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Friday, July 18, 2014

Weekly Tax Roundup

July 18, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

July 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

Weekly Student Tax Note Roundup

July 18, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Johnson: Reflections on Ridgely v. Lew

Johnson (Steve)TaxProf Blog op-ed:  Reflections on Ridgely v. Lew, by Steve R. Johnson (Florida State):

On July 16, the D.C. district court decided Ridgely v. Lew, Civ. No. 1:12-cv-00565 (CRC). It invalidated part of 31 C.F.R. sec. 10.27, restricting the ability of practitioners to charge contingent fees for services in connection with original returns, amended returns, and refund claims. The purported statutory authority for section 10.27 is 31 U.S.C. sec. 330(a), allowing Treasury to “regulate the practice of representatives of persons before the Department of the Treasury.”

In Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), a panel of the circuit invalidated regulations set out in 31 C.F.R. secs. 10.3 to 10.6 regulating return preparers. Affirming the Loving district court, the panel held that preparers are not “representatives” engaged in “practice” before the IRS, thus that Treasury lacked statutory authority to promulgate the regulations. The government chose not to seek Supreme Court review.

Loving, of course, has been quite controversial and has occasioned much commentary. My view, developed in Loving and Legitimacy: IRS Regulation of Tax Return Preparation forthcoming in the next issue of the Villanova Law Review, is that Loving was correctly decided. The “practice” rationale is not strong, but the “representative” rationale is sound, in my estimation. Cf. All Party Parliamentary Group on Extraordinary Rendition v. United States Dep’t of Defense, 2104 WL 2721381 (D.C. Cir. June 17, 2014) (FOIA case in which the court followed and applied Loving’s definition of “representative”).

The Ridgely plaintiff is a CPA. He brought suit under the Administrative Procedure Act and the Declaratory Judgment Act, arguing that the sec. 10.27 restrictions exceed Treasury’s statutory authority insofar as they apply to the preparation and filing of “Ordinary Refund Claims.” The Ridgely court followed Loving, finding that CPAs who advise as to and prepare Ordinary Refund Claims are not representatives practicing before the IRS. The result is not a big surprise. The government’s half-hearted attempts to distinguish Ridgely from Loving were easily brushed aside, and the district court obviously wasn’t going to disagree with its circuit court. If one believes Loving was correctly decided, then Ridgely too was correctly decided.

As to Ridgely’s aftermath, four thoughts.

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July 18, 2014 in Scholarship, Tax | Permalink | Comments (3)

University of Auckland Hosts Conference Today on Key Issues in the Design of Capital Gains Tax Regimes

AucklandThe University of Auckland Business School and the Faculty of Law host a conference today on Key Issues in the Design of Capital Gains Tax Regimes (speakerstopics):

The basic aim of this conference is to compare the ways in which selected jurisdictions tax capital gains, with a view to determining what might be learned from each jurisdiction’s experience as to the best approach to take.

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July 18, 2014 in Conferences, Tax | Permalink | Comments (0)

Osofsky: Concentrated Enforcement in a Best-Case Tax Enforcement Regime

Leigh Osofsky (Miami), Concentrated Enforcement in a Best-Case Tax Enforcement Regime, 2014 IRS Research Bulletin:

In this Article, I set forth a theory (“concentrated enforcement”) for allocating scarce enforcement resources within a low compliance tax sector. The intuition behind concentrated enforcement is that, under a number of different circumstances, there may be increasing marginal returns to enforcement resources and psychological factors that support concentration. This Article begins by setting forth the notion of a best-case tax enforcement regime, which would allocate scarce tax enforcement resources to maximize the combination of direct revenue and voluntary compliance. The Article then examines some empirical evidence from the criminology context which suggests that, under certain circumstances, concentration of enforcement may be critical to voluntary compliance. The bulk of the Article draws on a number of different disciplines to set forth the conditions under which concentrated enforcement may increase voluntary compliance and explore how it might work in the particularly problematic cash business tax sector. The question of when concentrated enforcement can increase compliance is not merely theoretical. As I explain in this Article, concentrated tax enforcement, in the form of project-based enforcement, already exists in practice. By exploring the conditions under which concentrated enforcement can increase compliance, this Article can help explain and improve existing practice, as well as guide future research. While ultimately determining when concentrated enforcement does increase voluntary compliance requires experimental application and evaluation, examining the conditions under which concentrated enforcement is likely to increase voluntary compliance and the evidence of such conditions is the first step toward such experimentation. This Article takes this first, necessary step toward thinking about concentrated enforcement as part of a best-case tax enforcement regime.

July 18, 2014 | Permalink | Comments (0)

The IRS Scandal, Day 435

IRS Logo 2Forbes:  Despite Yearlong Investigation Of IRS, DOJ Just Learned Of Lost Emails From News Media, by Robert W. Wood:

For over a year now, the DOJ and FBI have been investigating the IRS targeting scandal. Yet a DOJ lawyer testified before a Congressional committee that even a year into its investigation, DOJ had no advance notice of the 2 years’ worth of emails the IRS says went missing years ago. ...

[T]his is astonishing. On June 13, 2014, the IRS admitted that it lost Lois Lerner’s emails from January 2009 through April 2011. DOJ says it learned of the missing emails after June 13, 2014 from the media! Oh, those two-years’ worth of emails to and from the key IRS figure who refused to testify to Congress about her job as a top IRS official? They covered the precise period of time when the alleged IRS targeting of Tea Party groups took place.

Republican Rep. Ron DeSantis asked Deputy Attorney General James Cole, “So you actually read about it in the press and nobody in the IRS ever went to the Justice Department to give you a heads-up, knowing you were conducting the investigation that some evidence may have been destroyed?”

“Not before the 13th of June,” Cole replied. “I think we learned about it after that, from press accounts,” Mr. Cole told House Oversight and Government Reform subcommittee chairman Rep. Jim Jordan. Rep. Jordan pressed Mr. Cole, “Is it a big deal to you Mr. Cole, a big deal to the Justice Department that the head of the Internal Revenue Service waited two months to tell the United States Congress, two months to tell the American people, and, most importantly, two months to tell the FBI and the Justice Department that they had lost Lois Lerner’s emails?”

Mr. Cole’s response seemed practically Presidential, “It depends on what the circumstances were behind,” Cole responded. The whole story may eventually come out, but the investigation has taken on a decidedly pale complection. Now there’s a new DOJ investigation underway into the IRS missing emails. One might wonder if it will ever turn up even a smidgen of corruption.

Meanwhile, a federal court may prove to be tougher. In a suit against the IRS brought by Judicial Watch, U.S. District Judge Emmet G. Sullivan ordered the IRS to explain what happened to Lois Lerner’s emails. The DOJ has done its best to avoid having to explain much of anything to anyone.

It is another seedy chapter that casts further doubt on the tax system. In 2013, the IRS targeting scandal was already brewing, and Ms. Lerner asked an IT specialist at the IRS if the IRS saved texts? They are not saved automatically, came the response, but since saving them was possible, be careful. “Perfect,” Ms. Lerner answered.

So the switch to texts was an even better way to adopt the IRS version of Moscow Rules. Even President Obama’s new IRS Commissioner Koskinen testified that he was completely unaware of the instant-messaging system. Still, he told a House committee he didn’t think Ms. Lerner’s response about the texts meant she was happy that IRS instant messages weren’t saved. ‘Perfect’ must mean different things to different people.

Forbes

Wall Street Journal:  Justice Department Learned of Lost IRS Emails From Press, Official Says:

Justice Department officials didn't learn until June that the Internal Revenue Service had lost two years' worth of emails that could shed light on the agency's treatment of conservative groups, a top Justice official said.

Deputy Attorney General James Cole told a congressional panel Thursday that the agency learned from press accounts in June that the IRS had lost the emails. The Justice Department announced more than a year earlier, in May 2013, that it was investigating the alleged IRS targeting of conservative groups, after an inspector general found tea-party groups faced unusual scrutiny and lengthy delays as they sought tax-exempt status.

Republicans said the disclosure supports their claim that the Justice Department hasn't been aggressive in pursuing its investigation of the matter.

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July 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 17, 2014

Manipulating Citation Rankings

Inside Higher Ed, Manipulating Citation Rankings?:

Highly Cited 2The possession by Saudi Arabia’s King Abdulaziz University of more highly cited researchers than almost any other university in the world raises questions about institutions’ ability to manipulate global rankings.

This is the view of two researchers who last week posted on the arXiv preprint server a paper that ranks universities by the number of highly cited researchers who list them as affiliations. [Which of the World’s Institutions Employ the Most Highly Cited Researchers? An Evaluation of the Data From Highlycited.com] ... They examined the addresses on papers written by the world’s most highly cited researchers between 2002 and 2012, as revealed by Thomson Reuters last month. ...

[T]he University of California system is listed as the primary affiliation of 179 highly cited researchers, followed by Harvard University with 106 and Stanford University with 56. However, some authors also list secondary academic affiliations. When ranked according to how many highly cited researchers list them as either a primary or a secondary affiliation, the University of California remains top, with 198, but King Abdulaziz University leaps from nowhere to second, with 163.

Noting that the Academic Ranking of World Universities, often known as the Shanghai Jiao Tong rankings, takes into account an institution’s proportion of highly cited researchers, the paper says that “the results for King Abdulaziz illustrate that university rankings can be manipulated.” ...

Saudi Arabia is the country with by far the highest proportion (82 percent) of highly cited researchers who list its institutions only as secondary overseas affiliations. The second highest is South Africa, with 45 percent. King Abdulaziz is listed as a secondary affiliation by 122 researchers, compared with 27 for the next most commonly listed institution, Harvard. ...

[S]ome Saudi Arabian universities, including King Abdulaziz, offer highly cited researchers lucrative adjunct professorships, with minimal requirements for them to be physically present, in return for being listed by them as a secondary affiliation. ... King Abdulaziz did not respond to a request for comment.

July 17, 2014 in Legal Education | Permalink | Comments (2)

District Court Joins Loving, Holds IRS Lacks Statutory Authority to Regulate Tax Return Preparers

RTRPThe U.S. District Court for the District of Columbia yesterday followed Loving v IRS, 742 F.3d 1014 (D.C. Cir. 2014), and held that the IRS lacks statutory authority to regulate tax return perparers.  Ridgely v. Lew, 1:12-cv-00565 (D.D.C. July 16, 2014).

Prior TaxProf Blog coverage:

July 17, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

American Cities Couple Progressive Spending With Broad-based Taxes to Combat Inequality

Slate:  You Don’t Have to Move to Scandinavia:  American Towns Are Also Spending More on Social Programs as Inequality Rises, by Leah Platt Boustan (UCLA),  Hernan Winkler (World Bank) & Eric M. Zolt (UCLA):

The New York Times travel section, not known for its frugality, recently warned readers about the sticker shock of a Scandinavian vacation. “Prices do mean that unless money is no object, you’ll need to modify expectations,” the piece advised. In Norway, a burger and fries at a fast food joint will set you back $23. A six-pack of warm grocery-store beer is nearly $30. These hefty price tags are due, in part, to high wages for low-skilled service jobs. But high taxes play a role too. Most products have a 25 percent value-added tax, which means that $5.50 of the cost of that burger goes to fund Norway’s generous social programs.

As a visitor, you get little for the added price. But, as a resident, your daily spending helps to fund an expansive package of benefits, including health care, child care, high-quality education, pensions, and unemployment insurance. While many Americans admire European social safety net, what they may not appreciate is that these programs are typically paid for by a bundle of taxes that are much less progressive than taxes here. In large part, these benefits are not funded by high-income taxes on the rich. Instead, the beneficiaries of the public services also pay for them, kroner by kroner, through high consumption taxes.

Could this system work to combat income inequality in the United States? Usually, the assumption is no, even though the most popular social insurance program in the country, Social Security, fits this template. We’ve recently published research that adds surprising support for the argument that the European model of progressive spending funded by broad-based taxes could work more widely here—by showing that it’s already happening at the local level.  [The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence from U.S. Municipalities and School Districts, 1970-2000, 95 Rev. Econ. & Stat. 1291 (2013)]

July 17, 2014 in Tax | Permalink | Comments (0)

Death of the WSJ's Arden Dale

DaleWall Street Journal, Arden Dale, Dow Jones Writer, Dies:

Arden Dale, who covered taxes and estate planning at The Wall Street Journal, died Sunday at her home in Maplewood, N.J., after a battle with cancer. She was 54 years old.

She had a long and distinguished career with Dow Jones and the Journal. She was managing editor for energy coverage at Dow Jones Newswires in the early 2000s, and then a senior writer on personal-finance issues for Wealth Adviser.

"We are deeply saddened by Arden's death. She was a highly talented and widely respected journalist and colleague. Arden served Dow Jones, The Wall Street Journal and their readers well in important news management and reporting positions," said Neal Lipschutz, a deputy managing editor of the Journal.

I blogged Arden's final column, in May, Skirting the New Investment Tax: 'Active' Business Owners Can Escape the 3.8% Investment Tax—If They're Truly Active

July 17, 2014 in Obituaries, Tax | Permalink | Comments (1)

New England Dean John O'Brien Receives 2014 ABA Kutak Award

O'BrienFollowing up on my previous posts:

ABA, John F. O'Brien is 2014 Kutak Award Recipient:

John F. O’Brien, dean and professor of Law at New England Law| Boston, is the 2014 Robert J. Kutak Award Recipient. The ABA Section of Legal Education and Admissions to the Bar and the Kutak Rock national law firm established the Robert J. Kutak Award in 1984. The award is given annually to an individual who has contributed significantly toward increased cooperation among legal education, the practicing bar, and the judiciary. ...

Above the Law, ABA To Honor Law Dean Who Has Done The Most To Embarrass Legal Education

July 17, 2014 in Legal Education | Permalink | Comments (2)

Federalist Society Hosts Teleforum Conference Call Today on Who Judges Who is a Judge?

The Federalist Society hosts a Teleforum Conference Call today at 1:00 p.m. EST on Who Judges Who is a Judge? with Kristin E. Hickman (Minnesota) and Tuan Samahon (Villanova):

FSAt bottom, in Kuretski v. Commissioner  presidential power is at stake. Judges of the U.S. Tax Court (26 USC 7443(f)), were arguably characterized by the U.S. Supreme Court, in Freytag v. Commissioner, as exercising a portion of the judicial power of the United States. Recently, however, the D.C. Circuit Court of Appeals disagreed when it found that the Tax Court exercises only executive power. What are the implications of the D.C. Circuit Court’s opinion on the president’s removal power? Has the D.C. Circuit misread Freytag, or faithfully applied it?

Prior TaxProf Blog op-eds on Kuretski:

July 17, 2014 in Legal Education, Tax | Permalink | Comments (0)

Gamage: Analyzing the Optimal Choice of Tax Instruments

David Gamage (UC-Berkeley), Analyzing the Optimal Choice of Tax Instruments: The Case for Levying (all of) Labor-Income Taxes, Value-Added Taxes, Capital-Income Taxes, and Wealth Taxes, 68 Tax L. Rev. ___ (2014):

Economic analyses of taxation have largely focused on the problems of labor-to-leisure and saving-to-spending distortions. Based on these analyses, the prior literature has generally treated labor-income and consumption taxes as being essentially equivalent, and has also treated capital-income and wealth taxes as being essentially equivalent. Further, based on these analyses, the dominant view in the prior literature has been that neither capital income nor wealth should be taxed.

This Article expands on these prior analyses by incorporating a variety of tax-gaming responses and also administrative and compliance costs. By doing so, this Article argues that it is probably optimal for governments to levy some version of (all of) labor-income taxes, value-added taxes, capital-income taxes, and wealth taxes.

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July 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

Madison: The Futility of Tax Protester Arguments

Allen D. Madison (South Dakota), The Futility of Tax Protester Arguments,  36 T. Jefferson L. Rev. 253 (2014):

Tax protesters offer uncommonly silly arguments in support of their positions -- so silly, in fact, that courts commonly refuse to address them, lest those arguments be given any credence. Yet the wave of tax protestor arguments has not ebbed, and tax protestors continue to challenge, for example, the legal obligation to pay taxes, the constitutionality of the income tax, and the authority of the IRS to enforce the tax laws.

Maybe some education will help solve this problem. This Article provides a framework for analyzing tax protestor arguments through a civics discussion and explains why tax protestor arguments fail under our system of government.

July 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 434

IRS Logo 2Wall Street Journal:  Justice Dept. to Investigate Lost IRS Emails:

The Justice Department is conducting a criminal investigation into the loss of Internal Revenue Service emails that could shed light on the agency's treatment of conservative groups.

As part of its criminal probe into the IRS's treatment of politically active conservative groups, the Justice Department is "investigating the circumstances of the lost emails from [former IRS official Lois Lerner's] computer," according to prepared testimony by James Cole, the deputy attorney general. Mr. Cole is set to appear at a hearing scheduled for Thursday before a panel of the House Oversight and Government Reform Committee. The Wall Street Journal reviewed his prepared testimony on Wednesday. ...

Mr. Cole's comments underscore the potential seriousness of the email loss, which has roiled congressional probes of the matter and angered some top GOP lawmakers. The IRS has blamed the loss on a crash of Ms. Lerner's hard drive—a common occurrence at the agency, officials say. They add a backup tape also was routinely recycled after six months.

Some Republicans regard the timing of the email loss in 2011 as suspicious, however, noting that it came just days after Republicans began questioning the agency's treatment of politically active conservative donors and groups.

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July 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 16, 2014

Largest Employment Gains by Law School

National JuristNational Jurist, Largest Employment Gains by School:

While the nationwide employment rate for recent graduates has been largely flat during the past few years, some schools have bucked the trend and significantly improved their employment rates. Twenty law schools improved their employment rate by 10% or more during the past two years, according to a formula created by The National Jurist to analyze data from the ABA. ... The National Jurist calculates its employment rate using a formula that tracks full-time bar passage required employment at 100%, full-time-JD preferred employment at 70%, and ten other categories at percents from 60% to as low as 10% for non-professional, full-time positions.

Top Schools by Improvement 2011 2013   % Improved
1.  Willamette 57.4% 77.2% 19.7
2.  Illinois 64.5% 81.5% 17.1
3.  Brooklyn 59.0% 76.1% 17.0
4.  Appalachian 44.1% 60.6% 16.5
5.  Toledo 52.3% 68.1% 15.7
6.  Washburn 63.7% 78.5% 14.8
7.  Georgetown 76.0% 90.4% 14.4
8.  William & Mary 73.5% 87.1% 13.6
9.  Boston University 64.2% 77.6% 13.4
10. Case Western 63.8% 76.6% 12.8
11. Pepperdine 56.2% 67.9% 11.8
12. Southern Illinois 71.3% 82.7% 11.4
12. New Hampshire 67.8% 79.1% 11.4
14. University of Washington 70.5% 81.6% 11.1
15. Kansas 68.1% 79.1% 11.0
16. Maine 53.3% 63.8% 10.5
17. UDC 38.9% 49.2% 10.3
18, UCLA 74.7% 84.9% 10.2
19. CUNY 48.3% 58.4% 10.1

July 16, 2014 in Legal Education | Permalink | Comments (6)

National Taxpayer Advocate Releases Mid-Year Report to Congress

TASNational Taxpayer Advocate Nina Olson today released (IR-2014-78) her semi-annual report to Congress, FY 2015 Objectives Report to Congress:

[The report] identifies key issues, goals and activities TAS will focus on during the upcoming fiscal year. These include the implementation of the Taxpayer Bill of Rights, resolving refund delays for victims of return preparer fraud, and the need for minimum standards for tax return preparers. This year's report also includes a Volume II that outlines formal IRS responses to the 25 most serious taxpayer problems identified by the NTA in her 2013 Annual Report to Congress, as well as the NTA’s comments on those responses.

July 16, 2014 in IRS News, Tax | Permalink | Comments (1)

CNN: Go to Law School. Rack Up Debt. Make $62,000

CNN Money, Go to Law School. Rack Up Debt. Make $62,000:

CNNLeslie Thompson earns $40,000 a year working two jobs, but her Albuquerque, N.M., house almost went into foreclosure twice this year.

Thompson's trade? She's a lawyer.

Lawyers have been struggling for a while now, but it's gotten even worse: Half of lawyers are now starting at a salary of less than $62,000 a year, according to the National Association for Law Placement.

Not only that, but starting salaries have fallen 13% over the past six years, down from $72,000 in 2008. At the same time, lawyers' student debts are piling up. Thompson is carrying over $150,000 in student loans.

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July 16, 2014 in Legal Education | Permalink | Comments (14)

Bankruptcy’s Corporate Tax Loophole

Diane Lourdes Dick (Seattle), Bankruptcy’s Corporate Tax Loophole, 82 Fordham L. Rev. 2273 (2014):

Imagine you are a company with a failing business that is drowning in debt. On the bright side, you also possess a very valuable asset. This asset is unique because, unlike most assets, if you liquidate the business through a Chapter 7 bankruptcy, it will be extinguished and its value will not be realized by any shareholders or creditors. On the other hand, even if you substantially liquidate the business using Chapter 11, you can, thanks to an extraordinary ambiguity in the law, preserve this valuable asset. Even better, you can direct the value of this asset to your preferred stakeholders—whether they are shareholders or creditors—rather than have the asset’s value allocated among stakeholders according to bankruptcy’s absolute priority rule. You can do this because you have the most information about this valuable asset and because bankruptcy law and courts effectively ignore its existence, leaving you to allocate its value as you see fit. What is this unique asset? Valuable tax attributes, including net operating losses and credit carryovers. This scenario is not purely hypothetical; Solyndra and Washington Mutual, among others, have effectively used Chapter 11 to divert the value of tax losses and credits to a select group of shareholders and creditors in contravention of bankruptcy‘s distributional norms. This Article recommends statutory revisions to the tax and bankruptcy laws to remove the unintended tax advantage and thus neutralize the tax consequences of corporate restructuring decisions.

July 16, 2014 in Scholarship, Tax | Permalink | Comments (1)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through July 1, 2014) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

39,386

Reuven Avi-Yonah (Mich.)

6823

2

Paul Caron (Pepperdine)

26,267

Paul Caron (Pepperdine)

2702

3

Louis Kaplow (Harvard)

22,744

Richard Ainsworth (BU)

2686

4

D. Dharmapala (Illinois)

19,997

D.Dharmapala (Illinois) 

2585

5

Vic Fleischer (San Diego)

19,867

Richard Kaplan (Illinois)

1930

6

James Hines (Michigan)

19,626

Bridget Crawford (Pace)

1900

7

Ted Seto (Loyola-L.A.)

19,004

Katie Pratt (Loyola-L.A.)

1893

8

Richard Kaplan (Illinois)

18,863

Ed Kleinbard (USC)

1825

9

Katie Pratt (Loyola-L.A.)

15,918

Omri Marian (Florida)

1787

10

Dennis Ventry (UC-Davis)

15,341

Louis Kaplow (Harvard)

1751

11

Carter Bishop (Suffolk)

14,896

Robert Sitkoff (Harvard)

1713

12

Jen Kowal (Loyola-L.A.)

14,185

Brad Borden (Brooklyn)

1705

13

David Weisbach (Chicago)

14,162

Jen Kowal (Loyola-L.A.)

1628

14

Chris Sanchirico (Penn)

14,136

James Hines (Michigan)

1466

15

David Walker (BU)

13,885

Dick Harvey (Villanova)

1442

16

Francinet Lipman (UNLV)

13,741

Jeff Kwall (Loyola-Chicago)

1442

17

Richard Ainsworth (BU)

13,692

Francine Lipman (UNLV)

1367

18

Bridget Crawford (Pace)

13,686

Ted Seto (Loyola-L.A.)

1362

19

Brad Borden (Brooklyn)

13,623

Dan Shaviro (NYU)

1350

20

Robert Sitkoff (Harvard)

13,535

Carter Bishop (Suffolk)

1268

21

Ed Kleinbard (USC)

12,846

David Gamage (UCBerkeley)

1237

22

Herwig Schlunk (Vanderbilt)

12,442

Vic Fleischer (San Diego)

1190

23

Dan Shaviro (NYU)

11,947

Brian Galle (BC)

1189

24

Ed McCaffery (USC)

11,692

Dan Simmons (UC-Davis)

1184

25

Wendy Gerzog (Baltimore)

11,682

Chris Sanchirico (Penn)

1169

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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July 16, 2014 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

CPAs Sue IRS, Say its 'Voluntary' Regulation of Tax Preparers Lacks Authorization From Congress

RTRPFollowing up on my prior post, CPAs: IRS's 'Voluntary' Regulation of Tax Preparers Lacks Statutory Authorization From Congress, Contravenes D.C. Circuit Decision, and Violates Administrative Procedure Act:  the American Institute of CPAs yesterday sued the IRS in the U.S. District Court for the District of Columbia over its new "Voluntary" Tax Return Preparer Program:

July 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

50 Colleges Charge > $60,000/Year

Business Insider, There Are Now 50 Colleges That Charge More Than $60,000 Per Year:

As the average cost of higher education in America continues to rise, at least 50 American colleges and universities are now charging students more than $60,000 per year. ... Last year, only nine colleges charged more than $60,000.

25 Most

July 16, 2014 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 433

IRS Logo 2Forbes:  Is the IRS Scandal Microsoft's Fault?, by Gene Marks:

Hmm….maybe Microsoft is to blame for this whole IRS-email thing.

Just last week, “…a second federal judge has now ordered the IRS to explain under oath how the agency lost emails from former division director Lois Lerner, the woman at the heart of the Tea Party targeting scandal. U.S. District Court Judge Reggie Walton told Obama administration lawyers on Friday he wants to see an affidavit explaining what happened with Lerner’s hard drive. The IRS claims her computer suffered a crash in 2011 that wiped her email records at the time clean.”

Ah-hah! It’s a brilliant ploy. Can’t provide emails requested by the courts? Then just blame the computer guys! The computers crashed. It was a blue screen of death. You know what’s it like with Windows, right? We’ve all had this happen to us before. Who hasn’t had their computer crash? Curse you, Microsoft! This must be your fault! You’ve foiled us again!

I don’t know if the IRS did anything wrong – that’s for the courts to decide. But I do know a little something about information technology. And this is an IT issue. Judges. Lawyers. IRS people. Congressmen. The Media. Everyone’s trying to get to the bottom of the lost emails. But there’s one group of people missing from the conversation: the tech people. I don’t mean the ones who work for the IRS. They’re scrambling, I’m sure. The ones who should be subpoenaed are the ones who work at IT firms, like mine, across the country. They will tell a different story. When we hear that emails were just “lost,” especially in 2011, we scratch our heads in amazement. Ask any IT firm, the clients they serve, or the IT people that work in corporate America: e-mails don’t get “lost.” And frankly, computers don’t really crash very often. That was a great excuse in…oh…1995. But not anymore.

In other words: you can’t blame Microsoft. Nice try. ...

[D]id Ms. Lerner’s computer really crash, wiping out all her data, including emails? That story’s really hard to believe for anyone with an IT background. It’s easy to blame Microsoft for our problems. That used to be a great excuse. But that excuse is getting harder and harder for anyone, even the IRS, to make.

Continue reading

July 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, July 15, 2014

8th Circuit Orders New Trial in Unsuccessful Republican Faculty Candidate's Discrimination Suit Against Iowa Law School

Wagner 2Following up on my previous posts (links below) about Teresa Wagner's federal lawsuit claiming she was denied a faculty position because of her conservative views:  the Eighth Circuit today reversed and ordered a new trial.  Wagner v. Jones, No. 13- 1650 (8th Cir. July 15, 2014).

Prior TaxProf Blog coverage:

July 15, 2014 in Legal Education | Permalink | Comments (8)

House Votes to Cut IRS Budget 13% (21% Below Obama's Request)

IRS Logo 2Bloomberg:  IRS Budget Sliced 13% as U.S. House Constrains Tax Agency:

The House of Representatives voted to cut the IRS’s budget by $1.14 billion in another blow to the tax agency.  ... The changes would leave the IRS with a budget of $9.8 billion for the fiscal year that starts Oct. 1, 13 percent below this year’s funding level and 21 percent below the administration’s request.

July 15, 2014 in IRS News, Tax | Permalink | Comments (0)

John Oliver on Income and Wealth Inequality

There is a great discussion of the estate tax beginning at 7:20.  (Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

(Hat Tip: Deborah Schenk.)

July 15, 2014 in Tax | Permalink | Comments (1)

Moody's: Negative Outlook for Higher Education Continues Even as Green Shoots of Stability Emerge

Moody'sMoody's Investor Services, Negative Outlook for US Higher Education Continues Even as Green Shoots of Stability Emerge:

We maintain a negative outlook for the US Higher Education sector due to limited revenue growth prospects over the next 12 to 18 months, while expense pressures will constrain the ability of many universities to adjust. We expect regional public universities to be most pressured over the next 12 to 18 months while globally prominent private universities with large endowments will perform well, even as they continue to focus on improved financial operations. Despite ongoing strains, emerging trends point to possible stabilization of credit conditions over the next year.

Moody's

July 15, 2014 in Legal Education | Permalink | Comments (0)

More on the Tax-Driven Inversion Mania

IRS Says President's Use of University-Provided House Constitutes Taxable Income

Columbus Dispatch, IRS Sees Ohio University President’s House as Taxable:

AthensWhen Roderick J. McDavis became Ohio University’s president a decade ago, he moved into 29 Park Place, a 7,000-square-foot, 2 1/2-story home at the heart of OU’s campus in Athens.

The rent is free, and McDavis’ contract says he has to live in the house. Plus, it’s convenient for McDavis, administrators, faculty members and students to have him so close to the office.

So should he pay income taxes on the house as a benefit? Many Ohio universities say no. The Internal Revenue Service says yes.

An ongoing IRS audit of OU found that McDavis should pay taxes on his free residency at OU. The university’s board of trustees thought otherwise, voting last month to cover the “unexpected” cost: about $19,000 in federal, state and local taxes for this year. ...

Including his salary, bonuses and other pay, McDavis made nearly $600,000 during the 2013 fiscal year. ...

Meanwhile, several leaders of other Ohio universities with arrangements similar or identical to OU’s are still living tax-free, The Dispatch found. Ohio State University and at least five other universities own their presidents’ residences, and none asks its president to pay rent or taxes.

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July 15, 2014 in Legal Education | Permalink | Comments (14)

Rodriguez: Law Schools and the Lost Generation

Dan Rodriguez (Dean, Northwestern; President, AALS), Law Schools and the Lost Generation:

Elie Mystal has a post today on Above the Law that gets to the heart of a real problem, and one which potentially will only grow in significance and impact. Law grads, as he notes, feel increasingly disaffected from their law schools once they graduate, this disaffection being tied not principally (my characterization, not his) to the quality of the education provided, but to the employment outcomes and correlative debt burden suffered by students out in the marketplace with challenges and stress. In the law schools, we call this group (grads of the last seven years or so) “the lost generation.”

The basic problem which undergirds Elie’s righteous and thoughtful post is that law schools too often regard their unemployed or underemployed graduates, more than, say, a year out, as someone else’s problem. Even those law schools that work hard, and creatively, to increase employment opportunities for their current students and newly-minted graduates lack the clear incentives to continue that assistance — and in a tangible way — over the several beginning years of their graduates’ careers. No wonder why young alums perceive their law school as connecting with them only with their hands out for money. They are more right than wrong.

Let’s keep it real and say, again with credit to Elie’s main message in this post that law schools must be proactive and strategic in providing their graduates with assistance over at least the first few years following graduation.

Elie Mystal (Above the Law), Who Is To Blame For Declining LSAT Applications?:

If you look at the general trend of law school reforms, such as they are, they’re all designed to appeal to the next crop of law students. Law schools are doing nothing to to ameliorate the losses of their former recent students. ...

Law schools think that their recent graduates who got screwed aren’t their problem anymore. In fact, those guys are the biggest problem for law schools. It’s those people, more than anybody else, who are telling their friends and family to “stay away.” It’s those parents who are saying to other parents “my kid went to law school, and look what happened.” Law school deans, economists, and (some members of) the media act like the glut of unemployed and under-employed law graduates no longer affects the market going forward because they’re no longer competing for the choice entry-level jobs. But these people didn’t just die. They’re still out there, still struggling, and still telling their stories to anyone who will listen.

Law schools have created an army of people who tell other people not to go to law school. That is their legacy over the past half decade. Their damage to their own brands is severe.

July 15, 2014 in Legal Education | Permalink | Comments (23)

Ault, Schoen & Shay: Base Erosion and Profit Shifting: A Roadmap for Reform

Hugh J. Ault (Boston College), Wolfgang Schoen (Max Planck) & Stephen E. Shay (Harvard), Base Erosion and Profit Shifting: A Roadmap for Reform, 68 Bull. Int'l Tax'n 275 (2014):

In this Editorial, the authors explain the context of this special issue of the Bulletin for International Taxation. The fundamental premise of the BEPS project is that a coordination of national responses to BEPS can both eliminate double non-taxation and protect against material unrelieved double taxation. The articles in this issue further a dialogue among tax policymakers, taxpayers, advisors and academics that is critical to achieve this objective.

July 15, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 432

IRS Logo 2The Weekly Standard:  More Than a Smidgen, by Stephen F. Hayes:

The facts are simple. The IRS systematically targeted conservative and Tea Party groups after their activism proved decisive in the 2010 midterm elections—Obama’s famous “shellacking.” The effects of this targeting were widespread. Some Tea Party groups were neutered in the months before the 2012 presidential election.

Few of the explanations or justifications of this targeting provided by IRS leaders and Obama administration officials have held up. IRS officials at first denied that any targeting had taken place. That was false. They later claimed that the targeting had involved only low-level employees in the Cincinnati office. That was false. They argued that conservative groups weren’t singled out, that progressive groups were subject to the same level of scrutiny. That was false. They argued that the IRS has complied with all requests for information from Congress. That was false.

Three years ago, on June 3, 2011, Representative Dave Camp, chairman of the House Ways and Means Committee, wrote to the IRS requesting all information—including emails and other communication—related to the alleged targeting of conservative groups. Ten days later, Lois Lerner, the woman at the center of the targeting, reported to the IT team at the IRSthat her hard drive had crashed. IRS leaders, questioned repeatedly about Lerner’s emails in subsequent congressional hearings, made no mention of the hard drive crash. Earlier this summer, IRS director John Koskinen disclosed that thousands of Lerner emails—including many of those sent to executive branch agencies—were missing because of the alleged computer problems. From her first appearance before a congressional committee, back in May 2013,Lerner has exercised her right against self-incrimination and refused to testify.

Last week brought a significant new revelation: an email in which Lerner seeks advice about keeping information from Congress. ... She knew that the IRS scandal was about to explode.

At the time Lerner sent the email, IRS officials had recently learned that the Treasury inspector general would be issuing a report the following month criticizing the agency for its targeting of conservative groups. And Lerner’s email came just before she planted a question in the audience at an American Bar Association conference on May 10 in an effort to get out in front of the controversy.

These facts lead to one conclusion: Lois Lerner and other top IRS officials were desperate to keep information on the targeting of conservative groups from Congress. 

It’s crucial to understand why. And that will require a special prosecutor.

Town Hall:  Reality of the IRS Scandal, by Bruce Bialosky (Founder, Republican Jewish Coalition):

People who are not distraught about Lois Lerner and the IRS must have never actually dealt with the organization. As someone who has for 36 years, it is clear that at best we are dealing with fabrications and at worst outright lies and criminal actions. The fact that any American --let alone the national press, Congressional Democrats, and the White House – might not be agitated is dangerous for our society.

First, let us be clear: despite billions of dollars of taxpayer money being spent on improving their computer system, it is still rank. Second, the Internal Revenue has gradually over my career asserted more and more control at higher levels leaving agents and revenue officers less flexibility. That means there is less opportunity for an agent in the field to make their own decisions about any matter.

If you ever sat in an IRS office or waited endlessly on the telephone, you would know that this entire scenario of lost emails is not remotely plausible.

Las Vegas Review-Journal editorial:  Lerner Must Testify Without Immunity in IRS Scandal:

Last week, an Arizona Republic editorial stated that the only way to move this investigation forward is to get Ms. Lerner to talk — via immunity from prosecution. Ms. Lerner needs to talk, all right, but in light of the past week’s news, she cannot possibly be given immunity. The IRS regularly operates with absolute ruthlessness and no mercy in its dealings with the public, and in this case, we’ve seen nothing but complete contempt from the highest-ranking agency officials, all as the administration looks the other way and President Barack Obama himself says there’s “not even a smidgen of corruption” within the IRS.

Remember, this isn’t about partisan sniping. This is about an executive branch agency working to influence the outcome of the 2012 election in favor of the party — and the president — in power.

It’s one thing to offer reduced sentences or penalties for cooperating, but full immunity must be off the table. Ms. Lerner and the IRS are long overdue for a heavy dose of karma.

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July 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Monday, July 14, 2014

Grewal: Mixing Management Fee Waivers with Mayo

Florida Tax ReviewAndy Grewal (Iowa), Mixing Management Fee Waivers with Mayo, 16 Fla. Tax Rev. 1 (2014):

This Article examines whether the management fee waiver strategy used by private equity firms to convert ordinary income into long-term capital gains actually works. Scholars have almost uniformly condemned the strategy, calling it "extremely aggressive," "profoundly piggish," or illegal. However, this Article shows that the critics substantially overstate their case (the provision of law most frequently cited by the critics doesn't even exist), especially in light of the changes in the tax-administrative law landscape wrought by Mayo v. United States.

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July 14, 2014 in Scholarship, Tax | Permalink | Comments (0)

Lurie: The ObamaCare 3.8% Tax on Investment Income: A Second Income Tax

BenefitsLink.com: Obama's Trojan Horse: A 3.8% Medicare Surtax? No. A Free-Standing Second Income Tax? Yes. A Well-Kept Secret? You Bet, by Alvin D. Lurie:

The parties have continued to wage this war over innumerable aspects of the Affordable Care Act, most especially the technical failures that occurred during the rollout of the federal insurance exchange at the end of 2013 and into the first quarter of the current year. Doubtless this will continue to be one of the principal themes trumpeted by the Republicans during the upcoming midterm elections in November 2014. What is surprising is that they have not, even at this writing -- over four years after enactment of the ACA, two national elections held since then, and another one barely six months away -- launched any attacks against inclusion in the ACA of a tax that is misnamed (misleadingly so) as a "Medicare contribution" levy, purportedly (again misleadingly) to provide the revenues to support the government expenses associated with administering the ACA. One would have thought that tax would have provided the Republicans with their best point of attack against the Affordable Care Act.

In truth, the tax, imposed specifically on "net investment income," is a new income tax, now actually a part of the Internal Revenue Code (numbered section 1411), operating exactly the same as the long-standing regular income tax, calculated on a new form created for it and the total now reportable on a line added to Form 1040. It is, in fact, much more challenging to calculate than most of the long-time familiar ordinary, alternative minimum and capital gains components of the regular income tax, because of many new technical rules and difficult factual determinations necessary for its proper application. High rates of miscalculation by taxpayers are a certainty because of the difficulties inherent in the process, and because the rules themselves will be in flux for a lengthy period, until the Treasury, IRS and ultimately the courts put their respective stamps on the statute.

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July 14, 2014 in Tax | Permalink | Comments (1)

Fall 2014 Law Review Article Submission Guide

Nancy Levit (UMKC) & Allen Rostron (UMKC) have updated their incredibly useful document, which contains two charts for the Fall 2014 submission season covering 203 law reviews.

The first chart (pp. 1-51) contains information gathered from the journals’ websites on:

  • Methods for submitting an article (such as by e-mail, ExpressO, regular mail, Scholastica, or Twitter)
  • Any special formatting requirements
  • How to request an expedited review
  • How to withdraw an article after it has been accepted for publication elsewhere

The second chart (pp. 52-58) contains the ranking of the law reviews and their schools under six measures:

  • U.S. News: Overall Rank
  • U.S. News: Peer Reputation Rating
  • U.S. News: Judge/Lawyer Reputation Rating
  • Washington & Lee Citation Ranking
  • Washington & Lee Impact Factor
  • Washington & Lee Combined Rating

They also have posted a list of links to the submissions information on each law journal’s website. Nancy notes:

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July 14, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Germany Loses in Philosophers' World Cup

On the heels of its stirring victory in yesterday's Soccer World Cup, Germany suffered a last-second loss in the Philosophers' World Cup:

July 14, 2014 in Legal Education | Permalink | Comments (0)

Hariton: Should Share Repurchases Be Dividends to Remaining Holders?

Tax Analysys Logo (2013)David P. Hariton (Sullivan & Cromwell, New York), Should Share Repurchases Be Dividends to Remaining Holders?, 144 Tax Notes 175 (July 14, 2014):

Under current law, holders of common stock pay less tax than holders of debt, and arguably less tax than might be deemed desirable from a utilitarian perspective. The most frequently proposed solution is to require investors to mark publicly traded stocks to market and pay current tax on their associated gains. But there is a more modest alternative that might present fewer problems and better target the simple objective of ensuring that most shareholders pay at least some amount of tax.

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July 14, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (3)

ABA/NYLS 2014 Skills Training for Estate Planners

EPThe five-day 2014 Skills Training for Estate Planners hosted by the ABA Section of Real Property, Trust and Estate Law and New York Law School kicks off today:

The annual Skills Training for Estate Planners CLE program is for attorneys who practice, or plan to practice, estate planning law. This popular program has two courses of study:

The Fundamentals course is perfect for young or transitioning lawyers new to the practice and provides them with a strong educational experience focused on the “how to” of estate planning.

The Advanced Topics course focuses on current areas of interest and importance to lawyers experienced in estate planning and is an excellent opportunity to further expand their knowledge and skills.

This institute-type program provides a comprehensive CLE experience with coordinated sessions that build upon one another. It’s held annually at New York Law School in the Tribeca neighborhood of downtown Manhattan.

July 14, 2014 in Conferences, Tax | Permalink | Comments (0)

The IRS Scandal, Day 431

IRS Logo 2National Review:  The ‘Independent’ Counsel Mirage: Don’t Hand the IRS Investigation Over to a Special Prosecutor, by Andrew C. McCarthy:

I confess to being amazed that President Obama and his trusty attorney general, Eric Holder, have not mollified their detractors by appointing an “independent counsel” to investigate the IRS scandal.

“Why,” you ask, “would Obama sic a prosecutor with independence from Holder’s Justice Department on a component of the Obama administration?” The real question is: Why hasn’t he?

The disconnect here lies in the public’s perception — and, perhaps, the perception of some congressional Republicans who ought to know better — of what an “independent counsel” really is. Independence is a mirage: Obama’s critics crave an evenhanded investigation of executive lawlessness and, in the Washington fashion, they have convinced themselves that wishing can make it so. As it actually exists, however, an “independent counsel” would be tailor-made for letting the administration and the IRS dodge accountability. ...

You can have political accountability for abuses of power or you can have an “independent” counsel and “the process.” Political accountability is driven by congressional investigations and court cases brought by citizens whose rights have been trampled. It is messy, combative, and political, but the malfeasance it uncovers can result in the removal of corrupt officials from power.

By contrast, “the process,” under the steady hand of “independent” counsels, is neat, silent, and somnolent. In fact, once it starts, that may be the last you hear about it until President Obama pardons everyone on his way out the door.

Time:  After “Tea Party” Scandal, IRS to Rubber Stamp Tax-Exempt Status for Most Charities:

Amid ongoing controversy over its scrutiny of non-profits, the Internal Revenue Service has decided it will no longer screen approximately 80% of the organizations seeking tax-exempt charitable status each year, a change that will ease the creation of small charities while doing away with a review intended to counter fraud and prevent political and other non-charitable groups from misusing the tax code.

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July 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

San Diego Tax Prof Dinner

Dinner 5

From left: Jordan Barry (San Diego, Francine Lipman (UNLV), Vic, Penelope and Miranda Fleischer (San Diego), Paul Caron (Pepperdine), and Richard Winchester (Thomas Jefferson).  Thanks to Francine for organizing the dinner and for surprising me with a cake celebrating TaxProf Blog's 10 Year Anniversary:

Dinner 2

July 14, 2014 in Legal Education, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, July 13, 2014

Are Law Professors (And Lawyers) Playing Baseball When We Should Be Playing Soccer?

SoccerNew York Times op-ed:  Baseball or Soccer?, by David Brooks:

Is life more like baseball, or is it more like soccer?

Baseball is a team sport, but it is basically an accumulation of individual activities. Throwing a strike, hitting a line drive or fielding a grounder is primarily an individual achievement. The team that performs the most individual tasks well will probably win the game.

Soccer is not like that. In soccer, almost no task, except the penalty kick and a few others, is intrinsically individual. Soccer, as Simon Critchley pointed out recently in The New York Review of Books, is a game about occupying and controlling space. If you get the ball and your teammates have run the right formations, and structured the space around you, you’ll have three or four options on where to distribute it. If the defenders have structured their formations to control the space, then you will have no options. Even the act of touching the ball is not primarily defined by the man who is touching it; it is defined by the context created by all the other players. As Critchley writes, “Soccer is a collective game, a team game, and everyone has to play the part which has been assigned to them, which means they have to understand it spatially, positionally and intelligently and make it effective.” ...

Most of us spend our days thinking we are playing baseball, but we are really playing soccer. We think we individually choose what career path to take, whom to socialize with, what views to hold. But, in fact, those decisions are shaped by the networks of people around us more than we dare recognize. ...

Once we acknowledge that, in life, we are playing soccer, not baseball, a few things become clear.

First, awareness of the landscape of reality is the highest form of wisdom. It’s not raw computational power that matters most; it’s having a sensitive attunement to the widest environment, feeling where the flow of events is going. Genius is in practice perceiving more than the conscious reasoning.

Second, predictive models will be less useful. Baseball is wonderful for sabermetricians. In each at bat there is a limited range of possible outcomes. Activities like soccer are not as easily renderable statistically, because the relevant spatial structures are harder to quantify. Even the estimable statistician Nate Silver of FiveThirtyEight gave Brazil a 65 percent chance of beating Germany.

Finally, Critchley notes that soccer is like a 90-minute anxiety dream — one of those frustrating dreams when you’re trying to get somewhere but something is always in the way. This is yet another way soccer is like life.

For more, see The Role of Faculty Scholarship at Faith-Based Law Schools.

July 13, 2014 | Permalink | Comments (2)

The Tax Consequences of the Potato Salad Guy's Kickstarter Campaign

Kickstarter LogoTax Foundation: $21,000 Tax Bill Just for Some Potato Salad:

As of 2:30pm on July 9, 2014, Zack Danger Brown has amassed over $70,000 in pledges from donors using Kickstarter—a website that matches donors to projects—to make potato salad.

KS

Nearly 5,000 backers from across the world have chosen Brown’s potato salad project, and tens of thousands of dollars will be dished to Brown on August 2. But once these funds are given to Brown, they will constitute income that might mean a sizeable tax bill for Brown. Kickstarter explains how pledges are taxed:

In the U.S., funds raised on Kickstarter are considered income… A creator can offset the income from their Kickstarter project with deductible expenses that are related to the project and accounted for in the same tax year. For example, if a creator receives $1,000 in funding and spends $1,000 on their project in the same tax year, then their expenses could fully offset their Kickstarter funding for federal income tax purposes.

Kickstarter also notes creators “may be able to classify certain funds” as nontaxable gifts instead of income, so long as the funds were pledged with “detached and disinterested generosity,” but one look at Brown’s Kickstarter page shows that these funds probably won’t qualify.

Brown offers donor specific handouts, such as a recipe book with potato salad recipes from every donor country for pledges of $50 (so far 83 backers), potato salad themed hats for pledges of $25 (234 backers), and even a potato salad themed haiku for pledges of $20 (4 backers).

So, given that Brown’s funds will likely be considered income instead of non-taxable gifts, how much will he have to pay in federal, state, and local income taxes? ... In total, Brown’s federal, state, and local tax burden on his income of $65,912 is $21,167.49 for an effective tax rate of 32.11 percent, leaving him with take home pay of $44,744.51 less taxes and expenses.

Update (7/11/2014): Kickstarter has updated the funding totals (currently around $48,000 at 2:25pm). According to The Business Journals, the boost in total funds resulted from some fake pledges which have now been removed. Stay tuned, and we will update the final numbers once the remaining 21 days have expired.

Other commentators have pushed back on the Tax Foundation's analysis, arguing that the payments would constitute non-traxable gifts.

(Hat Tip: Eli Bortman, Allison Christians, Leandra Lederman.)

July 13, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Top 5 Tax Paper Downloads

The IRS Scandal, Day 430

IRS Logo 2Washington Post:  More IRS Smidgens Show Up. ‘Perfect.’, by Ed Rogers:

Anyone paying attention to the Internal Revenue Service scandal has been waiting for the next smidgen to drop. Well, two more hit pretty hard this week. At the president’s next encounter with the media, I will scream collusion if no one asks him for his exact definition of a “smidgen,” and if he thinks he has seen a smidgen of corruption yet. At this point, only the most gullible or culpable can continue to claim there is no compelling evidence in this case. Given the delays, lies and stonewalling, there is no viable argument against a special prosecutor.

In a stunning revelation this week, it was disclosed that former IRS official Lois Lerner told colleagues, “we need to be cautious about what we say in emails” and then proceeded to ask the IRS IT department, in an e-mail, “if [instant messaging] conversations were also searchable.”  When she was told they were not, she e-mailed back, “Perfect.” This is a smoking gun e-mail in that it makes plain she had a cover-up in mind. There is no other plausible explanation. ...

[A]s long as Lerner stays cool and the Obama Department of Justice has her back, the administration obviously thinks it can run out the clock on this scandal. But these revelations are definitely meaningful smidgens. At what point does a flock of smidgens become irrefutable evidence that deserves an independent examination?

Judicial Watch press release:

Judicial Watch announced today that on June 17, 2014, it filed a Freedom of Information Act (FOIA) lawsuit against the Department of Justice (DOJ) seeking the number of hours DOJ Attorney Barbara Bosserman expended in the investigation of the IRS targeting of conservative organizations seeking tax exempt status during the 2010 and 2012 elections cycles (Judicial Watch v. U.S. Department of Justice (No. 1:14-cv-01024)).

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July 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, July 12, 2014

Piketty's Failure to Account for Tax Law Changes Makes His Wealth Inequality Claims Worthless

CapitalWall Street Journal op-ed:  Why Piketty's Wealth Data Are Worthless, by Alan Reynolds (Cato Institute):

No book on economics in recent times has received such a glowing initial reception as Thomas Piketty's Capital in the Twenty-First Century (Harvard University Press, 2014). He remains a hero on the left, but the honeymoon may be drawing to a sour close as evidence mounts that his numbers don't add up.

Mr. Piketty's headline claim is that capitalism must result in wealth becoming increasingly concentrated in fewer hands to a "potentially terrifying" degree, on the grounds that the rate of return to capital exceeds the rate of economic growth. Is there any empirical evidence to back up this sweeping assertion? The data in his book—purporting to show a growing inequality of wealth in France, the U.K., Sweden and particularly the United States—have been challenged. And that's where the story gets interesting.

In late May, Financial Times economics editor Chris Giles published an essay that found numerous errors in Mr. Piketty's data. Mr. Piketty's online Response to FT was mostly about Europe, where the errors Mr. Giles caught seem minor. But what about the U.S.?

Mr. Piketty makes a startling statement: The data in his book should now be disregarded in favor of a March 2014 Power Point presentation, available online, by Mr. Piketty's protégé, Gabriel Zucman (at the London School of Economics) and his frequent co-author Emmanuel Saez (of the University of California, Berkeley). ...

Zucman-Saez concludes that there was a "large increase in the top 0.1% wealth share" since the 1986 Tax Reform, but "no increase below the top 0.1%." In other words, all of the increase in the wealth share of the top 1% is attributed to the top one-tenth of 1%—those with estimated wealth above $20 million. This is quite different from the graph in Mr. Piketty's book, which showed the wealth share of the top 1% (which begins at about $8 million, according to the Federal Reserve's Survey of Consumer Finances) in the U.S. falling from 31.4% in 1960 to 28.2% in 1970, then rising to about 33% since 1990.

In any event, the Zucman-Saez data are so misleading as to be worthless. They attempt to estimate top U.S. wealth shares on the basis of that portion of capital income reported on individual income tax returns—interest, dividends, rent and capital gains.

This won't work because federal tax laws in 1981, 1986, 1997 and 2003 momentously changed (1) the rules about which sorts of capital income have to be reported, (2) the tax incentives to report business income on individual rather than corporate tax forms, and (3) the tax incentives for high-income taxpayers to respond to lower tax rates on capital gains and dividends by realizing more capital gains and holding more dividend-paying stocks. ...

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July 12, 2014 in Book Club, Tax | Permalink | Comments (16)

Number of LSAT Test Takers in June Falls to 14-Year Low

Wall Street Journal, Number of LSAT Test Takers in June Falls to 14-Year Low:

Back in February, a slight dip in LSAT test-takers led Law Blog to wonder if the law-school crisis had turned a corner? The latest LSAT numbers suggest law schools are still digging into a hole.

The number of law school admission tests administered in June was down 9.1% compared to a year earlier, according to figures released by the Law School Admission Council on Thursday.

The 21,802 people who sat for the test last month is the lowest June total in 14 years, suggesting that law schools may still be having difficulty convincing college graduates on the value of a J.D. degree. For schools, it’s a step backward after the glint of hope they got in February when the number of law school admission tests administered inched up 1.1% over the February 2013 total.

LSAC

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

Typically, June has the highest proportion of first-time LSATs (~70 percent between 2010 and 2012). This June low bodes ill for the number of applicants next fall. ...

Chart 1

July 12, 2014 in Legal Education | Permalink | Comments (8)

The Best Computer Monitor Setup for Lawyers

Lawyerist:  The Best Computer Monitor Setup for Lawyers:

MonitorsMost people focus on the CPU — the box that sits on or under your desk — when buying a computer. You will find regularly-updated buying guides full of specs for processor speed, memory, storage, etc., just about everywhere. But most CPUs will handle a lawyer’s basic computing needs. Specs are not what make for a good computing experience. A monitor, for example, is far more important than your computer’s processor’s clock speed.

I used to work in an outdoor store selling canoes and kayaks. Customers regularly came in planning to buy a $2,000 kevlar kayak, then went straight to the cheap paddles and PFDs (life jackets, if you prefer). But it makes much more sense to buy a $500 paddle, a high-end PDF, and a cheap kayak than it does to buy a $2,000 kayak, a $50 paddle, and a $20 PFD. The paddle will be in constant motion, and your PFD will be shifting with every movement. Cheap products mean slower progress, fatigue, sore wrists, and chafing.

Similarly, you will spend nearly all your time staring at your computer’s monitor, not pushing its CPU to the limit. You can run Microsoft Word and whatever else you use to manage your practice on a five-year-old laptop (at least). But a fuzzy picture, poor contrast, and limited adjustment will ruin your eyesight and contort your spine. Get a good monitor and cut costs on the CPU, if you have to. ...

There are good reasons to consider a second — or third or fourth — monitor. There are also some bad reasons to have extra screens.

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July 12, 2014 | Permalink | Comments (13)