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Tuesday, October 28, 2014

The IRS Scandal, Day 537

IRS Logo 2Biz Pac Review:  IRS Scandal Is This Generation’s Watergate, Woodward Says; So Why Knock Fox News?:

As the 40th anniversary year of President Nixon’s resignation draws to an end, one of the newspapermen who helped bring it about said the Obama administration’s IRS scandal — which has faded from the headlines in recent weeks — should be this generation’s answer to Watergate.

In fact, Washington Post associate editor Bob Woodward told Fox News’ Howard Kurtz in an interview, it would be just the kind of job a much younger Woodward might tackle himself, along with Watergate investigative partner Carl Bernstein.

“The reality now in my view is that in the Obama administration, there are lots of unanswered questions about the IRS, particularly,” Woodward said in an interview broadcast Sunday.

“If I were young, I would take Carl Bernstein and move to Cincinnati where that IRS office is and set up headquarters and go talk to everyone.”

House Committee on Oversight and Government Reform:  Time for the Truth and an End to IRS Targeting Once and For All:

House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) said: “We have stopped an IRS targeting effort that treated conservatives differently and we have put the brakes on a new Administration effort to target political participation through regulation. But we have not fixed the IRS or finished our investigation of targeting that started under Lois Lerner. This IRS, this Treasury Department, and this White House have not given Congress the cooperation they promised – they have attempted to stonewall us. This new presentation should remind Americans that this is not over: the House of Representatives continues our investigation, our demand for a credible criminal probe, and to protect the rights of all Americans to participate freely and openly in the political process.”

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October 28, 2014 in IRS Scandal, Tax | Permalink | Comments (4)

Monday, October 27, 2014

Turmel Presents The Reasons of Taxation: Efficiency, Freedom, Equality Today at McGill

TurmelPatrick Turmel (Laval University, Department of Philosophy) presents The Reasons of Taxation: Efficiency, Freedom, Equality (with David Robichaud (University of Ottawa, Department of Philosophy)) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

In Capital in the 21st Century, Thomas Piketty argues for a series of controversial policy recommendations, such as a substantial increase in tax rates on higher incomes and a global tax on capital whose explicit aim is to halt the current spiral of inequality. Piketty’s main argument for these recommendations is not moral, but economic. Indeed, higher tax rates on top revenues and a progressive global tax on capital have not much to do with social justice or equality per se. According to Piketty, they are mostly needed in order to correct the market and maximize efficiency. But Piketty also put forth democratic reasons in favour of fighting inequalities, since they not only threaten the market, but also the very foundations of political freedom. These two types of reasons – reasons of efficiency and reasons of freedom - certainly go a long way to justify fighting the current dynamics of inequality and thus resisting the return of the Belle Époque’s patrimonial capitalism. But they remain somehow weak, when looked at from the perspective of most theories of social justice. They certainly don’t have much normative force when it comes to justifying important redistribution of wealth, as social justice seems to call for. At the very least, they fall short of creating a complete argument. The aim of this paper is to contribute to filling this gap by showing that alongside reasons of efficiency and freedom, a third type of reasons should play a central role in our understanding and justification of taxation, namely: reasons of equality.

October 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Crane Presents What Should Be the Criteria for Tax-base Design? Today at Loyola-L.A.

CraneCharlotte Crane (Northwestern) presents What Should Be the Criteria for Tax-base Design? at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

The legal academic discussions about the choice of tax base have paid little attention to the interactive effects of tax base choices with political and social institutions. Some work has been done by sociologists, political scientists and economic historians that connects the choice of tax base to the cultures and institutions that chose them that demonstrates the importance of taxes to the possibility of stable political institutions. Very little thought is given to the effect of the choice of tax base on the institutions that will evolve in response to this choice. These byproducts of taxation can be as obvious as a new cadre of tax collectors loyal to the government (but likely to insist that the tax remain in place) or as subtle as a population that learns to keep its accounts under a uniform methods or that develops uniform modes of doing business so as to avoid complications in tax compliance. This paper will explore several episodes in the history of taxes in the United States in which those making the choice were keenly aware of the political institutions that would result not just from the provision of a stable revenue source, but from the tax base chosen to provide that revenue.

Edward McCaffery (USC) is the commentator.

October 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Vanguard Seeks to Dismiss Whistleblower Suit by its Former Tax Lawyer

VanguardFollowing up on my previous posts (links below) on the whistleblower suit brought by a former Vanguard tax lawyer alleging that the mutual fund giant evaded over $1 billion in taxes:  the Philadelphia Inquirer reports that Vanguard has filed a motion to dismiss the law suit:

Vanguard Group, the Malvern mutual fund giant, has responded to a New York whistleblower lawsuit by former Vanguard tax lawyer David Danon with accusations of betrayal, theft and ethics violations the company says should bar him or his lawyers from bringing the complaint.

The company also offers a defense of Vanguard's "unique" legal structure, noting company officials have testified about its practices before Congress, and widely publicized its arrangements since its founding by John C. Bogle 40 years ago.

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October 27, 2014 in Tax | Permalink | Comments (0)

Call for Papers: IFA International Tax Symposium

IFAThe International Fiscal Association has issued a Call for Papers for the Second International Tax Research Symposium in Basel, Switzerland:

We are pleased to announce the call for papers for the Second International Tax Research Symposium held in conjunction with the 69th Congress of the International Fiscal Association in Basel, Switzerland (August 30 to September 3, 2015). After the success of the first International Tax Research Symposium held during the IFA Congress in Boston in 2012 we are delighted to invite you for the Second International Tax Research Symposium in Basel. The International Tax Research Symposium aims to provide a platform for international scholars in international taxation. The Second IFA International Tax Symposium will be held on Sunday, August 30, 2015 (afternoon) in Basel and is supported by the International Fiscal Association. 

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October 27, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

President of Macalester College Calls for University of North Carolina to Lose its Accreditation Over Academic Fraud Scandal

Chronicle of Higher Education op-ed:  UNC-Chapel Hill Should Lose Accreditation, by Brian Rosenberg (President, Macalester College):

UNCThe revelations from the report on the academic-fraud scandal at the University of North Carolina at Chapel Hill have been startling: More than 3,000 students over a period of 18 years were awarded grades and credit for nonexistent courses.

But much of what has been said and written to date about the extraordinary failures in ethics and oversight seems to miss both the seriousness of the misbehavior and the extent to which it strikes at the core of any college or university.

This is not chiefly an athletics issue, though the students involved are disproportionately intercollegiate athletes. Nor is it primarily a matter for the NCAA, which is more a cause of than a solution to the problem of athletics in American higher education.

This is an issue of institutional integrity, a violation of the most basic assumption upon which the credibility of any college or university is based: that the grades and credits represented on the transcripts of its students are an accurate reflection of the work actually done. Absent this assurance, a transcript—a degree—from the institution has lost its meaning.

What has been uncovered in the Wainstein report at Chapel Hill is not an isolated incident but a barely concealed process of falsification that persisted for well over a decade, involved more than one in five of all the university’s athletes during that period, and was either known to or willfully ignored by many officials in positions of responsibility. ...

I have little interest in whatever penalties the NCAA chooses to impose upon Chapel Hill’s athletics programs or that the university chooses to impose upon itself. As I said, this is not fundamentally an issue about sports but about the basic academic integrity of an institution. Any accrediting agency that would overlook a violation of this magnitude would both delegitimize itself and appear hopelessly hypocritical if it attempted, now or in the future, to threaten or sanction institutions—generally those with much less wealth and influence—for violations much smaller in scale.

Most of us work very hard to conform to the standards imposed by our regional accrediting agencies and the federal government. If falsified grades and transcripts for more than 3,000 students over more than a decade are viewed as anything other than an egregious violation of those standards, my response to the whole accreditation process is simple: Why bother? ...

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October 27, 2014 in Legal Education | Permalink | Comments (14)

Brooks: Income-Based Repayment and the Public Financing of Higher Education

John R. Brooks II (Georgetown), Income-Based Repayment and the Public Financing of Higher Education:

IBR 2The growth in higher education costs has outrun inflation for decades, in part for reasons outside of an institution’s control. This has serious distributional consequences, given that higher education is a quasi-public good that should be consumed widely. Full public financing is a possible answer to the distributional and spillover problems, but the budgetary impact of doing so makes that close to politically impossible in the United States.

Except that the federal government has, to a first approximation, already created a system of public financing of higher education, paid for with progressive taxation: The Income-Based Repayment student loan program. As of 2010, the federal government provides essentially all student loans, and as of 2012, students may pay no more than 10% of discretionary income to service those loans. After a maximum of 20 years, the remaining debt is forgiven — for any borrower, regardless of degree, career, or debt load. Thus higher education tuition is paid by the government and funded with something that looks very much like a tax on income.

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October 27, 2014 in Legal Education, Scholarship, Tax | Permalink | Comments (1)

Avi-Yonah Reviews Kleinbard's We Are Better Than This

We Are Better Than ThisReuven S. Avi-Yonah (Michigan), Why Not Tax the Rich? (reviewing Edward D. Kleinbard (USC), We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014)):

Ed Kleinbard’s new book, We Are Better Than This: How Government SHould Spend Our Money (Oxford University Press, 2014), is a well-balanced and important contribution to the tax literature. Kleinbard convincingly sets out the case for addressing inequality not through taxation but rather through spending. While the emphasis on treating both sides of the federal budget ledger with equal respect is not new (Michael Graetz, for one, said it in the 1980s), Kleinbard updates the analysis and addresses it to a wider audience. Kleinbard’s book is also well positioned as an antidote to Thomas Piketty’s obsession with taxing the rich [Capital in the Twenty-First Century].

The problem with the book, however, is that its proposed solutions [restore the pre-2001 tax rates on the middle class and lift the cap on social security] are much too narrow. These have the virtue of being (perhaps) sellable on Capitol Hill, despite the bipartisan promise not to increase taxes on the middle class. But as a solution to our inequality problem they are woefully inadequate.

Update:  Dan Shaviro (NYU), Avi-Yonah Reviews Kleinbard

October 27, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

NY Times: Law Lets IRS Seize Accounts on Suspicion, No Crime Required

New York Times, Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required:

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.

“They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They’re middle-class citizens who have never had any trouble with the law.”

On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.” ...

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October 27, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 536

IRS Logo 2The Atlantic:  The House GOP's New War on Incompetence: The Republicans Want to Overhaul Scandal-Plagued Federal Agencies in 2015, the Majority Leader Says:

House Republicans haven't officially locked down their majority for next year, but they're already sketching out a legislative agenda for when they do.

In a memo to lawmakers on Wednesday, Majority Leader Kevin McCarthy said the party would target the federal bureaucracy with an eye toward restoring "competence" across a range of scandal-plagued departments and agencies. He cited the well-documented problems at the Veterans Administration, the Secret Service, the IRS, last year's launch of the federal health insurance exchanges, and the more recent response to Ebola, along with several other missteps that haven't garnered as much attention.

Real Time with Bill Maher Blog:  Tax the Charities:

Obama’s IRS "scandal” comes down to whether Tea Party groups should pay taxes or not, and the angels-dancing-on-the-head-of-a-pin distinction between an organization that raises money for politicians and one that “promotes social welfare.” (… by raising money for politicians.) One has to pay taxes and one doesn’t. ...

The simple solution is to stop asking the IRS to make value judgments about what’s a legitimate charity called “Patriots for the Violent Overthrow of the Negro Usurper” and what’s just a family sex party, like the kind the Palins would crash. Make them all pay taxes.

Washington Post:  Obama, The Bewildered Bystander, by Charles Krauthammer:

The president is upset. Very upset. Frustrated and angry. Seething about the government's handling of Ebola, said the front-page headline in The New York Times last Saturday.

There's only one problem with this pose, so obligingly transcribed for him by the Times. It's his government. He's president. Has been for six years. Yet Barack Obama reflexively insists on playing the shocked outsider when something goes wrong within his own administration.

IRS? “It's inexcusable, and Americans are right to be angry about it, and I am angry about it,” he thundered in May 2013 when the story broke of the agency targeting conservative groups. “I will not tolerate this kind of behavior in any agency, but especially in the IRS.”

Except that within nine months, Obama had grown far more tolerant, retroactively declaring this to be a phony scandal without “a smidgen of corruption.”

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October 27, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, October 26, 2014

2014 on Pace for Record Number of Americans to Renounce Their U.S. Citizenship; 73% of Americans Living Abroad May Do So in the Future

International Tax Blog, 2014 Third Quarter Published Expatriates – Third Highest Ever:

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the third quarter of 2014.

The number of published expatriates for the quarter was 776, which is the third highest quarterly number of published expatriates ever. The number of published expatriates for the first three quarters of 2014 has been 2,353 (1,001 + 576 + 776). Last year there was a record-breaking number of published expatriates (2,999). This year (2014) will break last year's record if there are at least 647 published expatriates in the fourth quarter.

Chart

Value Walk, 73% Of Americans Abroad Consider Giving up Passport Due To FATCA:

73 per cent of Americans who live outside the U.S. are tempted to give up their U.S. passports in response to the introduction of FATCA (Foreign Account Tax Compliance Act), reveals a new survey by one of the world’s largest independent financial advisory organizations.The findings come as Federal Register data shows that the number of Americans renouncing U.S. citizenship increased by 39 per cent in the three months to September after the new global tax law came into force.

In the global poll, deVere Group recently asked more than 400 of its American expatriate clients: ‘Would you consider voluntarily relinquishing your U.S. citizenship due to the impact of FATCA?’

Cumulatively, 73 per cent of respondents answered that they had ‘actively considered it’, ‘are thinking about it,’ or ‘have explored the options of it.’

October 26, 2014 in Tax | Permalink | Comments (12)

WSJ: The New Rules of Estate Planning: Focus Shifts From Estate Tax to Capital Gains, State Death Taxes

Wall Street Journal Tax Report:  The New Rules of Estate Planning: For Many Families, the Focus Is Now on Minimizing Capital-Gains Taxes and State Levies, by Laura Saunders:

WSJ ChartThe federal estate tax is no longer the biggest concern for most affluent people who want to avoid taxes on wealth they leave to heirs. ...

[L]ast year, Congress set the top estate-and-gift-tax rate at 40% and raised the exemption to $5 million per person, adjusted for inflation. It now stands at $5.34 million and is expected to rise to $5.43 million next year. Lawmakers also changed the rules so that couples don’t need trusts to get their full break from Uncle Sam.

These changes have freed hundreds of thousands of affluent Americans from worrying about federal estate tax, and they may never have to.

Many experts think that Congress, scarred by years of turmoil over the estate levy, is averse to making more big changes. Michael Graetz, a former Treasury Department official who teaches at Columbia University’s law school, says lawmakers would sooner repeal the tax than lower the exemption.

The new rules present tax-saving opportunities that many people planning estates remain unaware of—and that could contradict past advice. “The conventional wisdom has been turned on its head because of changes in both the income tax and the estate tax,” says Suzanne Shier, chief tax strategist at Northern Trust in Chicago.

In the past, for example, avoiding the estate tax often meant forgoing efforts to minimize long-term capital-gains taxes, which had a much-lower top rate of 15%, Ms. Shier says.

But now many people who won’t owe estate tax can reap substantial tax savings on capital gains by choosing carefully which assets to hold until death. This strategy is especially useful now that the top federal rate on long-term gains is nearly 24%, two-thirds higher than in 2012.

The high exemption also is prompting changes in gift strategies and trusts, says John O. McManus, an estate lawyer in New York. In other cases, say experts, state estate and inheritance taxes are looming larger because the federal estate tax now affects so few people.

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October 26, 2014 in Tax | Permalink | Comments (0)

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 on SSRN, with a new #1 paper and a new paper debuting on the list at #2:

  1. [266 Downloads]  Trying Times 2014: Important Lessons to Be Learned from Recent Federal Tax Cases, by Nancy A. McLaughlin (Utah) & Steven J. Small (Law Office of Stephen J. Small, Newton, MA)
  2. [235 Downloads]  Obama Care Fails the Origination Clause: Why Sissel and Hotze Should Be Reversed, by Steven J. WIllis (Florida) & Hans G. Tanzler (Florida)
  3. [158 Downloads]  'Show Me the Money!' -- Analyzing the Potential State Tax Implications of Paying Student-Athletes, by Kathryn Kisska-Schulze (North Carolina A&T) & Adam Epstein (Central Michigan)
  4. [153 Downloads]  Home-Country Effects of Corporate Inversions, by Omri Y. Marian (Florida)
  5. [152 Downloads]  Rights Without Remedies, by Matthew L. M. Fletcher (Michigan State)

October 26, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 535

IRS Logo 2The Hill:  GOP: Majority Would ‘Get to Truth’ on IRS:

Republicans vow to put the clamps on the IRS if they sweep to power in November.

GOP lawmakers and aides believe that House-passed legislation to limit the IRS’s reach would have a better shot at making it to President Obama’s desk if Republicans win control of the Senate on Nov. 4.

Full Republican control of Congress would give the GOP added leverage over the IRS, doubling the panel’s oversight of an agency that drew conservative ire by improperly scrutinizing Tea Party groups seeking tax-exempt status.

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October 26, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, October 25, 2014

Are You a Chicago-Style (Quantity) or a Harvard-Style (Quality) Scholar?

CHOrin Kerr (George Washington), Writing, Fast and Slow:

Zachary Kramer's thoughtful post, The Slow Writing Movement, brings up a broader choice between two approaches to producing legal scholarship.   Fast versus slow.  Or what I think of as the Chicago style versus the Harvard style.  

The Chicago style is to pump out a bunch of articles every year.  When you get an idea for an article, whether big or small, you write it up.  The idea is to produce a steady stream of scholarship. Not every article will be a home run.  But among your articles enough will be a hit that you'll produce a major body of influential work.  I call this the Chicago style because it is most closely associated with the traditional faculty culture at the University of Chicago Law School.  

On the other hand, the Harvard style is to write less but bigger.  You focus on quality instead of quantity, not sending out an article unless and until you think it is the definitive statement about that area of law.  You won't win any productivity awards.  But what you send out should be a signficant statement -- if not a home run, at least a double or triple.  And by focusing your efforts on really big ideas, the thinking runs, you'll produce a major body of influential work.  I call this the Harvard style because I have heard it associated with the traditional faculty culture at Harvard Law School. ...

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October 25, 2014 in Legal Education, Scholarship | Permalink | Comments (1)

Wilkins Presents How IRS Lawyers Contribute to Sound Tax Enforcement at Florida

WilkinsWilliam Wilkins, Chief Counsel for the Internal Revenue Service and Assistant General Counsel in the Department of the Treasury, presented How IRS Lawyers Contribute to Sound Tax Enforcement at Florida yesterday as part of its Graduate Tax Program Enrichment Speaker Series:

Wilkins characterized the IRS as the largest tax firm in the United States and addressed the challenges of administering federal tax laws in an era of increasing budgetary pressures and expanding demands for providing interpretive guidance and assistance to taxpayers.

Mr. Wilkins is a former partner of the Tax Practice Group of Wilmer Cutler Pickering Hale and Dorr, LLP. Prior to joining Wilmer, Mr. Wilkins was Staff Director and Chief Counsel of the United States Senate Committee on Finance and an associate with King & Spalding in Atlanta, Ga. Mr. Wilkins is also Past Chair of the Section of Taxation of the American Bar Association. He previously served on the governing boards of the American College of Tax Counsel and the American Tax Policy Institute. Mr. Wilkins is a graduate of Yale University and Harvard Law School.

October 25, 2014 in Tax | Permalink | Comments (1)

NYU Technology Prof Bans Student Use of Technology in His Classroom

Clay Shirky (NYU), Why I Just Asked My Students To Put Their Laptops Away:

GadgetsI teach theory and practice of social media at NYU, and am an advocate and activist for the free culture movement, so I’m a pretty unlikely candidate for internet censor, but I have just asked the students in my fall seminar to refrain from using laptops, tablets, and phones in class.

I came late and reluctantly to this decision — I have been teaching classes about the internet since 1998, and I’ve generally had a laissez-faire attitude towards technology use in the classroom. This was partly because the subject of my classes made technology use feel organic, and when device use went well, it was great. Then there was the competitive aspect — it’s my job to be more interesting than the possible distractions, so a ban felt like cheating. And finally, there’s not wanting to infantilize my students, who are adults, even if young ones — time management is their job, not mine.

Despite these rationales, the practical effects of my decision to allow technology use in class grew worse over time. The level of distraction in my classes seemed to grow, even though it was the same professor and largely the same set of topics, taught to a group of students selected using roughly the same criteria every year. The change seemed to correlate more with the rising ubiquity and utility of the devices themselves, rather than any change in me, the students, or the rest of the classroom encounter. ...

So this year, I moved from recommending setting aside laptops and phones to requiring it, adding this to the class rules: “Stay focused. (No devices in class, unless the assignment requires it.)” Here’s why I finally switched from ‘allowed unless by request’ to ‘banned unless required’.

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October 25, 2014 | Permalink | Comments (8)

The IRS Scandal, Day 534

IRS Logo 2Letter From Dave Camp (Chair, House Ways & Means Committee) to Jacob Lew (Secretary, U.S. Treasury Department) (Oct. 22, 2014):

Some of the key questions remaining in the investigation into the IRS' targeting of conservatives groups are: who at the White House knew what was going on; when did they know it; and, what action did they take upon learning about it? Your office is now refusing to make available until after the election the very person that could unlock that mystery. This is completely unacceptable , especially for an Administration that once pledged to be the most open and transparent ever.

On September 16, 20 14, five weeks ago, I first requested that you make available for an interview Hannah Stott-Bumstead, a Treasury Department counsel, who, based on transcribed interviews ofIRS perso1mel, appears to be the first person at Treasmy to be told by the IRS that it had lost Lois Lerner's emails. Notwithstanding President Obama 's pledge to "work with Congress as it performs its oversight role ...[a]nd...make sure that we are working hand in hand with Congress to get this thing fixed," to date your Department has refused to allow the Committee to directly question Ms. Stott-Bumstead. 1 In addition to reiterating my request to interview Ms. Stott-Bumstead without delay, I am requesting additional information about what Ms. Stott-Bumstead and others at Treasury did with this information, including how the White House was informed, and why the decision was made to not infonn Congress until months later.

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October 25, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, October 24, 2014

Law School Carnage Enters Its Fifth Year

LSAC reports that LSAT takers declined 8.1% in September, on the heels of a 9% decline in June:

LSAC 3

As Derek Muller (Pepperdine) notes, the worst may be yet to come:

Excess

Matt Leichter, LSAT Tea-Leaf Reading: September 2014 Edition:

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October 24, 2014 in Legal Education | Permalink | Comments (8)

Hoffer, Lederman & Walker Debate Tax Court Exceptionalism Today at Kentucky

HLWStephanie Hoffer (Ohio State), Leandra Lederman (Indiana), and Christopher Walker (Ohio State) debate Tax Court exceptionalism at Kentucky today as part of its Faculty Workshop Series (blogged here):

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October 24, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Talley Presents Corporate Inversions and the Unbundling of Regulatory Competition Today at Virginia

Talley 2Eric Talley (UC-Berkeley) presents Corporate Inversions and the Unbundling of Regulatory Competition at Virginia today as part of its Faculty Workshop Series:

A sizable number of US public companies have recently executed “tax inversions” – acquisitions that move a corporation’s residency abroad while maintaining its listing in domestic securities markets. When appropriately structured, inversions replace American with foreign tax treatment of extraterritorial earnings, often at far lower effective rates. Regulators and politicians have reacted with alarm to the “inversionitis” pandemic, with many championing radical tax reforms. This paper questions the prudence of such extreme reactions, both on practical and on conceptual grounds. Practically, I argue that inversions are simply not a viable strategy for many firms, and thus the ongoing wave may abate naturally (or with only modest tax reforms). Conceptually, I assess the inversion trend through the lens of regulatory competition theory, in which jurisdictions compete not only in tax policy, but also along other dimensions, such as the quality of their corporate law and governance rules. I argue that just as US companies have a strong aversion to high tax rates, they have a strong affinity for strong corporate governance rules, a traditional strength of American corporate law. This affinity has historically given the US enough market power to keep taxes high without chasing off incorporations, because US law specifically bundles tax residency and state corporate law into a conjoined regulatory package. To the extent this market power remains durable, radical tax overhauls would be unhelpful (and even counterproductive). A more blameworthy culprit for inversionitis, I argue, can be found in an unlikely source: Securities Law. Over the last fifteen years, financial regulators have progressively suffused US securities regulations with mandates relating to internal corporate governance matters – traditionally the domain of state law. Those federal mandates, in turn, have displaced and/or preempted state law as a primary source of governance regulation for US-traded issuers. And, because US securities law applies to all listed issuers (regardless of tax residence), this displacement has gradually “unbundled” domestic tax law from corporate governance, eroding the US’s market power in regulatory competition. The most effective elixir for this erosion, then, may also lie in securities regulation. I propose two alternative reform paths: either (a) domestic exchanges should charge listed foreign issuers for their consumption of federal corporate governance policies; or (b) federal law should cede corporate governance back to the states by rolling back many of the governance mandates promulgated over the last fifteen years.

October 24, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

October 24, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

October 24, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

October 24, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Hickman Reviews Blank's Collateral Compliance

JotwellKristin Hickman (Minnesota), Evaluating the Efficacy of Nonmonetary Penalties (Jotwell) (reviewing Joshua D Blank (NYU), Collateral Compliance, 162 U. Pa. L. Rev. 719 (2014)):

Monetary penalties for noncompliance are a routine feature of the tax laws. The tax literature includes extensive debate over different ways of structuring those penalties to improve tax compliance and eliminate the tax gap. In Collateral Compliance, Josh Blank shifts his gaze beyond that debate to examine what he labels “collateral tax sanctions”—nonmonetary penalties that federal and state governments impose, in addition to the monetary ones, for failing to comply with the tax laws. ...

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October 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Cauble: Redefining Qualifying Income for Publicly Traded Partnerships

Tax Analysys Logo (2013)Emily Cauble (DePaul), Redefining Qualifying Income for Publicly Traded Partnerships, 145 Tax Notes 107 (Oct. 6, 2014):

In general, business entities are subject to the section 11 corporate tax if they are publicly traded. Corporate tax is justified under the rationale that entities will pay tax in exchange for access to an established market because liquidity has value. It allows owners of large enterprises to easily exit by selling their shares. Publicly traded partnerships can avoid being subject to corporate tax under current law if they earn primarily qualifying income. The best rationale for this exemption from corporate tax is that the partners could have access to the income of the publicly traded partnership by buying the assets of the partnership directly. Congress should redefine qualifying income to make the definition better fit that rationale by classifying income as qualifying only if it is earned by holding publicly traded stock or other publicly traded assets.

October 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

American University Symposium Today on The Taxation of the Digital Economy

AmericanAmerican University, Kogod School of Business, hosts a symposium today on The Taxation of the Digital Economy. Robert Stack, Assistant Deputy Secretary for International Tax at the U.S. Treasury Department, will deliver the keynote address.

Panel 1: Cross-Border Taxation Considerations for the Digital Economy
The digital economy often involves the massive use of personal data and multi-sided business models. This can often lead to difficulties in quantifying costs and benefits generated by free products and user created intangibles including the determination of where value creation occurs. Defining a permanent establishment in the context of the digital economy has been difficult since companies often do not require a physical presence in a jurisdiction in order to conduct business. This panel will discuss the tax issues faced by the broader digital economy, proposals currently under consideration by the OECD, and planning considerations in light of the OECD report.  

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October 24, 2014 in Conferences, Tax | Permalink | Comments (1)

The IRS Scandal, Day 533

IRS Logo 2USA Today:  Tea Party Loses Court Battle Over Targeting to IRS:

A federal court dismissed two lawsuits against the Internal Revenue Service Thursday, ruling that the tax agency is no longer targeting conservative tax-exempt groups for greater scrutiny.

True the Vote v. IRS Ruling

Linchpins of Liberty v. IRS

"Unless an actual, ongoing controversy exists in this case, this court is without power to decide it," U.S. District Court Judge Reggie Walton ruled, dismissing one lawsuit brought by True the Vote, a conservative vote-monitoring organization.

True the Vote, an offshoot of the Tea Party-affiliated King Street Patriots, had its application as a social welfare group help up because the IRS suspected it was engaging in direct political election campaigning, which is forbidden under section 501(c)(4) of the tax code. IRS agents found that its web site contained "Democratic attacks and Republican/conservative response," according to confidential IRS documents obtained by USA TODAY. 

Walton said the IRS has assured the public that they're no longer screening applications for tax exemptions based on its political leanings, a practice that led to the dismissal of several top IRS officials when it was disclosed by Treasury inspectors last year.

"Thus, the allegedly unconstitutional governmental conduct, which had delayed the processing of the plaintiffs' tax-exempt applications and spawned this litigation, is no longer impacting the plaintiffs," Walton said in a second opinion dismissing a lawsuit brought by Linchpins of Liberty and 40 other groups in 22 states. ...

In a footnote, the judge did leave open the possibility that two groups -- Patriots Educating Concerned Americans Now of Redding, Calif. and the suburban Cincinnati Liberty Township Tea Party -- could still sue because the IRS failed to rule on their tax exemption application within 270 days. The judge gave the IRS 14 days to argue why that element of the lawsuit cannot go forward.

Because he dismissed the lawsuits on procedural grounds, Walton did not rule on the merits of the case. He wrote in a footnote: "The court's opinion should not be interpreted as an assessment of the propriety of the alleged conduct by the defendants."

True the Vote:  Press Release:

"The Court today correctly acknowledged that the IRS targeted True the Vote because of its perceived political beliefs," True the Vote President Catherine Engelbrecht said. “Such conduct is reprehensible and should never be acceptable in a free society. Despite this critical finding, we are stunned and disappointed in the court’s ruling which nevertheless dismisses our case. We will be evaluating our legal options and will announce our intent in that regard soon.”

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October 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Thursday, October 23, 2014

Hickman Presents Treasury's Retroactivity Today at UC-Irvine

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at UC-Irvine today as part of its Faculty Workshop Series:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code.

October 23, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Whistleblowers: IRS Officials Behind ‘Fraudulent’ Multi-Billion Dollar Corporate Tax Giveaways

IRS Whistleblower (2014)Raw Story:  Whistleblowers: IRS Officials Behind ‘Fraudulent’ Multi-Billion Dollar Corporate Tax Giveaways:

A 10-year veteran IRS attorney has demanded a Congressional audit of the IRS to investigate the agency’s alleged role in allowing American corporations to illegally avoid paying billions of dollars in taxes at the same time the agency is cracking down on individuals and small businesses.

In a letter to Treasury Secretary Jacob Lew, IRS commissioner John A. Koskinen, and IRS chief counsel William Wilkins, Jane J. Kim, an attorney in the IRS Office of the Chief Counsel in New York, accused IRS executives of “deliberately” facilitating multi-billion dollar tax giveaways. The letter, dated October 19, will add further pressure on the agency, which is under fire for allegedly targeting conservative and Tea Party groups.

Kim, who has previously blown the whistle on “gross waste of government resources” in the IRS New York field offices [Senior IRS Lawyer Charges Chief Counsel's New York Office With Waste and Abuse], wrote in her new letter that senior IRS officials have “intentionally undermined the authority of the IRS Whistleblower Office” to avoid taking action “in cases involving billions in corporate taxes due.” The IRS also refuses to enforce laws for “large corporate taxpayers,” resulting in giveaways of further billions, despite applying the same laws with “draconian strictness to small business, the self-employed, and wage-earning individuals.”  ...

Following coverage of her earlier allegations by Pulitzer Prize winning tax journalist David Cay Johnston, Kim was approached by a private sector lawyer representing corporate whistleblowers to the IRS, who told her that numerous legitimate investigations into corporate tax fraud were being shut down. Her letter sent on Sunday to the US Treasury and IRS described three such cases. ...

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October 23, 2014 in IRS News, Tax | Permalink | Comments (7)

Osofsky: Tax Law Nonenforcement

Leigh Osofsky (Miami), Tax Law Nonenforcement:

The Obama Administration has engaged in what some have characterized as an “unprecedented use of executive power” not to enforce certain laws, including immigration laws, federal marijuana laws, and even parts of the Obama Administration’s own Patient Protection and Affordable Care Act. In response to this nonenforcement, commentators have begun asking what would have happened if a President Romney, or a future Republican President, decided not to enforce the tax laws. Could a President decide not to enforce the estate tax, the income tax with respect to millionaires, or the income tax for anyone who has already paid a specified percentage of income in taxes? In answering this question, constitutional scholars have suggested that the President cannot declare categorical, or complete, prospective nonenforcement of some aspect of the law. Recent tax literature examining IRS pronouncements that it will not enforce particular aspects of the tax law has also determined that categorical tax law nonenforcement is troublesome from the perspective of the rule of law.

What has been missing in the existing discussion, especially in the preoccupation with flashy, and relatively infrequent, presidential nonenforcement of the tax law, is a broad based examination of what tax law nonenforcement looks like at the agency level and an accompanying examination of categorical nonenforcement through the lens of the legitimacy of the administrative state.

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October 23, 2014 in Scholarship, Tax | Permalink | Comments (0)

Mann: Subchapter S: Vive Le Difference!

Roberta F. Mann (Oregon), Subchapter S: Vive Le Difference!, 18 Chapman L. Rev. 65 (2014):

Is Subchapter S obsolete, or does it still serve a rational purpose in the economy? This Article will examine that issue, focusing on the comparison between S corporations and LLCs. The Article begins with a history of Subchapter S and the “check-the-box” regulations. Next, the Article will compare the arguments for and against repealing Subchapter S. Statistics appear to show that the number of S corporation returns is still increasing. Why are S corporations still being used, and do those reasons justify its continued existence? Perhaps the answer is political: politicians love small businesses and S corporation stands for “small business.” Ultimately, the answer to these questions may depend on whether politicians’ favorable view of small business is justified.

October 23, 2014 in Scholarship, Tax | Permalink | Comments (1)

U.S. News Annual Peer Assessment of Law School Tax Programs

U.S. NewsI received in the mail my ballot for the 2016 U.S. News Tax Rankings (2015 U.S. News tax rankings). As in prior years, the survey is intended "to identify the law schools having the top programs in tax law."  The survey is sent "to a selection  of faculty members involved in and who are knowledgeable about the area of tax law. Law schools supplied names of these faculty members to U.S. News in summer 2014."  Recipients are asked "to [i]dentify up to fifteen (15) schools that have the highest-quality tax law courses or programs. In making your choices consider all elements that contribute to a program's excellence, for example, the depth and breadth of the program, faculty research and publication record, etc."

As Donald Tobin (Dean, Maryland) has noted, it is more than strange that NYU has finished ahead of Florida and Georgetown each year that U.S. News has conducted the survey.  Because the survey ranks the schools by how often they appear on the respondents' "Top 15" lists, this means that some folks list NYU, but not Florida and Georgetown, among the Top 15 tax programs.

In filling out your survey, you may want to consult our forthcoming book, Pursuing a Tax LLM Degree, which compiles information about 13 highly ranked tax LLM programs: (1) NYU; (2) Florida; (3) Georgetown; (4) Northwestern; (5) Miami; (6) Boston University; (7) San Diego; (8) Loyola-L.A./LMU; (9) SMU; (10) Denver; (11) University of Washington; (12) Villanova; and (13) Chapman. The topics on which information is reported in the book include:

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October 23, 2014 in Law School Rankings, Legal Education, Tax | Permalink | Comments (1)

Economists: 90% Top Tax Rate Would Decrease Inequality, Raise Revenue & Increase Everyone’s Well-Being

90%Huffington Post:  Economists Say We Should Tax The Rich At 90 Percent, by Ben Walsh:

America has been doing income taxes wrong for more than 50 years.

All Americans, including the rich, would be better off if top tax rates went back to Eisenhower-era levels when the top federal income tax rate was 91 percent, according to a new working paper by Fabian Kindermann from the University of Bonn and Dirk Krueger from the University of Pennsylvania [High Marginal Tax Rates on the Top 1%? Lessons From a Life Cycle Model With Idiosyncratic Income Risk].

The top tax rate that makes all citizens, including the highest 1 percent of earners, the best off is “somewhere between 85 and 90 percent,” Krueger told The Huffington Post. 

Chart 22

Kindermann and Krueger say that a top marginal tax rate in the range of 90 percent would decrease both income and wealth inequality, bring in more money for the government and increase everyone’s well-being -- even those subject to the new, much higher income tax rate. ...

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October 23, 2014 in Tax | Permalink | Comments (12)

Cockfield: BEPS and Global Digital Taxation

Tax Analysys Logo (2013)Arthur J. Cockfield (Queen's University Faculty of Law), BEPS and Global Digital Taxation, 75 Tax Notes Int'l 933 (Sept. 15, 2014):

In 2013, the Organization for Economic Cooperation and Development (OECD) launched its base erosion and profit shifting (BEPS) project to inhibit aggressive international tax planning. Action 1 of the BEPS project requires the OECD to identify the main challenges that the digital economy poses for the application of current international tax rules and develop reforms to address these challenges. The article reviews related academic perspectives, and discusses how the digital world facilitates aggressive tax planning. It concludes that any new tax rules should apply broadly and neutrally to substantively similar economic activities from either the digital or traditional commercial world. In addition, the OECD should more carefully examine how Internet technologies can help enforce national tax laws to constrain aggressive planning.

October 23, 2014 in Scholarship, Tax | Permalink | Comments (0)

TIGTA: IRS Fails to Follow TEFRA Procedures in 63% of Partnership Audits

TIGTA The Treasury Inspector General for Tax Administration yesterday released Improvements Are Needed to Ensure That Procedures Are Followed During Partnership Audits Subject to the Tax Equity and Fiscal Responsibility Act of 1982 (2014-30-082):

This audit was initiated to determine whether audits of partnerships subject to the TEFRA are initiated in accordance with applicable statutory and administrative procedures. ... TIGTA reviewed a statistically valid sample of 35 partnership audits subject to the TEFRA that were closed during Fiscal Year 2012 and identified 22 audits that were not conducted in accordance with one or more applicable TEFRA procedures. Specifically, TIGTA found that: (1) minimum tests were not always documented to determine whether TEFRA procedures should have been used to examine the partnership return; (2) necessary checks were not always documented to ensure that the Tax Matters Partner was qualified to represent the partnership; (3) some Forms 2848, Power of Attorney and Declaration of Representative, did not contain the required information that allows disclosure of tax return information; and (4) some Letters 1787, Notice of Beginning of Administrative Proceeding, were not issued timely. When the sample results are projected to the population of 2,698 TEFRA audits closed during Fiscal Year 2012, TIGTA estimates that approximately 1,696 TEFRA audits were not conducted in accordance with one or more applicable TEFRA procedures.

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October 23, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 532

IRS Logo 2Independent Journal Review:  Former Newsweek Editor Gives 4 Solid Reasons Why Women No Longer Feel Safe Under President Obama:

Appearing on MSNBC’s Morning Joe, former Newsweek editor Tina Brown said women no longer feel safe under Obama’s leadership. She gave four areas in which she feels this is the case: ...

#4 – “What they feel unsafe about is the government response to different crises and I think that they’re beginning to feel a bit that Obama’s like that guy in the corner office who’s too cool for school: calls a meeting, says this has to change, doesn’t put anything in place to make sure it does change, then it goes wrong and he’s blaming everybody.”

Yes, he has been blaming others when things have gone wrong. In particular, he’s been blaming the women around him. Hillary Clinton, Susan Rice, Cheryl Campbell, Lois Lerner, and Kathleen Sebelius all come to mind as women who have taken the fall for Obama.

WND:  Tina Brown Scorches Obama on Live TV:

One of the top feminists in America blasted Barack Obama’s handling of numerous crises Monday, claiming the president is actually making women feel unsafe. During an appearance on MSNBC’s “Morning Joe” program, Tina Brown, the founder and former editor of the Daily Beast and Newsweek as well as current head of Tina Brown Live Media, explained support for Democrats among women in recent polls has been plummeting because Obama is making women feel “unsafe.” ...

She continued, “More recently women felt unsafe when Lois Lerner wielded the IRS like a mighty weapon and targeted thousands of innocent civilians who were deemed ‘enemies’ of the Obama administration. No one has been held accountable and because of evidence that was ‘mysteriously’ destroyed, no one probably ever will. Women have seen innocent people punished and/or killed while criminals have been lauded.

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October 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, October 22, 2014

Law Schools Rankings by Mid-Career Salaries

Wall Street Journal, Harvard Law Graduates Top Salary Survey:

SalaryAt $201,000 a year, Harvard Law School alumni earn more than those of any other U.S. graduate school by the midpoint in their careers. ...

The data come courtesy of the online salary-information company PayScale [press release], which has asked 1.4 million people what they earn in return for finding out how they stack up against their peers. ... The survey pulled data for more than 600 graduate schools, including only those for which there were enough respondents to make their answers statistically valid. ...

Among their findings: the midcareer median salary for seven of the top 10 graduate programs were law schools, but business schools produced eight out of the top 10 highest salaries for those less than five years past graduation. Eight of the top 17 programs that produced graduates with the highest midcareer salary were in California, many in and around Silicon Valley.

Among the top law schools ranked behind Harvard by salary were Emory, Santa Clara, UCLA, Pepperdine, Georgetown, Columbia, Fordham, Berkeley and University of Texas at Austin.

Capture 2

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October 22, 2014 in Law School Rankings, Legal Education | Permalink | Comments (4)

Faulhaber: Charitable Giving, Tax Expenditures, and Direct Spending in the US and EU

Lilian Faulhaber (Boston University), Charitable Giving, Tax Expenditures, and the Fiscal Future of the European Union, 39 Yale J. Int'l L. 87 (2014):

This Article compares the ways in which the United States and the European Union limit the ability of state-level entities to subsidize their own residents, whether through direct subsidies or through tax expenditures. It uses four recent charitable giving cases decided by the European Court of Justice (ECJ) to illustrate the ECJ’s evolving tax expenditure jurisprudence and argues that, while this jurisprudence may suggest a new and promising model for fiscal federalism, it may also have negative social policy implications. It also points out that the court analyzes direct spending and tax expenditures under different rubrics despite their economic equivalence and does not provide a clear rule for distinguishing between the two, adding to the confusion of Member States and taxpayers. The Article then surveys the Supreme Court’s Dormant Commerce Clause jurisprudence, under which the Court analyzes discriminatory state spending provisions. The Article concludes that although both the Supreme Court and the ECJ prioritize formalism over economic equivalence, the Supreme Court’s approach to tax expenditures is more defensible than that of the ECJ due to the different federal structures of the two jurisdictions.

October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

Kerr: Tips for First-Year Law Professors

Orin Kerr (George Washington), Tips for First-Year Law Professors:

I want to offer some advice for the fortunate few who landed a tenure-track law teaching job recently and are now in their first year of teaching. Everyone has a different perspective, of course, and if I go astray, I hope others will respond in the comment thread. But if this is your first year of tenure-track law teaching, here are some tips you might consider:

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October 22, 2014 in Legal Education | Permalink | Comments (0)

Mann: The Tax Policy Implications of Economists/Policymakers Miscommunication

Roberta F. Mann (Oregon), Economists are from Mercury, Policymakers are from Saturn: The Tax Policy Implications of Communication Failure, 5 Wm. & Mary Pol'y Rev. 1 (2013):

SaturnPolicymaking lawyers and economists are different types of people who come together in the policymaking realm. Sometimes policymakers rely on economic analysis to make decisions. Sometimes policymakers use economic analysis to support decisions already made. In particular, economic analysis has played a large role in the formation of tax and budgetary policy. However, there is a problem. Not only do economists and lawyers communicate differently, they think, perceive, react and respond differently. They almost seem to be from different planets, speaking different languages. While both lawyers and economists use “stories” to persuade, economic analysis cloaks the story in a complex mathematical model, opaque to those without training in economic theory. The results of economic modeling can obscure the decisions that policymakers and the public need to make — about the direction of the tax system, the nation, and the economy. This article examines the roles economists and lawyers play in the development and implementation of the income tax system. 

October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

ABA Tax Section Publishes Fall 2014 Issue of News Quarterly

ABA News QuarterlyThe ABA Tax Section has published 34 News Quarterly No. 1 (Fall 2014):

October 22, 2014 in ABA Tax Section, Tax | Permalink | Comments (0)

Osofsky: Concentrated Enforcement

Florida Tax ReviewLeigh Osofsky (Miami), Concentrated Enforcement, 16 Fla. Tax Rev. 325 (2014):

When enforcement resources are limited, how should the scarce enforcement resources be allocated to increase compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, while “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations. In such populations, existing, high levels of noncompliance, and underlying, structural causes of the high noncompliance can serve as coordinating mechanisms, providing mutual assurance of low compliance. Moreover, “worst-first” theories do not provide a comprehensive explanation for the group and project-based enforcement practices that are found in a number of actual enforcement settings. In response to these deficits, I draw on work from across different disciplines to develop a new theory for the allocation of scarce tax enforcement resources. I suggest that, under certain conditions, deterrence can be enhanced by allocating scarce enforcement resources among a low-compliance population of taxpayers through a process I call concentrated enforcement. After setting forth the theoretical case for concentrated enforcement, I examine how it might apply in the cash business tax sector, a highly noncompliant sector that presents particular challenges for “worst-first” methods. I conclude that concentrated enforcement may increase compliance, meriting its application and empirical evaluation.

October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

Thompson: The Cat-and-Mouse Inversion Game with Burger King

Tax Analysys Logo (2013)Samuel C. Thompson, Jr. (Penn State), The Cat-and-Mouse Inversion Game with Burger King, 144 Tax Notes 1317 (Sept. 15, 2014):

With inversions, taxpayers and the Treasury are playing a game of Cat and Mouse. The partnership structure employed in the Burger King-Tim Hortons inversion is the latest twist in this game, and indeed, the Mouse seems to be taunting the Cat. This article discusses the structure of the partnership that is used to give electing Burger King shareholders tax-free treatment and explains why the Treasury should challenge the transaction.

October 22, 2014 | Permalink | Comments (0)

Death of Mark Kuller

KullerWashington Post, Mark Kuller, Former Tax Lawyer Who Opened Acclaimed Restaurants in D.C., Dies at 61:

Mark Kuller, a former tax lawyer who transformed his prodigious appetite for good food and drink into a diverse collection of critically acclaimed restaurants in Washington, died Oct. 16 at his home in Bethesda, Md. He was 61.

The cause was pancreatic cancer, said his daughter, Candace Kuller.

The son of a bookie who took bets for the Mafia, Mr. Kuller went on to become, according to the New York Times, “a major player in corporate tax shelters.” As part of his job studying tax codes and entertaining clients, he developed a serious interest in restaurants that eventually spurred his desire to change careers. ...

If Mr. Kuller had carved a new career path for himself in his 50s, he had also created a new life at home. In 2010, he married Kristin Connor, who was more than 20 years his junior, and started talking about being a father again. (Mr. Kuller had divorced his first wife, the former Janet Goldberg, in 2003, according to a Washingtonian profile; he had two children from that marriage, Max and Candace, who both work at their father’s restaurants.)

But last year, just days after Mr. Kuller learned Connor was pregnant, he received tragic news: He was diagnosed with stage-four pancreatic cancer, a condition with a short life expectancy.

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October 22, 2014 in Obituaries, Tax | Permalink | Comments (1)

Willis & Tanzler: ObamaCare Violates the Origination Clause

Steven J. Willis (Florida) & Hans G. Tanzler IV (Florida), ObamaCare Fails the Origination Clause: Why Sissel and Hotze Should Be Reversed:

ObamaCare 2The Affordable Care Act violates the Constitution's Origination Clause: Article One, Section 7. What began as House Bill 3590 was not a "bill for Raising Revenue" because it solely covered non-taxes: spending items such as credits and recapture exclusions. Further, the Senate amendment adding I.R.C. section 5000A - the tax for lacking health insurance - was not germane to the House Bill; however, the amendment was indeed a "bill for Raising revenue" that must originate in the House.

The D.C. Circuit - in Sissel - and the District Court - in Hotze - each used a mistaken "primary purpose" test to overcome an Origination Clause challenge. Both Courts mistakenly focused on the "primary purpose" of the Affordable Care Act, rather than the purpose of the isolated section 5000A tax. As the Supreme Court in Rainey (1914) and Flint (1911) demonstrated, an Origination Clause challenge must examine the individual provision of the Act on its own merits as to germaneness and revenue raising, rather than as compared to the Act as a whole.

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October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 531

IRS Logo 2Barrow Journal:  Losing Faith as Dysfunction Clouds Our Institutions:

We Americans seem to have lost faith in our major institutions. All around us we see dysfunction dominating the news. To wit: ...

The IRS openly, and without apology, targeted a small number of conservative groups for special scrutiny in what can only be seen as a political move designed to silence those organizations. When called in before Congress to testify, the IRS’ chief administrator smirked and dithered, basically flicking his middle finger to Congress. His agency is above the law, he seemed to be saying. The IRS has become the stereotypical ruthless tax collector. Adding a political agenda to that only makes that powerful agency more suspect. Unfortunately, nobody seems interested in reeling in the IRS and making sure it doesn’t become a gunslinger for either political party.

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October 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, October 21, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at UNLV

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at UNLV today as part of its Faculty Enrichmant Series:

For over a century, politicians, government officials and scholars in the United States have debated whether corporate tax returns, which are currently subject to broad tax privacy protections, should be publicly accessible. The ongoing global discussion of base erosion and profit shifting by multinational corporations has generated calls for greater tax transparency. Throughout this debate, participants have focused exclusively on the potential reactions of a corporation’s managers, shareholders and consumers to a corporation’s disclosure of its own tax return information. There is, however, another perspective: how would the ability of a corporation’s stakeholders and agents to observe other corporations’ tax return information affect the corporation’s compliance with the tax law?

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October 21, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Top Scorer on Florida Bar Exam Is IRS Agent

Florida International University Law School Press Release, FIU Law Student Earns Top Score on Florida Bar Exam:

MartiniFIU alumnus Alexander Martini has earned the highest score among more than 2,800 lawyers who took the Florida Bar Examination in July. ...

“I am absolutely honored and excited,” said Martini, 28, who studied law in the evening while he worked full-time as an Internal Revenue Service agent.

Martini, who was valedictorian of the evening class, was a member of the FIU Law Review, competed in the American Bar Association Section of Taxation Law Student Tax Challenge, took and passed his final Certified Public Accountant exam, [and] completed a master’s degree in taxation. ...

Martini is married to Melissa Aponte Martini, who is a recent graduate of Nova Southeastern University Law School’s evening program, and also took and passed the bar exam in July.

October 21, 2014 in IRS News, Tax | Permalink | Comments (2)