TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, January 6, 2016

Hemel:  A Deeper Dive Into The Tax Returns Of The Top 400 Taxpayers

Following up on my recent posts:

University of Chicago Law Faculty Blog:  The Tax Returns of the Top 400: A Deeper Dive, by Daniel Hemel:

The IRS released data this week on the 400 individual income tax returns with the highest adjusted gross incomes (AGIs). According to the IRS data, the average federal income tax rate for the top 400 was 22.9% in 2013, down from a peak of 29.9% in 1995 (though up from a low of 16.6% in 2007). Much has been written about the IRS data already (and no doubt more will be written in the coming days and weeks), but three trends deserve more attention than they have drawn thus far.

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January 6, 2016 in IRS News, Tax | Permalink | Comments (0)

AALS President:  'I Don’t See Legal Education As Being In Crisis At All'

AALS (2017)National Law Journal, As Law Professors Convene, New Leader Looks to Unite Profession:

The nation’s largest gathering of law professors kicks off Jan. 6 in New York with the Association of American Law School’s 110th Annual Meeting. About 3,000 legal educators will convene for a five-day program with more than 200 sessions.

The National Law Journal spoke with incoming AALS President Kellye Testy, dean of the University of Washington School of Law, about the challenges law schools face and her goals for the coming year. Testy, whose research and teaching focuses on business law and equality issues, takes over the AALS helm from outgoing president Blake Morant, the dean at George Washington University Law School. ...

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January 6, 2016 in Legal Education | Permalink | Comments (10)

Ave Maria, Charleston & Thomas Jefferson Law Schools On Federal Government's Financial Watch List

ACTNational Law Journal, Three Law Schools Face Government Scrutiny Over Finances:

The U.S. Department of Education has added two law schools to its updated list of educational institutions subject to heightened financial monitoring.

Thomas Jefferson School of Law and Charleston School of Law, a for-profit school, landed on department’s so-called “heightened cash monitoring list” for the first time in December. Ave Maria School of Law has been included since the list was first released publicly in March as part of the department’s push to boost accountability and transparency.

Department spokesman Jim Bradshaw declined to specify why the three law schools were included, although each was found to have fallen short in the general category of “financial responsibility.” ...

The law schools face the lower of two tiers of financial scrutiny by the department and will be subject to further review of how they manage their cash. The higher tier of scrutiny—which the law schools so far have avoided—requires institutions to front student loan payments before receiving a reimbursement from the federal government. ...

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January 6, 2016 in Legal Education | Permalink | Comments (1)

Sunstein Reviews The Hidden Wealth Of Nations And The Price We Pay

New York Review of BooksThe New York Review of Books:  Parking the Big Money, by Cass Sunstein (Harvard) (reviewing Gabriel Zucman, The Hidden Wealth of Nations (University of Chicago Press, 2015) & The Price We Pay (film directed by Harold Crooks):

In some circles, “redistribution” of wealth has become a dirty word, and recent efforts to make the tax system more progressive have run into serious political resistance, above all from Republicans. But whatever your political party, you are unlikely to approve of the illegal use of tax havens. As it turns out, a lot of wealthy people in the United States, Europe, and elsewhere have been hiding money in foreign countries—above all, Switzerland, Luxembourg, and the Virgin Islands. As a result, they have been able to avoid paying taxes in their home countries. Until recently, however, officials have not known the magnitude of that problem.

But people are paying increasing attention to it. A vivid new documentary, The Price We Pay, connects tax havens, inequality, and insufficient regulation of financial transactions. The film makes a provocative argument that a new economic elite—wealthy managers and holders of capital—is now able to operate on a global scale, outside the constraints of any legal framework. In a particularly chilling moment, it shows one of the beneficiaries of the system cheerfully announcing on camera: “I don’t feel any remorse about not paying taxes. I think it’s a marvelous way in life.”

Gabriel Zucman, who teaches at the University of California at Berkeley, has two goals in his new book, The Hidden Wealth of Nations: to specify the costs of tax havens, and to figure out how to reduce those costs. While much of his analysis is technical, he writes with moral passion, even outrage; he sees tax havens as a “scourge.” His figures are arresting. About 8 percent of the world’s wealth, or $7.6 trillion, is held in tax havens. In 2015, Switzerland alone held $2.3 trillion in foreign wealth. As a result of fraud from unreported foreign accounts, governments around the world lose about $200 billion in tax revenue each year. Most of this amount comes from the evasion of taxes on investment income, but a significant chunk comes from fraud on inheritances. In the United States, the annual tax loss is $35 billion; in Europe, it is $78 billion. In African nations, it is $14 billion.

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January 6, 2016 in Book Club, Tax | Permalink | Comments (0)

Kaplan: Reflections On Medicare's 50th Anniversary

Richard L. Kaplan (Illinois), Reflections on Medicare at 50: Breaking the Chains of Path Dependency for a New Era, 23 Elder L.J. ___ (2015):

On the occasion of Medicare’s 50th anniversary, this Article examines the evolution of this essential program from its enactment in 1965 through implementation of the Affordable Care Act. Persons who are, or soon will be, newly enrolled in Medicare may be especially interested in the first part of this Article, which addresses the coverages, exclusions, and costs of Medicare’s constituent parts and concludes (on pp. 20-21) with seven critical questions that every new beneficiary must consider before enrolling.

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January 6, 2016 in Scholarship, Tax | Permalink | Comments (0)

Corporate Law Professor Rankings

Marco Ventoruzzo (Penn State), Where are the Best (Corporate) Law Professors Teaching?:

Are the best law professors teaching at the best law schools in the United States? And how can the best law schools around the world be evaluated in terms of the scholarship their professors produce?

This Essay contributes to addressing these questions by examining empirically a specific issue: whether the top-ranking law schools employ the most productive, authoritative and influential scholars of corporate law. In considering this matter, I will also discuss if it is possible, and if so how, to compare law faculties of different countries. This undertaking is generally considered too problematic because of the obvious apples-and-oranges problems raised by comparing legal scholarship and education from different national and cultural contexts.

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January 6, 2016 | Permalink | Comments (0)

The IRS Scandal, Day 972

IRS Logo 2Russ Fox (Taxable Talk), 2015 Tax Offender of the Year:

Once more it’s time to award that prestigious award, the 2015 Tax Offender of the Year. The winner of this award must do more than just cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions. Unfortunately, there were plenty of nominations. ...

Our final runner up was IRS Commissioner John Koskinen. While I applaud the lead he appears to now be taking on identity theft, Commissioner Koskinen’s reaction to the IRS scandal has been ridiculous. I agree with Joe Kristan’s comment earlier this year:

His glib, arrogant and obstructionist response to the Tea Party scandal, full of denials of the existence of information that subsequently surfaced, has destroyed his credibility. There’s no hope that the IRS will get improved funding as long as he is around to spend it.

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January 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, January 5, 2016

NYU Tax Law Review Symposium:  Thomas Piketty's Capital In The Twenty-First Century

PikettySymposium on Thomas Piketty's Capital in the Twenty-First Century, 68 Tax L. Rev. 443-647 (2015):

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January 5, 2016 in Book Club, Conferences, Scholarship, Tax | Permalink | Comments (0)

Better-Looking Female Students Get Better Grades; For Male Students, Looks Don’t Matter

Report CardSlate, Better-Looking Female Students Get Better Grades. But For Male Students, Looks Don’t Matter.:

Professors differ on how much their grading should be based on tests, written assignments, labs, class participation, and other factors. But students’ looks?

Most faculty members would deny that physical appearance is a legitimate criterion in grading. But a study presented Monday at the annual meeting of the American Economic Association finds that—among similarly qualified female students—those who are physically attractive earn better grades than others. For male students, there is no significant relationship between attractiveness and grades. And the results hold true whether the faculty member is a man or a woman. [Student Appearance and Class Performance]

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January 5, 2016 in Legal Education | Permalink | Comments (5)

Technology Will Not Create A Lawyer 'Jobs-Pocalypse'

ABA Journal, Will Technology Create a Lawyer 'Jobs-Pocalypse'? Doomsayers Overstate Impact, Study Says:

Automation is having an impact on the job market for lawyers, but the future isn’t as dire as some headlines predict, according to a new study [Dana Remus (North Carolina) & Frank S. Levy (MIT), Can Robots Be Lawyers? Computers, Lawyers, and the Practice of Law].

The researchers analyzed law-firm billing data for the year 2014 provided by an analytics company and came up with this “ballpark estimate”: Lawyer employment would drop slightly more than 13 percent if automation is applied to law practice. ... A 13 percent drop would pose a big problem if it occurred in one year, but that impact would have less of an impact if it occurs over a more realistic five-year time frame, the study says. ...

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January 5, 2016 in Legal Education | Permalink | Comments (2)

Fall 2016 Law School Applicants Up 0.7%

LSACFollowing up on the nascent law school rebound (Number of LSAT Test-Takers Increases 7.4%, The Fourth Consecutive (And Biggest) Increase):  LSAC, Three-Year ABA Volume Comparison:

As of 01/01/16, there are 117,498 2016 applications submitted by 20,095 applicants for the 2016–2017 academic year. Applicants are up 0.7% and applications are down 2.3% from 2015–2016. Last year at this time, we had 36% of the preliminary final applicant count.

ABA

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January 5, 2016 in Legal Education | Permalink | Comments (0)

Ben Carson's Tax Plan:  14.9% Flat Tax, No Charitable, Mortgage, State & Local Tax Deductions, No Tax On Capital Gains, Dividends, Interest

Richard Posner:  How To Fix Law School

Divergent PathsSalon:  Here’s How We Fix Law School: This Is The Real-World Training Future Lawyers Need, by Richard Posner (Judge. U.S. Court of Appeals for the 7th Circuit) (from Divergent Paths: The Academy and the Judiciary (Harvard University Press, 2016)):

The first year of law school, usually so different from the student’s previous educational experiences, is bound to make a lasting, indeed a lifelong, impression.The first-year program at most law schools is demanding, though less than it used to be; current tuition levels tend to induce law schools to treat students more as customers than as plebes. I felt changed after my first year (1959–1960) as a student at the Harvard Law School—I felt that I had become more intelligent.The basic training was in learning how to extract holdings from judicial opinions in common law fields and how to apply those holdings to novel factual situations—in other words how to determine the scope and meaning of a legal doctrine.The courses were very difficult because the legal vocabulary was unfamiliar; the professors asked incessant, difficult questions, usually cold calling; the casebooks had very little explanatory material; and we were told not to waste our time reading secondary materials—and most of us were docile and so obeyed.That first year of Harvard Law School was active learning at its best.

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January 5, 2016 in Book Club, Legal Education | Permalink | Comments (11)

New Treasury Data Shows How Progressive America's Tax Code Really Is

Tax Foundation logoScott Hodge (Tax Foundation), New Treasury Data Shows How Progressive America's Tax Code Really Is:

Recent data produced by Treasury’s Office of Tax Analysis shows that not only is the income tax very progressive, but so too is the overall tax system when we include payroll taxes, corporate income taxes, and various excise taxes.

Treasury’s data for 2015 [found here] allows us to look at two simple ways of measuring the progressivity of the tax code: the share of the total tax burden borne by families at each level of income; and, the average tax rates paid by families at each level of income.

The Treasury data is comprehensive, in that it includes all roughly 167 million families (rather than just the 145 million income tax filers) and it uses a broader “cash” measure of income that includes government transfers in addition to wages, salaries, and investment income. Treasury divides the population into deciles, or ten equal groups of 16.7 million families.

Chart

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January 5, 2016 in Tax, Think Tank Reports | Permalink | Comments (2)

Prof Sues Amherst, Says She Was Pressured To Have Sex With Students To Increase Enrollment

NY Times:  If The IRS Is Watching You, You’ll Pay Up

New York Times, If the I.R.S. Is Watching You, You’ll Pay Up:

What would be more likely to get you to report the whole truth and nothing but the truth on your tax returns? A notice that says “Don’t cheat” or one that says “Don’t be a cheater”?

As it turns out, the personalized injunction works better than the more generalized abstract principle — though neither works as well as the plain, old-fashioned threat of an audit.

With April 15 looming in the not-so-distant future, that is just one of the lessons that has emerged from the recent explosion of research into tax cheating. Inspired by a new availability of data sets and technological tools, economists and social scientists are trying to figure out what will blunt the ever-present temptation to cheat on one’s taxes.

Although categorized under the rather unglamorous heading of tax compliance, the studies are really about what motivates human behavior. Our brains are all subject to a stew of greed, shame and honesty, not to mention gut-level notions of fairness and calculated assessments of risk. ...

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January 5, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 971

IRS Logo 2Washington Post:  Goodbye to 2015, a Year of Absurdity and Overreach, by George F. Will:

E.B. White reportedly said “the most beautiful sound in America” is “the tinkle of ice at twilight.” In 2015’s twilight, you had to fortify yourself with something 90 proof as you remember that year in which: ...

The Internal Revenue Service persecutes conservative advocacy groups but does not prosecute IRS employees who are tax cheats: An audit revealed that over the past decade, the IRS fired only 400 of the 1,580 employees who deliberately violated tax laws, rather than the 100 percent required by law. ...

This list of 2015 ludicrousness could be lengthened indefinitely, but enough already. The common thread is the collapse of judgment in, and the infantilization of society by, government.

Happier New Year.

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January 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 4, 2016

Krugman:  Professors Have Not Become More Liberal; They Have Rejected A GOP That Has Moved Sharply Right

New York Times:   The Conscience of a Liberal — Academics And Politics, by Paul Krugman (Princeton):

Via Noah Smith, an interesting back-and-forth about the political leanings of professors. Conservatives are outraged at what they see as a sharp leftward movement in the academy:

Chart 1A

But what’s really happening here? Did professors move left, or did the meaning of conservatism in America change in a way that drove scholars away? You can guess what I think. But here’s some evidence. ...

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January 4, 2016 in Legal Education | Permalink | Comments (5)

Tax Exempt San Francisco Super Bowl Committee Raises Millions, With Little Transparency

Super BowlSan Francisco Chronicle, Tax Exempt Super Bowl Committee Raising Millions, With Little Transparency:

The Super Bowl 50 Host Committee — the organization charged with raising money to produce events around the Bay Area leading up to and including February’s big game — has already raised $50 million from leading Bay Area corporations.

It also has pledged $12 million to more than 100 Bay Area nonprofits, a major step toward its goal of being “the most philanthropic Super Bowl ever.”

But because the NFL requires its host committees to be structured as nonprofit organizations — claiming the same tax-exempt status that the National Football League enjoyed for decades — it doesn’t have to reveal its contributors or how much each donor gave.

That opacity is raising concerns in an era of “dark money,” where politicians use the tax code to hide contributions. Watchdog groups, which also question why wealthy professional sports leagues get to classify themselves as nonprofits, say any entity that’s raising and spending millions — with little transparency — needs to be monitored closely.

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January 4, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Loyola To Host Tax Prof Dinner At ABA Tax Section Midyear Meeting In Los Angeles

ABA Tax Section Logo (2012)Tax Professors attending the ABA Tax Section Midyear Meeting in Los Angeles are invited to a dinner at Loyola Law School on Friday, Jan. 29 from 6:00-8:00 p.m.  If you would like to attend, please RSVP to Jennifer Kowal.

On a related note, please let me know if would like to break away and see the many wonders of Malibu (a 35 minute drive from the conference hotel).  I'd be happy to get together for breakfast, lunch, dinner, or drinks at one of the many beachfront spots here, or show you around America's most beautiful campus:

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January 4, 2016 in ABA Tax Section, Legal Education, Tax | Permalink | Comments (0)

There’s Something Funny About the NRA’s Tax Filings

NRA LogoNew York Post, There’s Something Funny About the NRA’s Tax Filings…:

The National Rifle Association doesn’t shoot straight when it comes to documenting its lobbying and political activities, filing tax forms for years that were littered with information gaps and apparent falsehoods, a Post review of the filings found.

The NRA, which was founded in New York in 1871 and claims to have millions of members, even told the IRS it didn’t receive membership dues, thus enabling it to avoid disclosing more about its activities. Last year, it spent $345 million.

And for six years on tax filings, the NRA failed to list the Political Victory Fund, its PAC, as one of its associated organizations. These tax documents are signed under “penalties of perjury.”

“How that form wasn’t intended to mislead the IRS, I don’t know. I don’t know how you come to any other conclusion,” said lawyer Marcus Owens, a former IRS official and leading expert on non-profit tax law.

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January 4, 2016 in Tax | Permalink | Comments (8)

NY Times:  2013 Tax Justice Victory Is Likely Short-Lived

Following up on my recent post:

New York Times, Justice in Taxes, Most Likely Short-Lived:

For 20 years beginning in the early 1990s, the effective tax rates for those at the very top of the income ladder generally dropped. Then, in 2013, after a pair of unusual tax increases negotiated by the Obama White House went into effect, taxes went up on this group.

According to data released on Wednesday by the Internal Revenue Service, the average rate for federal income taxes paid by the country’s top 400 income earners rose from 16.7 percent in 2012 to 22.9 percent in 2013, almost exactly where they stood in the early 2000s, though well below the level of the early 1990s. By any measure, that’s a victory for the cause of tax justice, analysts said.

But the recent rate increases, many experts also noted, still do little to overcome the broader issue of a separate, more comfortable tax system for the ultrawealthy.

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January 4, 2016 in Tax | Permalink | Comments (0)

The Top Ten Tax Posts Of 2015

The Top Ten Legal Education Posts Of 2015

El Niño Hits Malibu

Malibu

Don't worry about us: we've battened down the hatches and stocked up on the essentials:

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January 4, 2016 in Legal Education, Tax | Permalink | Comments (2)

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January 4, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

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January 4, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 970

IRS Logo 2American Center for Law and Justice, ACLJ Forces IRS to Comply with the Law in Major Federal Lawsuit:

The ACLJ has secured an important victory in our Freedom of Information Act (FOIA) case against the IRS on behalf of Citizens for a Strong New Hampshire. After a year of litigation, which followed over four months of waiting for the IRS to respond to its FOIA request, we finally succeeded in compelling the IRS to comply with its obligations under federal law.

As we have previously written, Citizens for a Strong New Hampshire issued a FOIA request to the IRS in June 2014 seeking communications between two New Hampshire legislators and certain IRS officials, including Lois Lerner, the IRS’s Exempt Organizations Director who was at the center of the IRS Tea Party targeting scandal. Rather than search for and provide responsive documents within the statutory time period, the IRS sat on the request for months as the November 2014 elections approached. This delay blatantly flouted the very purpose of the Freedom of Information Act, as it prevented Citizens for a Strong New Hampshire from knowing whether these legislators had engaged in any communications with the IRS in which the New Hampshire public might be interested—and, if so, disseminating that information to voters prior to the November elections.

In order to get a response from the IRS, we filed a federal lawsuit on behalf of Citizens for a Strong New Hampshire. While the IRS did perform a search and provide some responsive documents shortly thereafter, it was not at all clear that the agency had searched all sources reasonably likely to contain responsive records or that the records it refused to produce were properly withheld. After raising these issues with the court, we succeeded in forcing the IRS to provide the withheld documents to the court—essentially a means of providing the necessary assurances that the IRS had not withheld documents to which the organizations enjoyed a right of access. We also obtained an order from the court explaining that the IRS had failed to demonstrate the reasonableness (i.e., thoroughness) of its search for documents.

The upshot of the court’s order was that we would be heading to trial—a highly unusual occurrence in FOIA cases. On its own initiative, however, obviously realizing that its prior search was deficient, the IRS undertook two additional searches and provided the necessary information to Citizens for a Strong New Hampshire (and the court) to demonstrate the appropriateness of these new searches.

In short, the IRS finally decided to fully comply with its legal obligations under FOIA, providing Citizens for a Strong New Hampshire with the relief it had been seeking for nearly a year and a half.

We are pleased to have obtained this positive outcome for Citizens for a Strong New Hampshire and will continue to pursue litigation in federal appeals court on behalf of the numerous nonprofit organizations that are still seeking relief from the IRS’s unlawful targeting of conservative groups.

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January 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Holiday Weekend Roundup

Sunday, January 3, 2016

Hemel:  The Twilight Of Tax Sunsets?

Sunset 2University of Chicago Law Faculty Blog:  The Twilight of Tax Sunsets?, by Daniel Hemel:

Since the early 2000s, Congress has filled the Internal Revenue Code with numerous sunset provisions. These provisions by their terms apply for a limited period, although Congress regularly renews them through annual “extenders” legislation. Examples have included the tax credit for research and experimentation expenses, the Subpart F exception for active financing, the deduction for state and local sales taxes, and the American Opportunity Tax Credit for the first four years of postsecondary education. Interest groups have devoted significant resources toward ensuring that members of Congress extend these tax breaks from year to year. Tax law scholars, in turn, have channeled considerable energy toward explaining the prevalence of sunset provisions in tax law.

A leading explanation of the “sunset” phenomenon is that lawmakers use temporary tax legislation to extract rents from interest groups. Rebecca Kysar writes that “the continuous threat of expiration allows Congress to extract more rents from interest groups through the use of sunset provisions that require those groups repeatedly to return to the congressional floor to achieve their goals.” Edward McCaffery and Linda Cohen likewise hypothesize that lawmakers will maximize rents through a “stringing-along” strategy, using extenders bills to get “multiple bites at the apple.” Others have offered similar accounts.

The rent-extraction hypothesis might lead one to expect that temporary tax breaks will be a permanent feature of the Code, as lawmakers have little incentive to relinquish the rents they derive from the extenders game. But that prediction has proven wrong: earlier this month, Congress voted to make 22 once-temporary tax breaks permanent, including all four provisions mentioned above. Congress’s recent action gives rise to a puzzle: If temporary legislation allows lawmakers to maximize the rents they can extract from interest groups, why did Congress allow these tax breaks to become permanent? Did DC suffer a sudden outbreak of public spiritedness this holiday season? Or does the rent-extraction hypothesis need updating?

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January 3, 2016 in Tax | Permalink | Comments (1)

Weekly Tax Roundup

The Top 5 Tax Paper Downloads

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

  1. [278 Downloads]  The Three Causes of Inversions: Reflections on Pfizer/Allergan and Notice 2015-79, by Reuven Avi-Yonah (Michigan)
  2. [204 Downloads]  The State Administration Of International Tax Avoidance, by Omri Y. Marian (UC-Irvine)
  3. [160 Downloads]  The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond, by Kimberly A. Clausing (Reed College)
  4. [143 Downloads]  Transfer Pricing Challenges in the Cloud, by Orly Mazur (SMU)
  5. [66 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)

January 3, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 969

IRS Logo 2Washington Examiner op-ed:  Congress Moves to Protect Free Speech From Bureaucratic Assault, by Luke Wachob (Center for Competitive Politics):

Tucked away in the 2,000 page omnibus tax and spending deal to fund the government is an early Christmas gift to proponents of free speech.

Seven provisions of the deal will help encourage more speech or put a halt to various efforts to increase regulation of political speech via the executive branch. After years of losing at the Supreme Court, in Congress and at the Federal Election Commission, those who wish to limit speech under the guise of campaign finance "reform" have increasingly focused their efforts on pressuring administrative agencies to achieve through regulation what could not be won via legislation. Through these seven provisions, Congress put a stop to much of this nonsense.

The riders may seem relatively unassuming, but they are in fact a major victory. Threats to speech increasingly originate from the executive branch, most prominently during the IRS targeting scandal. Years of urging from "reform" groups and thin-skinned politicians duped the IRS into playing the role of speech police, with predictably disastrous results. The agency discriminated against conservative groups applying for tax-exempt status on the basis of their names and political beliefs, with no regard for the First Amendment.

Congress sought to prevent such abuse in the future; the omnibus prohibits the agency from working on new speech regulations over the coming year.

The IRS was not alone, however, in being pushed outside its duties to regulate speech. ...

[The omnibus provisions] further prohibit the president from issuing an executive order requiring companies to report their federal election campaign donations, which are already publicly disclosed, as part of the process for bidding on government contracts; clarify that the IRS may not attempt to stifle speech by collecting the Gift Tax on donations to organizations advocating for social change; forbid IRS employees from conducting government business on personal email addresses; and require that employees be fired if they discriminate against groups or individuals on the basis of political belief.

Several of these provisions — most pointedly the requirement that government business be conducted over government email — are clearly a response to the actions of Lois Lerner, the IRS official at the center of the scandal whose use of a personal email address resulted in missing emails that frustrated investigators. But the IRS's hostility towards free speech did not end with Lerner's resignation. Instead, it sought to make restrictive speech rules official IRS policy, proposing harsh new rules that would have silenced many nonprofit advocacy groups during election years.

Those rules were withdrawn in the face of overwhelming, bipartisan opposition, but the IRS promised to try again and potentially apply the new rules to an even broader swath of groups. By denying funding for the development of new rules, Congress ensures that if new rules are written, it will be by the next president.

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January 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, January 2, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Prof Suing Law School For Access To Admissions Data Asks Court To Stay Investigation Into His Alleged Bias Against Minority Students Initiated By Two 'Race-Baiting Professors'

UALRFollowing up on my previous posts (links below):

Arkansas Online, Professor Modifies Law School Challenge:

A professor suing the University of Arkansas at Little Rock law school over public records is now asking a judge to prevent the school from forcing him to participate in an investigation he refers to as "a witch hunt" before a hearing in his case takes place.

Law professor Robert Steinbuch sued the W.H. Bowen School of Law and the school's dean, Michael Schwartz, in November over Schwartz's refusal to turn over certain student admissions records.

Steinbuch amended his public records lawsuit earlier this month to add Associate Dean Theresa Beiner as a defendant, accusing her of retaliation over his litigation.

After two professors emailed complaints about Steinbuch's lawsuit -- questioning his grading practices and whether he is biased against minority-group students given his research conclusions that the school has lower admissions standards for black students -- an investigation into his grading and the bias complaint has begun.

A hearing over that retaliation complaint is set for Jan. 25. Steinbuch has sought relief from a judge from participating in the investigation, which he says is "based on nothing more than the baseless allegations of two rogue, race-baiting professors."

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January 2, 2016 in Legal Education | Permalink | Comments (4)

Weekly Legal Education Roundup

The IRS Scandal, Day 968

IRS Logo 2Phil Kerpen (President, American Commitment), The Free Speech Silver Lining in the Budget Cloud:

The massive omnibus package of tax and spending changes recently passed by Congress was mostly a defeat for free-market economics. ... But the deal is actually a triumph in the single most important policy area: the First Amendment. ...

In 2012, Democrats won a national election by turning the IRS into a political intimidation agency, systematically destroying the vitality of the tea party movement that delivered a conservative wave in 2010. Given the level of scrutiny the agency is now under as a consequence, you might think there was no way they could use the same playbook to tilt the playing field for 2016. But the IRS was actually poised to propose official rules that would have been facially neutral but would have had the effect of silencing precisely the same groups that were sidelined by targeting in 2012.

This deal takes that risk off the table by expressly prohibiting such rules.

The deal also includes a comprehensive package of IRS reforms authored by Rep. Peter Roskam of Illinois that enjoy broad support but that until now had failed many attempts to be attached to a legislative vehicle that would be signed by the president.

That package includes a prohibition on IRS employees using private email address, as we know Lois Lerner and her coconspirators often did when orchestrating targeting, a mechanism for nonprofit groups to challenge IRS determinations in court so that they cannot be held indefinitely in limbo, and a provision requiring any IRS employee engaged in political targeting to be fired. (In the recent scandal nobody was: Even Lois Lerner was allowed to retire with her full pension.)

Most significantly, Roskam's reform package bans the IRS from trying to assess gift tax on contributions to nonprofit organizations, which they infamously attempted against conservative donors.

In 2011, donors to conservative groups were told that despite decades of clear legal understanding and practice, they could be found liable for gift tax on their contributions. While the IRS never did impose such a tax, the threatening letters they sent likely had a chilling effect on contributions to conservative groups, which was the point.

Taxing contributions to nonprofits would do nothing to advance the intended purpose of the gift tax — enforcing compliance with the federal estate tax — and would serve to dramatically diminish the ability of nonprofit groups to educate and mobilize citizens in the public policy process. Yet some liberal advocates continued to praise these abusive letters and even call for more of them to be issued.

Now donors have an ironclad legal guarantee that their contributions to nonprofit groups will not be subject to threatening IRS audit letters and arbitrary taxation.

The bottom line is that on a wide range of issues the omnibus deal is deeply disappointing, but the First Amendment provisions are an enormous silver lining because they mean activists will not be IRSed in 2016 the way they were in 2012. And that assures conservatives an honest opportunity to effectively engage the political process and come back to win on all the other issues.

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January 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, January 1, 2016

LexisNexis Sells Law School Publishing Business To Carolina Academic Press

LNCAPAs a LexixNexis author, I received the following email:  Law School Publishing News from LexisNexis Matthew Bender and Carolina Academic Press (posted with permission of LexisNexis):

Dear Author,

On December 31, LexisNexis® Matthew Bender® completed the sale of our law school publishing business to Carolina Academic Press. As part of this transaction, Matthew Bender® assigned all of the associated author agreements to Carolina Academic Press, and Carolina Academic Press agreed to assume all of the Matthew Bender obligations under such agreements. Therefore, Carolina Academic Press is now the publisher of your title(s).

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January 1, 2016 in Book Club, Legal Education, Tax | Permalink | Comments (0)

NLJ:  The Top 10 Legal Education Stories Of 2015

National Law JournalNational Law Journal, The Year in Law Schools:

Here are 10 of The National Law Journal’s top stories on law schools and legal education in 2015.

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January 1, 2016 in Legal Education | Permalink | Comments (0)

ABA:  The Top 10 Law Stories Of 2015

ABA Journal (2014)ABA Journal, 10 Most Important Legal Stories of 2015:

As the ABA Journal staff looked back over the past year, these were the 10 legal stories which seemed the most important and prominent. ABA Journal legal affairs writer Victor Li provides a summary of each below.

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January 1, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 967

IRS Logo 2The Blaze op-ed:  Despite New Limits, The IRS is Not Yet Under Control, by Andrew F. Quinlan (President, Center for Freedom and Prosperity):

The massive omnibus spending package passed by Congress included new limits on the IRS, in particular on the agency’s ability to harass political non-profits. Congress is not done, however, as an ongoing dispute between the tax collection agency and Microsoft demonstrates that the IRS continues to operate outside the bounds of the law.

The IRS is in the midst of an almost nine-year audit of Microsoft. That’s unusual given the three-year statutory limit for audits. Sometimes they can be extended when necessary, but the IRS has asked and been granted permission by Microsoft to do so eight times already. Most notable, however, is the fact that Microsoft just wants to pay its bill and move on, but the IRS has refused to submit one. That might be due to the fact that the never-ending audit is proving quite profitable for a powerful, politically-connected law firm.

Again acting outside normal procedure, the IRS brought in lawyers from Quinn Emanuel Urquhart & Sullivan, a major contributor to Barack Obama and the Democrat Party. This despite the fact that the IRS already employs a veritable army of lawyers and accountants with more relevant expertise.

The use of outside lawyers raises serious concerns regarding taxpayer privacy and potential conflicts of interest. Namely, that a $1,000-per-hour firm is going to be less motivated to resolve a case quickly and efficiently than the taxpayers footing their bill.

The $2.2 million contract for Quinn Emanuel also comes at a time when the IRS is claiming poverty and a lack of sufficient funds for assisting taxpayers.

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January 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, December 31, 2015

Tax Rate Of Top 400 Taxpayers Soared 37% In 2013, To Highest Rate Since 1997

On Tuesday, the New York Times published a front page article on How The Ultra Wealthy Buy Tax Policy, which contained this statement:

Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups. 

On Wednesday, the IRS released updated data showing that in 2013 the Top 400 taxpayers bore the highest tax rate since 1997:

Top 400 - 2

Wall Street Journal, Tax Rate for Top 400 U.S. Taxpayers Climbed in 2013: Obama Administration Policies Reversed a Decadeslong Trend Toward Lower Tax Burdens for Wealthiest Americans:

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December 31, 2015 in IRS News, Tax | Permalink | Comments (2)

Ted Cruz’s Simple, Radical Tax Plan

CruzNew York Times:  Ted Cruz’s Simple, Radical Tax Plan, by Josh Barro:

Like Rand Paul before him, Ted Cruz is promoting a tax plan that relies heavily on a value-added tax, or VAT. And like Mr. Paul, Mr. Cruz is not calling his VAT a VAT.

He has good reason not to.

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December 31, 2015 in Political News, Tax | Permalink | Comments (1)

WSJ:  Japanese Law Schools Facing ‘Unprecedented Crisis’ Amidst 84% Applicant Decline

JapanWall Street Journal Law Blog: Japanese Law Schools Facing ‘Unprecedented Crisis’, by Jacob Gershman:

About a decade ago Japan embarked on an ambitious plan to groom more lawyers.

With its long tradition of out-of-court dispute resolution and lack of litigation, the country never had a lot of need for lawyers. But by 2004, a surge of civil suits and other court cases led the country to adopt a legal education system more like the one here. The country opened 68 new U.S.-style law schools within universities and set out to more than double its lawyer population, which stood at just 23,000. (The United States has more than one million lawyers, in comparison.)

Under the old system, you didn’t have to graduate from law school to become a lawyer in Japan, but had to pass an extremely difficult exam. Under the new system, a law degree was required. But it turned out that demand for lawyers and law degrees was much less than anticipated. And now, according to a new report, many of its government-subsidized law schools are shutting down or on the brink of closure.

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December 31, 2015 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 966

IRS Logo 2Following up on my previous coverage (here, here, and here):  Breitbart, Koch Brothers May Have to Disclose Donor List to California:

The San Francisco Ninth Circuit Court of Appeals overruled a U.S. District Court judge to give authority to California Attorney General Kamala Harris to obtain the donor list from the Koch Brothers-backed Americans for Prosperity Foundation.  [Americans for Prosperity v. Harris, No.  15-55446 (9th Cir. Dec. 29, 2015)].

The Americans for Prosperity Foundation was founded by Charles and David Koch as a national foundation in 2004 and registered in all states, including California, as a nonprofit organization promoting limited government and free markets by educating individuals around the country about practical ways to improve their circumstances. It became one of the most influential American conservative political advocacy organizations after the 2009 inauguration of President Barack Obama. ...

But AFP became the number one target of elected Democrat officials and their constituencies for the role the organization played in breaking Democrat majority control of the House of Representatives in 2010 and the U.S. Senate in 2014.

AFP has complied with the filing requirements with the Internal Revenue Service each year for over a decade and disclosed its nationwide list of major donors’ names and addresses on tax form “Schedule B” for a nonprofit charity. Federal criminal statutes protect the constitutional right to privacy by forbidding the IRS to make any unauthorized disclosure of charity donors to a 501(c)4 non-profit.

For a decade, California accepted AFP’s charitable registrations and renewals without need for filing Schedule Bs. But in 20014, California Attorney General and candidate for U.S. Senate Kamala Harris suddenly began demanding Schedule Bs under threat of draconian sanctions, such as personal fines against a charity’s officers. ...

AFP in February was granted a preliminary injunction protecting against disclosure of the Foundation’s Schedule B by the district court after considering evidence of threats, violence, and harassment directed at the Foundation, as attested to in sworn affidavits and confirmed by accompanying documentation.

The court stated:“Public disclosure of [the Foundation’s] Schedule B, and thus the names and addresses of its donors, would open those persons up to harassment, retaliation, and chilling of free speech.” It added: “These negative consequences would objectively work to chill protected First Amendment speech.”

But a three-judge Ninth Circuit Court of Appeals panel overturned the lower court judge, allowing California Attorney General Kamala Harris access to information from the Americans for Prosperity Foundation while the group’s lawsuit is being decided. The appeals panel’s unanimous decision said that AFP failed to show reason to fear disclosure. ...

Derek Shaffer, Americans for Prosperity, said AFP will immediately appeal the ruling to the U.S. Supreme Court.

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December 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, December 30, 2015

Ohio State Republican Law Faculty Holiday Party Enjoyed By Both

5th Circuit:  Texas Can Deny Tax Breaks To Films It Doesn’t Like

MacheteWall Street Journal Law Blog:  Texas Can Deny Tax Breaks to Films it Doesn’t Like, Appeals Court Rules, by Jacob Gershman:

Texas has leeway under the First Amendment to deny tax breaks to films deemed insulting to the state, a federal appeals court ruled [Machete Prooductions LLC v. Page, No. 15-50120 (5th Cir. Dec. 28, 2015)] ...

Last year the producers behind the sequel to the 2010 gory action comedy “Machete” sued Texas for denying them tax breaks under a state program that encourages film production in the state. ...

The state denied it infringed on any constitutional speech rights. And a lower court agreed in a ruling handed down earlier this year. On Monday the Louisiana-based Fifth U.S. Circuit Court of Appeals affirmed that decision.

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December 30, 2015 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (1)

The States With The Most (MT, VT, IA) And Least (NV, UT, AZ) Tax-Exempt Organizations

Tax Foundation, Which States Have the Most Tax-Exempt Organizations?:

Tax Exempt

The map above shows data from all 1,535,388 tax-exempt organizations in the fifty states that are registered with the IRS. ... Overall, across the United States, there are 5.36 tax-exempt organizations for every 1,000 people. However, the concentration of tax-exempt organizations varies greatly by state. In Montana, for instance, there are 9.71 tax-exempt organizations for every 1,000 residents – the highest out of all fifty states. On the other hand, Nevada is home to only 2.92 tax-exempt organizations for every 1,000 residents, the lowest concentration in the country. ...

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December 30, 2015 in Tax | Permalink | Comments (1)

McLaughlin:  Conservation Easements And The Valuation Conundrum

Florida Tax ReviewNancy A. McLaughlin (Utah), Conservation Easements and the Valuation Conundrum, 19 Fla. Tax Rev. ___ (2016):

For more than fifty years, taxpayers have been able to claim a federal charitable income tax deduction under Internal Revenue Code § 170(h) for the donation of a conservation easement or a façade easement. For just as long, the deduction has been subject to abuse, including valuation abuse. Dismayed by the expenditure of significant judicial and administrative resources to combat abuse in the easement donation context, the Treasury Department recently proposed reforms, including reforms to address valuation abuse. The reforms were proposed in somewhat of an analytical vacuum, however, because there has been no comprehensive analysis of the easement valuation case law. This article fills that void.

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December 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

IRS Employee Whose Job Was Assisting Victims Of Identity Theft Charged In $1 Million Identity Theft Tax Fraud

Taxpayer Advocate (2016)Department of Justice Press Release, IRS Employee Charged in $1 Million ID Theft Tax Fraud Scheme:

Federal officials today announced arrests and charges in a stolen identity tax-refund scheme believed to involve more than $1 million in false claims and run by an IRS employee who was supposed to be assisting taxpayers experiencing problems resulting from identity theft.

A federal grand jury earlier this month indicted NAKEISHA HALL, JIMMIE GOODMAN and ABDULLA COLEMAN for their involvement in a 2008 to 2011 scheme operated out of Birmingham that involved stealing personal identity information from the Internal Revenue Service to create fraudulent tax returns and collecting the stolen refunds, announced U.S. Attorney Joyce White Vance, IRS Criminal Investigation, St. Louis Field Office, Special Agent in Charge Karl A. Stiften, and Treasury Inspector General for Tax Administration, Mid-States Field Division, Special Agent in Charge Ruben Florez. The indictment was unsealed with today’s arrests.

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December 30, 2015 in IRS News, Tax | Permalink | Comments (11)