost no oversight. The IRS in the past has stripped charities of their tax-exempt status when they are shown to be operating for a purpose other than benevolence. The agency has shown no real interest in the Clinton Foundation. Go figure.

Clinton allies are insisting to all who listen that the foundation exists to do good. It does. It exists to do very good things for Hillary and Bill and all their longtime allies. And in that, it has succeeded beautifully.

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June 6, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, June 5, 2015

Congratulations, New Pepperdine Lawyers

I had the pleasure tonight of attending the swearing in ceremony tonight for the 15 Pepperdine graduates who passed the February California bar exam.  It was great to catch up with my former student John Kristofferson and his father, Kris Kristofferson:

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June 5, 2015 in Legal Education | Permalink | Comments (3)

Stark Delivers Keynote Address Today On Tax Policy In The Super Zips At L.A. Bar Association

Stark (2014)Kirk Stark (UCLA) delivers the keynote address on Tax Policy in the Super Zips at the Los Angeles County Bar Association Dana Latham Award Luncheon today:

As the distribution of income and wealth has grown more skewed, households have increasingly sorted into income homogenous neighborhoods. The rise of income segregation entails increased fiscal segregation as well, as the operation of federal tax law becomes more differentiated across space. This paper concerns one dimension of the tax law’s disparate geographical impact—i.e., the operation of the federal income tax in the nation’s wealthiest communities, or “Super ZIPs.” Using IRS zip code level data for tax year 2012, the paper examines several key federal income tax characteristics for these zip codes (e.g., AGI, income composition, itemized deductions), comparing these figures to the same data for the nation as a whole as well as select neighboring zip codes on the opposite end of the income distribution. The resulting analysis reveals a stark perspective on income segregation in the United States through the lens of the federal tax system.

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June 5, 2015 in Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

10th Annual Junior Tax Scholars Workshop Concludes Today At Texas

Texas LogoPanel #5:  Administration

Andrew Blair-Stanek (Maryland), Tailoring Tax
Commentators:  Philip Hackney (LSU), Fadi Shaheen (Rutgers-Newark)

Philip Hackney (LSU), Tied Up in (K)Nots
Commentators:  Kim Brooks (Schulich), Christine Allie (Widener)

Jake Brooks (Georgetown), Quasi-Public Spending 
Commentators:  Leigh Osofsky (Miami), Micah Burch (Sydney)

Leigh Osofsky (Miami), Strategic Simplicity and the Tax Law 
Commentators:  Andrew Blair-Stanek (Maryland), Itai Grinberg (Georgetown)

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June 5, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

1st Annual Mid-Career Tax Professors Workshop Concludes Today At Ohio State

Ohio State LogoPanel #5

Miranda Perry Fleischer (San Diego), Making The Charitable Deduction More Charitable
Commentator:  Benjamin Leff (American)

Brian Galle (Georgetown), Pay It Forward? Law and the Problem of Restricted-Spending Philanthropy
Commentator:  Stephanie Hoffer (Ohio State)

Samuel Brunson (Loyola-Chicago), Tax & Religious Exceptions
Commentator:  Bobby Dexter (Chapman)

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June 5, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The U.S. News Rankings And Law School Grading Curves

JD Supra, Law School Ranks and Law School Curves:

[A]n extensive list of law school GPA curves can be found at Wikipedia. That list contains target class median GPAs for roughly 100 law schools. The schools represented there are a fairly representative cross-section of all the law schools in the country; most important for our purposes, there is no difference between the mean U.S. News ranking for schools listed and those which do not appear (t = 1.27, p = 0.21).

CurvePlot2

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June 5, 2015 in Law School Rankings, Legal Education | Permalink | Comments (0)

2014 Law Grad Job Placement Rankings By Region

ABA Logo 2Institute for the Advancement of the Legal System, Guess What Region’s Law Schools Had Best Employment Rates in 2014

Three years ago, we launched Law Jobs: By the Numbers, an interactive online tool that gives prospective law students the most transparent and complete law school employment rate information available.

With the release of the latest ABA employment data, we now have four years of data stored in the tool. ... In 2011, only 63% of graduates landed jobs that are considered full-time/long-term and require bar passage or view a JD as an advantage. That percentage increased to 65.7% in 2012, 67.1% in 2013, and 71.1% in 2014.

2014 full-time, long-term bar-passage required and J.D. advantage by region:

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June 5, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 757

IRS Logo 2Washington Examiner, IRS Sends Congress Unsigned Form Letter to Brush Off Demands for Clinton Foundation Investigation:

The IRS responded to a Republican request for an investigation into the Clinton Foundation's tax-exempt status with a one-page form letter that starts with "Dear Sir or Madam."

In May, more than 50 House Republicans asked the IRS to review the Clinton Foundation's tax-exempt status, after it became clear that the foundation had failed to report millions of dollars in grants from foreign governments.

That letter, led by Rep. Marsha Blackburn of Tennessee, said a review was "appropriate" given that this money was accepted and not reported while Hillary Clinton was serving as secretary of state.

In response, the IRS sent Blackburn a form letter, which Blackburn received late Wednesday. The letter thanked her for submitting the request, and said the IRS has an "ongoing examination program" to ensure tax-exempt groups comply with tax law.

"The information you submitted will be considered in this program," it said. The letter was from Margaret Von Lienen, director of exempt organizations examinations, but she didn't sign it.

Blackburn said the perfunctory response is far below the level of customer service members of Congress should be getting.

"The IRS response is not acceptable and lacking in the requisite tact that should accompany a congressional inquiry," she said. "It is unbelievably disrespectful that Margaret Von Lienen couldn't even take the few extra seconds needed to sign the letter."

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June 5, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, June 4, 2015

Shaviro Applauds Tax Policy Community's Influence On Supreme Court's Decision In Comptroller v. Wynne

JotwellDaniel Shaviro (NYU), Discrimination Against Interstate Commerce Vs. Double Taxation (Jotwell) (reviewing Michael Knoll (Pennsylvania) & Ruth Mason (Virginia), What Is Tax Discrimination?, 121 Yale L.J. 1014 (2012); Ryan Lirette (Goodwin Procter, Boston) & Alan Viard (American Enterprise Institute), State Taxation of Interstate Commerce and Income Flows: The Economics of Neutrality (American Enterprise Institute 2014)):

For good reasons on balance, the best academic work in tax (and other) law has moved far away in recent decades from focusing primarily on which answers to particular questions are legally correct. Not only have scholars wanted to pursue larger game than just the current, inevitably flawed, state of the law, but it is often hard to say what “legal correctness” means. Writing about policy, rather than just about legal correctness, not only broadens the menu of possible topics, but permits one to devise clearer criteria for assessing the merits of competing arguments.

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June 4, 2015 in Scholarship, Tax | Permalink | Comments (0)

ABA To Consider Paid Externships, 10% LSAT-Free Classes

ABA Logo 2National Law Journal, Paid Law Student Externships Top ABA Council’s Agenda:

Should law schools grant students academic credit for externships that pay student participants? The ABA’s Council of the Section of Legal Education and Admissions to the Bar has debated that question for more than a year, and will take it up once again this week in Minneapolis.

Also on the agenda during a two-day meeting that begins Friday is reconsideration of an accreditation standard that allows some law schools to admit up to 10 percent of their classes from among high-performing undergraduates from their own university who have not taken the Law School Admission Test. Additionally, the council will take up proposals to broaden the ABA’s law school diversity rules.

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June 4, 2015 in Legal Education | Permalink | Comments (1)

Rosenzweig: Source As A Solution To Residence

Florida Tax ReviewAdam H. Rosenzweig (Washington University), Source as a Solution to Residence, 17 Fla. Tax Rev. ___ (2015):

The choice between source-based and residence-based taxation has defined the terms of the debate for the international tax regime since its inception in the early 1900's. The thesis of this Article is that the construct of source and residence as two competing and irreconcilable doctrines is largely incorrect as a legal matter. Rather, both source rules and residence rules can and should be thought of solely as instrumental tools to divide taxing authority in a globalized world with mobile capital. Under this approach, there is no reason why “source” rules as a doctrinal matter need to be used only for “source” taxation as an economic matter, or that “residence” rules as a doctrinal matter need be used for “residence” taxation as an economic matter. Instead, the source rules as a doctrinal matter can actually be used to solve the problems of the residence rules as a doctrinal matter. Put differently, source and residence as doctrinal rules can converge into a single concept in the modern global economy.

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June 4, 2015 in Scholarship, Tax | Permalink | Comments (0)

We Don’t Need Fewer Lawyers. We Need Cheaper Ones.

Washington Post op-ed:  We Don’t Need Fewer Lawyers. We Need Cheaper Ones., by Martha Bergmark (Voices for Civil Justice):

In well over two thirds of critical cases in America’s civil courts, people appear without a lawyer, even though the stakes are often just as high as in criminal proceedings. Many people suffer crushing losses in court not because they’ve done something wrong, but simply because they don’t have legal help.

The future of the legal profession is unclear. Student loan debt for law graduates now averages $84,000 for public law schools and $122,000 for private law schools, reflecting the dramatic rise in the cost of attending law school in the past three decades. Despite the growing costs for students, long-term job prospects have become less certain. One study found that among 2010 law school graduates, 20 percent hold jobs that don’t require a law degree. Only 40 percent are employed by law firms, where the financial returns are highest.

Some say that the recent decline in law school enrollment simply marks a natural correction in the legal industry, because law schools are producing more lawyers than the country needs. But the latest studies, and J.’s story, show the opposite: Americans need legal help more than ever. ...

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June 4, 2015 in Legal Education | Permalink | Comments (2)

I'm A Liberal Professor, And My Liberal Students Terrify Me

VoxVox op-ed, I'm a Liberal Professor, and My Liberal Students Terrify Me, by Edward Schlosser:

I'm a professor at a midsize state school. I have been teaching college classes for nine years now. I have won (minor) teaching awards, studied pedagogy extensively, and almost always score highly on my student evaluations. I am not a world-class teacher by any means, but I am conscientious; I attempt to put teaching ahead of research, and I take a healthy emotional stake in the well-being and growth of my students.

Things have changed since I started teaching. The vibe is different. I wish there were a less blunt way to put this, but my students sometimes scare me — particularly the liberal ones.

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June 4, 2015 in Legal Education | Permalink | Comments (6)

10th Annual Junior Tax Scholars Workshop Kicks Off Today At Texas

Texas LogoPanel #1:  Compliance

Tessa Davis (South Carolina), Of Tax Evasion and Bad Citizens
Commentators:  Emily Satterthwaite (Toronto), Randle Pollard (Indiana)

Emily Satterthwaite (Toronto), Tax Compliance Learning
Commentators:  Susie Morse (Texas), Andy Grewal (Iowa)

Susan Morse (Texas), Tax Anti-Avoidance Law in Australia and the United States
Commentators:  Tessa Davis (South Carolina), Allen Madison (South Dakota)

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June 4, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

1st Annual Mid-Career Tax Professors Workshop Kicks Off Today At Ohio State

Ohio State LogoPanel #1

Rifat Azam (Radzyner), Responsible Corporate Tax
Commentator:  Samuel Brunson (Loyola-Chicago)

Adam Rosenzweig: (Washington University), Electing Arbitrage: Tax Elections, Tax Fictions and Cross-Border Tax Arbitrage
Commentator:  Rebecca Kysar (Brooklyn)

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June 4, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Bloom Receives Albany Law School's Annual Faculty Scholarship Award

BloomIra Mark Bloom, Justice David Josiah Brewer Distinguished Professor of Law, received Albany Law School's annual faculty scholarship award:

Professor Ira Bloom received the Faculty Award for Excellence in Scholarship for producing a body of work that that is seen as influential and required reading in his field for New York state and the country. Professor Bloom is the author of numerous law review articles, co-author of nine law school casebooks on tax and trusts and estates, and principal author of the two-volume treatise Drafting New York Wills and Related Documents.

June 4, 2015 in Legal Education, Scholarship, Tax, Tax Profs | Permalink | Comments (0)