TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, January 5, 2018

More On State Resistance To The New Federal Tax Law

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Kaplow And Shavell And The Priority Of Income Taxation And Transfer

David Blankfein-Tabachnick (Michigan State) & Kevin A. Kordana (Virginia),  Kaplow and Shavell and the Priority of Income Taxation and Transfer, 69 Hastings L.J. 1 (2017):

This Article rejects a central claim of taxation and private law theory, namely, Kaplow and Shavell’s prominent thesis that egalitarian social goals are most efficiently achieved through income taxation and transfer, as opposed to egalitarian alterations in private law rules. Kaplow and Shavell compare the efficiency of rules of tort to rules of tax and transfer in meeting egalitarian goals, concluding that taxation and transfer is always more efficient than other private law legal rules. We argue that Kaplow and Shavell reach this conclusion only through inattention to the body of private law that informs the very basis of their discussion: underlying property entitlements.

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January 5, 2018 in Scholarship, Tax | Permalink | Comments (0)

Invitation: Pepperdine Law School Reception Tonight At AALS

Pepperdine AALS

Pepperdine Law School invites law professors and deans to a reception
hosted by our new dean, Paul Caron, at the 2018 AALS Annual Meeting in San Diego:

Friday, Jan. 5, 5:30 - 7:30 p.m.
Del Mar Room | South Tower, Level 3
Marriott Marquis San Diego Marina
Please join us for hors d'oeuvres, a hosted bar, and some tunes from Hamilton!
RSVP

January 5, 2018 in Legal Education, Tax | Permalink | Comments (1)

Sexual Harassment At Annual Academic Meetings

Inside Higher Ed, Harassment at Annual Meetings:

A "sizable" minority of women and a smaller but still notable share of men have experienced harassment or other inappropriate behavior at the annual meeting of the American Political Science Association, according to a survey of members that the association has just released.

A solid majority (63 percent) of the 2,424 members who responded to the survey indicated that they had never been harassed or treated inappropriately at the meeting. But the figures were different for men (74 percent) and women (51 percent).

APSA

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January 5, 2018 in Legal Education | Permalink | Comments (1)

From Business Tax Theory To Practice In Law School Clinics

Alina S. Ball (UC-Hastings) & Manoj Viswanathan (UC-Hastings), From Business Tax Theory to Practice, 24 Clinical L. Rev. 27 (2017):

The past decade has seen a dramatic increase in the number of business law clinics in legal academia. This increase in clinical transactional courses has not, however, resulted in a proliferation of transactional tax clinical offerings. Although tax issues, including federal, state, and local tax matters, are an integral consideration of nearly every business transaction, most business law clinics explicitly exclude tax representation from their client services. For clients of business law clinics that are social enterprises — companies that combine market-based business strategies and social mission — this lack of tax-focused representation is problematic for two reasons.

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January 5, 2018 in Legal Education, Scholarship, Tax, Teaching | Permalink | Comments (0)

Dan Markel's Family Is In 'Agony' Over Delays In Murder Trials

Markel 3Seattle Times, Family of Slain Professor in ‘Agony’ Over Trial Delays:

The family of a slain law professor is speaking out the delay of the trial of a woman charged in the killing.

An attorney representing the parents of Dan Markel said Wednesday they “remain in agony” due to the delay. Markel was shot in his garage in the summer of 2014. Police said that killing was sparked by a bitter divorce and family squabbles.

Media outlets reported a judge agreed to push back the trial of Katherine Magbanua until October. She is one of three people charged in the slaying of the Florida State University professor and Toronto native.

Magbanua has pleaded not guilty to charges that she helped orchestrate the plot. Sigfredo Garcia is scheduled to stand trial in July. Luis Rivera has already pleaded guilty to second-degree murder.

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January 5, 2018 in Legal Education | Permalink | Comments (2)

Thursday, January 4, 2018

Davidson Reviews Wendel's Wills Act Compliance And The Harmless Error Approach

Jotwell (T&E)Camille Davidson (Wake Forest), Strict Compliance and Wills Act Formalities (JOTWELL) (reviewing Peter T. Wendel (Pepperdine), Wills Act Compliance and the Harmless Error Approach: Flawed Narrative Equals Flawed Analysis?, 95 Or. L. Rev. 337 (2017)):

In the law of Wills, the testator’s intent is of upmost importance. If there is clear and convincing evidence of a testator’s intent, then a document intended to be his or her will should be probated, right? Not so fast—according to Professor John Langbein, in a jurisdiction that has adopted the strict compliance approach to Wills Act formalities a document will not constitute a validly executed will if all of the statutory requirements are not met, even when evidence shows that the testator intended the document to be his or her will. Langbein penned substantial compliance and harmless error proposals as alternatives to strict compliance. In Wills Act Compliance and the Harmless Error Approach: Flawed Narrative Equals Flawed Analysis?Professor Peter T. Wendel asserts that Professor Langbein has not framed the narrative correctly and therefore the analysis of the issue is flawed. He rephrases the narrative so that the debate can continue in a less simplistic manner. ...

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Growth Of Law School Online Master's Programs

2U Pepperdine 2Following up on my previous posts:

ExtensionEngine Blog, Online Master's Programs at Law Schools: Why Online Learning?:

The growth and acceptance of online learning over the last decade have been mostly in undergraduate, business, and technical education. Despite the report that the American Bar Association (ABA) rejected Syracuse College of Law's initial application to develop a partially online hybrid Juris Doctor (J.D.) degree, I believe the next area of growth and acceptance will be with legal education.

While the ABA has yet to approve any 100% online J.D. programs, one fascinating but not often discussed aspect of online legal education is the recent growth in the number of 100% online Master of Legal Studies (MLS) degrees and post J.D. Master of Laws (LL.M.) degrees offered by ABA-approved law schools. These graduate degrees may appeal to a variety of working professionals, including but not limited to compliance specialists, risk management professionals, professionals in the tax industry, or other business professionals who would like or need to learn more about the law.

For example, 100% online Master of Legal Studies degrees, which require only a Bachelor's degree, are now offered at ASU, Northeastern, Wake Forest, and Seton Hall [and Pepperdine].

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January 4, 2018 | Permalink | Comments (0)

Colon: ETFs And In-Kind Redemptions

Jeffrey M. Colon (Fordham), The Great ETF Tax Swindle: The Taxation of In-Kind Redemptions, 122 Penn St. L. Rev. 1  (2017):

Since the repeal of the General Utilities doctrine over 30 years ago, corporations must recognize gain when distributing appreciated property to their shareholders. Regulated investment companies (RICs), which generally must be organized as domestic corporations, are exempt from this rule when distributing property in kind to a redeeming shareholder.

In-kind redemptions, while rare for mutual funds, are a fundamental feature of exchange-traded funds (ETFs). Because fund managers decide which securities to distribute, they distribute assets with unrealized gains and thereby significantly reduce the future tax burdens of their current and future shareholders. Many ETFs have morphed into investment vehicles that offer better after-tax returns than IRAs funded with after-tax contributions.

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

Kuehn: Clinical Faculty Demographic And Salary Data

KuehnTax Prof Blog op-ed:  Clinical Faculty — Who Are You? Who, Who, Who, Who?, by Robert Kuehn (Associate Dean for Clinical Education, Washington University):

Though clinical faculty have largely moved out of the proverbial basement, they remain a distinct sub-group within most law faculties. Often labeled as something other than law professors (“clinicians”) because of their teaching methods and goals, faculty that teach law clinic and externship courses also differ as a group by gender, race, employment status, and salary from “podium” faculty teaching doctrinal courses. And unlike the movement out of the basement, it’s not clear that clinical and doctrinal faculty are moving closer to each other on those attributes.

So who are the faculty who teach law clinic and externship courses? Predominantly female, and more so today than in the past. In the latest survey by the Center for the Study of Applied Legal Education (CSALE) of over 1000 faculty who teach in a law clinic or externship course, 62% identified as female. Externship courses are more heavily taught by female faculty than law clinics, as 75% of full-time externship teachers are female. As the graph below shows, over the last decade an increasing proportion of clinical faculty are female.

Graph of Clinic Faculty make up by Gender

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January 4, 2018 in Legal Education | Permalink | Comments (2)

A Simple Tech Upgrade At The IRS Could Transform The Economy

IRS Logo 2Tech Crunch, How a Simple Tech Upgrade at the IRS Could Transform the Economy:

Our credit system runs on the power of data. A simple IT upgrade at the IRS would put more of this power in your hands. ...

The IRS Data Verification Modernization Act of 2017, recently introduced in Congress by Rep. Patrick McHenry (R-NC) and Sen. Cory Booker (D-NJ), would set up an application programming interface (API) at the IRS.

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January 4, 2018 in Tax | Permalink | Comments (0)

Missouri, Pepperdine 1Ls Play Division I Basketball

Aldridge 4St. Louis Post-Dispatch, Juggling Basketball, Law School Is Quite a Feat:

Even Wonder Woman wonders how she does it.

Lauren Aldridge is the starting point guard for Mizzou’s women’s basketball team.

Lauren Aldridge is a first-year student at Mizzou’s law school.

It’s mind-boggling to think she has the energy to do both of these, considering people push themselves to unfathomable limits to succeed at just one of them. But there’s a superhuman in Columbia, practicing on the court and for court, while showing young people that when someone says “follow your dreams,” it really can be plural. ...

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January 4, 2018 in Legal Education | Permalink | Comments (0)

Manns & Todd: The Tax Lifecycle Of A Single Member LLC

F. Philip Manns Jr. (Liberty) & Timothy M. Todd (Liberty), The Tax Lifecycle of a Single Member LLC, 36 Va. Tax Rev. 323 (2017):

The single-member LLC (SMLLC) is ubiquitous. Despite its ubiquity, the Internal Revenue Code (Code) does not squarely address its tax consequences nor even contemplate its existence. This article examines the tax lifecycle of an SMLLC through its formation, operation, and exit event (e.g., sale, gift, or deathtime transfer).

This article identifies and isolates a tax asymmetry that arises from the U.S. Tax Court’s decision in Pierre v. Commissioner. Despite the check-the-box regulations, which disregard the SMLLC, Pierre regards the SMLLC for federal gift tax purposes. This asymmetry has several tax consequences, including a potential prophylactic immunization of transfers to SMLLCs against application of section 2036 — which claws back into the federal gross estate transfers when the transferor retains an interest — in the family partnership context.

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 3, 2018

Goldman Sachs Takes $5 Billion Hit From New Tax Law

Goldman (2017)Bloomberg, Goldman Takes One-Time $5 Billion Hit From New U.S. Tax Law:

Goldman Sachs Group said the U.S. tax reform will cut profit this year by about $5 billion, mainly because of a tax targeting earnings held abroad.

About two-thirds of the hit comes from the repatriation tax, while writing down U.S. deferred tax assets also contributed, the company said in a filing on Friday. The bank also accelerated the delivery of previously granted stock awards to many of its top executives to lower its taxable profit subject to this year’s higher rates.

While bank stocks have rallied on the tax bill’s lower corporate rates, the new law requires charges in the near-term as foreign earnings face taxation and the value of deferred tax assets declines. Citigroup Inc. said it expects a hit of as much as $20 billion, while Bank of America Corp. will take a $3 billion charge and Credit Suisse Group AG is at risk of posting a third consecutive annual loss.

Wall Street Journal, Goldman to Take a Big Charge Related to U.S. Tax Overhaul:

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January 3, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Mitchell-Hamline Hybrid-J.D. Program To Graduate Its First Class

Mitchell Hamline (2018)Twin Cities Pioneer Press, Online Law School? Mitchell-Hamline’s Unique Program Will Graduate Its First Attorneys:

Mitchell-Hamline School of Law’s first-in-the-country “hybrid” juris doctor program [is] [n]ow entering its fourth year. [T]he fully accredited program enrolls more than 80 students per year to complete law school through “e-learning,” on top of one or two weeks of on-campus coursework per semester. ...

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January 3, 2018 in Legal Education | Permalink | Comments (0)

Barry: Taxation And Innovation — The Sharing Economy As A Case Study

Jordan M. Barry (San Diego), Taxation and Innovation: The Sharing Economy as a Case Study, in Cambridge Handbook on Law and Regulation of the Sharing Economy (Nestor Davidson, Michèle Finck & John Infranca, eds., Cambridge University Press 2018):

This chapter considers the relationship between the U.S. federal income tax system and innovation, using the sharing economy as a focal point for analysis. It makes two main points.

First, the tax system is currently a questionable tool for encouraging innovation. Regulators are understandably concerned that taxpayers will use tax incentive provisions in unanticipated ways, and thus are inclined to tightly limit such provisions’ scope. This reduces incentive provisions’ net benefit to taxpayers, and can even cause such provisions to miss their marks entirely. Moreover, small and new companies are key drivers of innovation, and evidence suggests that they are relatively unresponsive to tax incentives.

Second, innovation can help improve the tax system. To fix a problem, one must first identify it; innovation provides opportunities to see where tax law is achieving its goals and where it is falling short. The sharing economy experience suggests some strengths, such as the tax system’s definition of income, as well as weaknesses, such as the dividing line between independent contractors and employees.

January 3, 2018 in Scholarship, Tax | Permalink | Comments (0)

IRS Issues Tax Rate Guidance For Stockpiled Foreign Income

Bloomberg:  IRS Issues Tax Rate Guidance for Stockpiled Foreign Income, by Lynnley Browning:

The Internal Revenue Service and Treasury Department will generally allow existing loans and other related-party transactions involving the overseas affiliates of multinational corporations to be taxed at the lower of two preferential rates, according to an official notice [Notice 2018-07].

The notice, released Friday afternoon, says the IRS and Treasury “intend to issue” new regulations clarifying how multinational companies must compute tax bills on the foreign earnings they have accumulated to date.

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January 3, 2018 | Permalink | Comments (0)

Tamanaha: 14 Law Schools With Attrition Rates >20% May Fail Accreditation Standard 501(b) (Admitting Students Capable Of Passing The Bar)

Tamanaha (2017)TaxProf Blog op-ed:  14 Law Schools With Attrition Rates >20% May Not Be In Compliance With Accreditation Standard 501(b) Because They Are Admitting Students Who Are Not Capable Of Passing The Bar, by Brian Tamanaha (Washington University):  

ABA Accreditation Standard 501(b):
A law school shall only admit applicants who appear capable of satisfactorily completing its program of legal education and being admitted to the bar.

Interpretation 501-3:
A law school having a cumulative non-transfer attrition rate above 20 percent for a class creates a rebuttable presumption that the law school is not in compliance with the Standard.

This interpretation was adopted to prevent schools from admitting large numbers of unqualified students, collecting tuition, then failing them out. In particular, the concern motivating the new interpretation was that law schools in danger of violating bar passage standard 316 might protect their bar pass rate by dismissing students they perceive to be a high risk of failing the bar. The term “cumulative non-transfer attrition” means schools must keep track of each admitted class and count every student who is dismissed at any time thereafter (including the second and third year).

The 509 reports indicate that 14 law schools have run afoul of interpretation 501-3, thus incurring a presumption that they have violated Standard 501(b):

2017 ABA 509 Reports

Law School

% 1L Attrition

# Students

# Minority Students

Minority Student
% 1L Attrition

Liberty

20.3%

13

1

8%

Widener-Delaware

21.7%

35

15

43%

John Marshall (Atlanta)

21.9%

40

25

62%

Lincoln Memorial

22.2%

14

5

36%

Western State

22.4%

30

18

60%

Capital

23.0%

29

11

38%

California-Western

24.4%

56

27

46%

Southwestern

24.8%

69

32

46%

Florida Coastal

25.7%

76

35

46%

Arizona Summit

27.2%

47

29

62%

Golden Gate

30.5%

46

35

76%

Widener-Pennsylvania

32.7%

35

13

37%

Thomas Jefferson

37.2%

73

53

73%

N. Carolina Central

37.7%

69

57

83%

To put these numbers in context, consider the attrition rates at most law schools:  at 50 law schools attrition is between 0% and 2%; at 47 law schools attrition is between 2% and 5.1%; and at 50 law schools attrition is between 5.1% and 9.9%.

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January 3, 2018 in Legal Education | Permalink | Comments (9)

NY Times: Democrats In High-Tax States Plot To Blunt Impact Of New Tax Law

New York Times, Democrats in High-Tax States Plot to Blunt Impact of New Tax Law:

Democrats in high-cost, high-tax states are plotting ways to do what their states’ representatives in Congress could not: blunt the impact of the newly passed Republican tax overhaul.

Governors and legislative leaders in New York, California and other states are considering legal challenges to elements of the law that they say unfairly single out parts of the country. They are looking at ways of raising revenue that aren’t penalized by the new law. And they are considering changing their state tax codes to allow residents to take advantage of other federal tax breaks — in effect, restoring deductions that the tax law scaled back.

One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments.

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January 3, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (8)

Tax Profs Weigh In On Potential State Lawsuits To Block Repeal Of The State & Local Tax Deduction

Reuters, U.S. Tax Bill May Face Lawsuits With Long Odds But Political Payoffs:

Democratic-leaning states may take legal action to challenge the cap on deductions of state and local taxes under the sweeping overhaul of the U.S. tax code, and even though such lawsuits would face long odds they could help galvanize Democrats for next year’s mid-term election. ...

Law professors said legal challenges would likely rest on arguing that the provision interferes with the protection of states’ rights under the U.S. Constitution. ...

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January 3, 2018 in Tax Policy in the Trump Administration | Permalink | Comments (5)

Will Dan Markel Get Justice In 2018?

Markel 3XTL, High-profile Big Bend Cases to Watch in 2018:

More than three years after FSU professor Dan Markel was murdered, the search for justice continues. Alleged triggerman Sigfredo Garcia has been in and out of court more than a dozen times.

His trial was supposed to start this month, but it's been pushed back six more months. Prosecutors explained in June why this trial is taking a while to happen.

"Murder cases frequently get continued, so there's lots of reasons that can happen," said Georgia Cappleman, the deputy assistant state attorney. "This is an ungangly beast that we're trying to wrangle."

Garcia is expected back in court Jan. 3, the same day as Katherine Magbanua, also charged in Markel's murder. Her trial is scheduled for Jan. 22. Her attorneys have maintained the state has a weak case.

"They were just proved wrong," said Christopher DeCoste, a defense attorney. "They're making these accusations based on little pieces of information and trying to connect imaginary dots with invisible lines."

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January 3, 2018 in Legal Education | Permalink | Comments (1)

Tuesday, January 2, 2018

Blank Presents The Timing Of Tax Transparency At Hebrew University

Blank (2017)Joshua Blank (NYU, moving to UC-Irvine) presented The Timing of Tax Transparency, 90 S. Cal. L. Rev. 449 (2017) (review here), at Hebrew University in Jerusalem, Israel yesterday as part of its Tax Law Forum hosted by David Gliksberg (Hebrew U):

Fairness in the administration of the tax law is a subject of intense debate in the United States. As myriad headlines reveal, the Internal Revenue Service (“IRS”) has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, international tax structures of multinational corporations, and estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

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January 2, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Herzig: States Pay The Price When You Buy Online

New York Times op-ed:  States Pay the Price When You Buy Online, by David Herzig (Valparaiso):

Can online retailers be compelled by law to collect a sales tax? According to the Supreme Court, no — but that could change if, in the next few weeks, it decides to take up a case challenging the current rule.

The court should reconsider the prohibition, because the law takes a hammer to the fiscal health of states, which lose out on millions, if not billions, of dollars in sales tax revenue. Staggering amounts of digital transactions occurred this year: an estimated $6.59 billion in digital transactions on Cyber Monday (which would be a record), and an estimated $100 billion for the holiday season.

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January 2, 2018 in New Cases, Tax | Permalink | Comments (0)

NY Times: What Explains The Dearth Of New Year's Babies? Taxes, Of Course

Tax Break BabiesNew York Times, To-Do List: Wrap Gifts. Have Baby.:

In the last 15 years, there has been a huge increase in the number of births that are induced with drugs or come by Caesarean section. In either case, parents or doctors can often schedule a baby’s arrival on a day of their choosing. ...

Over this same period — since the early 1990s — the federal government has been steadily increasing the tax breaks for having a child. For parents to claim the full amount of any of these breaks in a given year, a child must simply be born by 11:59 p.m. on Dec. 31. If the baby arrives a few minutes later, the parents are often more than a thousand dollars poorer.

Unless you’re a cynic, or an economist, I realize you might have trouble believing that the intricacies of the nation’s tax code would impinge on something as sacred as the birth of a child. But it appears that you would be wrong. ...

“It’s phenomenal what’s happening in late December,” said Amitabh Chandra, a Harvard economist who provided many of the numbers here. “December is not really a particularly busy time for babies to be born. So to see a spike that’s equal to September is astounding.” ...

So to see if taxes were truly the culprit, Mr. Chandra and another economist, Stacy Dickert-Conlin of Michigan State, devised some clever tests [Taxes and the Timing of Births]. They found that people who stood to gain the most from the tax breaks were also the ones who gave birth in late December most frequently. When the gains were similar, high-income parents — who, presumably, are more likely to be paying for tax advice — produced more December babies than other parents. ...

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January 2, 2018 in Tax | Permalink | Comments (0)

Dulles Airport Duty-Free Fight Moves To Supreme Court

Dulles 2Virginia's Loudoun County has filed a petition for certiorari (PDF) asking the Supreme Court to reverse a state court ruling that bars the county from imposing its gross receipts tax on duty-free sales at Dulles International Airport. From the petition:

Dulles Duty Free, LLC (“DDF”). . . operates “duty free” stores at Dulles International Airport . . . . Those stores’ sales are predominantly to travelers departing the United States . . . . Loudoun County imposes a 0.17% Business, Professional and Occupational License (“BPOL”) tax measured by the gross receipts of retail stores located in the County. Loudoun accordingly calculated the BPOL tax on DDF using gross receipts, including the portion of its total sales attributable to international travelers who purchase an item at its Dulles Airport duty free stores, and then carry that item out of the country on an international flight.

DDF argu[ed that] the County’s collection of those taxes related to “international sales” violated the Import-Export Clause. . . . The Supreme Court of Virginia . . . held that, as applied to DDF's “export goods,” the BPOL “constitutes an impermissible impost upon an export in violation of the Import-Export Clause” . . . .

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January 2, 2018 | Permalink | Comments (0)

Invitation: Pepperdine Law School Reception At AALS

Pepperdine AALS

Pepperdine Law School invites law professors and deans to a reception
hosted by our new dean, Paul Caron, at the 2018 AALS Annual Meeting in San Diego:

Friday, Jan. 5, 5:30 - 7:30 p.m.
Del Mar Room | South Tower, Level 3
Marriott Marquis San Diego Marina
Please join us for hors d'oeuvres, a hosted bar, and some tunes from Hamilton!
RSVP

January 2, 2018 in Legal Education, Tax | Permalink | Comments (0)

Far Fewer Law School Conditional Scholarship Programs In 2016-17 Than In 2011-12

This blog posting highlights the much smaller number of law schools with conditional scholarship programs in 2016-17 compared to 2010-11.  It also looks at the smaller number and smaller percentage of first-year students with conditional scholarships in 2016-17 compared with 2011-12, and the extent to which the number and percentage of rising second-year students whose scholarships were reduced or eliminated has changed since 2011-12.  Next, it analyzes both the prevalence of conditional scholarship programs among law schools across different rankings categories and the extent to which scholarship retention rates differ among law schools across different rankings categories.  In this regard, it notes both that there are almost no conditional scholarship programs among top-50 law schools as of 2016-17, and that the concentration of conditional scholarship programs in law schools ranked 101 and lower probably means a disproportionate number of women students and minority students are dealing with conditional scholarships. Finally, it looks at how the distribution of retention rates by decile has changed since 2011-12.

  1. Introduction

Several years ago, the Council for the Section of Legal Education and Admissions to the Bar approved revisions to Standard 509, requiring that law schools post a chart identifying the number of conditional scholarships given to incoming first years and the number of those scholarship recipients whose scholarships were reduced or eliminated at the end of the first year.  As a result, there is now a much greater universe of publicly available information about law school scholarship programs. In the summer of 2013, I posted to SSRN an article entitled Better Understanding the Scope of Conditional Scholarship Programs among American Law Schools, summarizing the first year of available data on conditional scholarship programs, covering the 2011-12 academic year.  Law schools have now published this data for six years, with data covering the 2016-17 academic year having just been released as of December 15.

  1. Number of Law Schools with Conditional Scholarship Programs Declines by 36.4%

As shown in Chart 1 below, excluding the three law schools in Puerto Rico, there were 140 fully-accredited ABA law schools with conditional scholarship programs in 2011-12. For the 2016-17 academic year, however, the number of fully-accredited ABA law schools with conditional scholarship programs had dropped to 89, a decline of over 36%.Chart 1 2017 Cond. Schol. Blog SECOND

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January 2, 2018 in Jerry Organ, Law School, Legal Education | Permalink | Comments (6)

The IRS Scandal, Day 1699: Lois Lerner And Civil Service Reform

IRS Logo 2Wall Street Journal op-ed:  A Big, Beautiful Trump 2018 Issue, by Kimberley A. Strassel:

President Trump is on the hunt for a 2018 issue—a strong follow-up to his tax-cut victory that will motivate voters and gain bipartisan support. Democrats are pushing for an infrastructure bill, inviting the president to spend with them. House GOP leaders are mulling entitlement reform—a noble goal, if unlikely in a midterm cycle.

Fortunately for the president, there’s a better idea out there that’s already a Trump theme. It’s also a sure winner with the public, so Republicans ought to be able to pressure Democrats to join.

Let 2018 be the year of civil-service reform—a root-and-branch overhaul of the government itself. Call it Operation Drain the Swamp. ...

We live in an administrative state, run by a left-leaning, self-interested governing class that is actively hostile to any president with a deregulatory or reform agenda.

It’s Lois Lerner, the IRS official who used her powers to silence conservative nonprofits. ...

More broadly, it is a federal workforce whose pay and benefits are completely out of whack with the private sector. ...

Civil-service reform’s bipartisan appeal means it has a shot in the Senate. The Chuck Schumers and Elizabeth Warrens will fight for their federal union buddies. But will Democrats like Jon Tester, Claire McCaskill, Joe Manchin and Joe Donnelly —who represent conservative or right-to-work states—go to bat for the likes of Lois Lerner?

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January 2, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

TaxProf Blog Holiday Weekend Roundup

Monday, January 1, 2018

The Top 10 Legal Education Posts Of 2017

The Top 10 Tax Posts Of 2017

The IRS Scandal, Day 1698: Fallout From Tea Party Targeting Allegations Has Neutered IRS Oversight Of Nonprofits

IRS Logo 2Washington Post editorial, Scandal Has Overwhelmed the IRS:

Conservatives who long sought to restrain the Internal Revenue Service have managed to throw a wrench into an IRS division that is supposed to regulate tax-exempt nonprofits and charities, just at a time when these groups are becoming more partisan and complex.

In a Dec. 18 article in The Post, reporter Robert O’Harrow Jr. offered a disturbing picture of the besieged Exempt Organizations division of the IRS, which regulates charities and nonprofits such as those allowed under sections 501(c)(3) and 501(c)(4) of the tax code. The former may not directly or indirectly support a political candidate, but they are allowed to participate in educational debates about the issues; the latter are social-welfare groups that can be involved in politics only so long as it is not their primary activity. The number of applications from new charities has exploded in recent years, and the law is a bit of a gray zone — vaguely written and hard to enforce.

In recent years, overwhelmed by applications, the division and its then-leader, Lois Lerner, fell into the crosshairs of the conservative tea party movement for the slow pace of approvals of tea party groups, which they claimed was due to a conspiracy by the Obama administration to target them. Subsequent investigations found mismanagement — the IRS was taking shortcuts and using keywords to deal with the mountain of applications — but not deliberate targeting.

Still, the charges took a toll. The division seems to have lost its will to scrutinize charities. According to Mr. O’Harrow, last year the division rejected just 37 of the 79,582 applications on which it made a final determination. He reported that charities have now begun to recognize they face little or no chance of examination or sanction. The division’s budget has declined from a peak of $102 million in 2011 to $82 million last year. The number of division employees has fallen from 889 to 642. ...

There is more than enough blame to go around in this tale. The conservative groups, their allies in Congress and the IRS itself all bear responsibility. It is clear what the result will be. Voters will have less and less knowledge of who is paying for political activity in their democracy, even as many politicians hypocritically claim to favor transparency.

(Hat Tip: Bill Turnier.)

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January 1, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (9)

Sunday, December 31, 2017

WSJ: The Most Popular People At New Year's Eve Parties? Tax Accountants

Happy New YearWall Street Journal, Who’s the Center of Attention at Holiday Parties? Your Tax Accountant:

When Mark Astrinos is asked what he does, the response is typically muted. “I’ll just say, ‘I’m a CPA,’ and the conversation will end,” said the certified public accountant and financial planner with Libra Wealth in San Francisco.

Not lately, though. Thanks to the sweeping tax-overhaul bill passed by Congress and signed this month by President Donald Trump, people now “light up and they’re so intrigued and they want to know how they’ll be affected,” he said.

In part because of the attention, Mr. Astrinos said, “It’s never been a better time to be a CPA.”

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December 31, 2017 in Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #1 among 13,276 tax papers in all-time downloads:

  1. [41,057 Downloads]  The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation, by Ari Glogower (Ohio State), David Kamin (NYU), Rebecca Kysar (Brooklyn) & Darien Shanske (UC-Davis) et al.
  2. [506 Downloads]  The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule, by Itai Grinberg (Georgetown)
  3. [478 Downloads]  Tax Reform: Process Failures, Loopholes and Wealth Windfalls , by Stephen Shay (Harvard)
  4. [331 Downloads]  Once More, with Feeling: The 'Tax Cuts and Jobs' Act and the Original Intent of Subpart F, by Reuven Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2018, Michigan)
  5. [206 Downloads]  Heading Off a Cliff?, by Michael Graetz (Columbia)

December 31, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1697: Budgetary Evisceration After Tea Party Targeting Allegations Has Left The IRS Incapable Of Implementing The New Tax Law

IRS Logo 2New York Times editorial, Don’t Cheer as the I.R.S. Grows Weaker:

[A]s it prepares to implement the most sweeping tax overhaul in 30 years, the I.R.S. is perhaps weaker than it has ever been. In 1986, the last time Congress passed major changes in the tax code, it included a budget increase for the agency, allowing it to hire 2,100 more employees to carry out the changes. Earlier this year, as the agency struggled to do its job with a decimated staff, a shrinking budget and decrepit computers, its commissioner pleaded with Congress to at least give it time to prepare for the big tax overhaul Republicans wanted.

That didn’t happen. Instead, Republicans rushed hastily written legislation larded with amendments through both chambers. Even before this hash hit their desks, I.R.S. officials were warning about the potential for a catastrophic breakdown that could imperil our tax system. Then, at its busiest time of year, the agency was given a week before the tax law goes into effect to translate hundreds of pages of conflicting provisions, potential loopholes and unintended consequences into coherent guidance for taxpayers. ...

Americans should reserve their rage for Republicans, who have spent years targeting the I.R.S. for political gain. Since 2010, Congress has cut the agency’s budget by nearly $1 billion, or 18 percent, adjusted for inflation, as the I.R.S. processes about 10 million more tax returns. Its work force has been whacked by 21,000, or nearly one-quarter; taxpayers who need help — often individuals preparing their own returns — have a hard time getting anyone to answer the phone. ...

There is no permanent commissioner leading the I.R.S. Its last one, John Koskinen, left in November at the expiration of his term. Mr. Koskinen had spent a big chunk of his time on Capitol Hill, being lambasted by Republicans over allegations that the Obama-era I.R.S. unfairly targeted conservative political groups seeking tax-exempt status. A report released in October by the Treasury Department’s inspector general found that the I.R.S. had also scoured left-leaning groups’ applications for tax-exempt status as part of its effort to identify groups focused on politics, not “social welfare,” as the rules for tax-exempt status require.

The agency apologized for its improper audits, and a Justice Department investigation found mismanagement but no evidence of a crime. Though the audits occurred before Mr. Koskinen came aboard, Republicans clamored for him to be impeached, an action not taken against an administration official besides the president since the 1870s. The dumb and unsuccessful effort was led by legislators like Jason Chaffetz, then a Republican congressman from Utah, who view the I.R.S. as symbolic of “big government” and think that killing it outright might be a good idea. ...

Pounding a perennial punching bag like the I.R.S. scores easy political points among Americans who associate the agency with an unpleasant April deadline. We get it. But if the agency that collects more than 90 percent of the government’s money stumbles, all Americans pay, and they can look to Congress, not just the I.R.S., in assigning the blame.

(Hat Tip: Bill Turnier.)

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December 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (17)

Saturday, December 30, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Students Wait For Relief Months After Closure Of Charlotte Law School

Charlotte Logo (2016)WSOCTV, Charlotte School of Law Students Wait for Relief Months After Campus Closes:

Four months after the embattled Charlotte School of Law closed its doors, Eyewitness News learned the future is still uncertain for many people who were connected to the school when it shut down.

The American Bar Association placed the school on probation in November 2016 and the Department of Education pulled its federal student loan funding in December 2016 before the state pulled its license over the summer.

"A year later and I'm still in limbo," former student Talece Hunter said. Hunter put her dreams on hold when she withdrew from the crumbling Charlotte School of Law amid its financial and academic crisis earlier this year. Now, she's searching for a way to attend law school on the weekends so she can continue working to support herself. ...

The is one of the hundreds of students being represented by attorney Gary Jackson who want CSL and its parent company, Infilaw, to pay up for drowning students in debt and then leaving them hanging. "Many have over $200,000 in student debt. Some of these are people who have finished, graduated and still haven't passed the bar. This has obviously been an extraordinary burden on these people," Jackson said.

There are several groups suing CSL. Most of the students’ cases are slowly making their way through the courts.

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December 30, 2017 in Legal Education | Permalink | Comments (0)

Almost Everything Is Wrong With the New Tax Law

Wall Street Journal op-ed:  Almost Everything Is Wrong With the New Tax Law, by Alan S. Blinder (Princeton):

Dec. 20, 2017, should go down in political history as a day of infamy or absurdity, probably both. After passing a massive tax bill without a single Democratic vote—something highly unusual in itself—congressional Republicans gathered with President Trump on the White House steps that day to engage in an orgy of self-congratulation.

The president patted himself on the back so vigorously that he might have required physical therapy. One after another, Republican senators and representatives competed for the honor of offering the most unctuous praise for their Maximum Leader. But Sen. Orrin Hatch of Utah, who was previously thought to be level-headed, set a new standard for fawning by declaring that Mr. Trump may be the greatest president ever. Ever? Not Lincoln? Not Washington?

Was this love-fest because Republicans had just passed an economically sound and wildly popular tax bill that was winning praise from tax experts and scoring marvelously in public opinion polls? Not quite. Polls show that Americans hate this bill.

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December 30, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (5)

Friday, December 29, 2017

NY Times: The College Sports Tax Dodge

NCAA LogoNew York Times, The College Sports Tax Dodge:

New York University does not have much of an athletic program. But 70 years ago, it ran a profitable macaroni company, leading indirectly to a decision by Congress that college sports — if not a college-owned noodle business — should be exempt from taxation.

Today, as the hugely lucrative football bowl season wraps up, colleges fear that the new tax law signed by President Trump could derail their gravy train — two provisions target coaches’ high salaries and booster donations tied to ticket purchases. But they need not worry much.

There are no plans to start taxing television revenue and corporate sponsorships, two of the biggest income streams, which together transformed intercollegiate athletics into a multibillion-dollar business. Even with the legislative changes, collegiate sports remain largely tax exempt, the beneficiary of a public subsidy that is increasingly difficult to defend.

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December 29, 2017 in Tax | Permalink | Comments (2)

Weekly Legal Education Roundup: The Best Legal Education Articles Of 2017

Because the week between Christmas and New Years is typically slow for legal education news, I am going to discuss the best legal education articles from 2017.  Several articles in the past year showed the effectiveness of new approaches to legal education.  There have also been several excellent articles this year on professional identity development.  Finally, measuring outcomes was an important area of research in 2017.

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December 29, 2017 in Legal Education, Scott Fruehwald, Weekly Legal Education Roundup | Permalink | Comments (6)

'Orwellian' Offshore Tax Will Hit Some Firms Harder Than Others

Bloomberg:  'Orwellian' Offshore Tax Will Hit Some Firms Harder Than Others, by Lynnley Browning:

The name that Republican tax writers gave to a new, multi billion-dollar business levy implies that it targets foreign earnings from “intangible” intellectual property — hitting tech firms and drugmakers like Apple and Pfizer.

But experts agree that the little-understood “global intangible low-taxed income” levy, or GILTI, will also apply to earnings that go far beyond patents, royalties and licensing, and could end up snaring many global firms that earn little such income. Private equity partnerships that aren’t publicly traded, including Bain Capital, stand to pay rates three times as high as corporate competitors’, tax lawyers say. Law and advertising firms with overseas offices may also be hit — as will many U.S. companies that make “excess” profit from foreign plants, equipment and inventory.

The name is “Orwellian,” said James Duncan, a tax partner at the law firm Cleary Gottlieb Steen & Hamilton, in a Dec. 20 webcast. “Its most significant effect is on income that is neither intangible nor low-taxed.”

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December 29, 2017 in Tax | Permalink | Comments (1)

Confusion Reigns As People Race To Prepay (And Deduct) Property Taxes By Year-End

IR-2017-210, Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017:

The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.

The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.

The following examples illustrate these points.

Example 1: Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018.  On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018.   Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return.

Example 2: County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018. County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019.  However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year.  Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.

Victor Thuronyi, Can You Prepay 2018 Property Tax in 2017?:

It turns out this question get[s] more complex by the day. ...

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December 29, 2017 in IRS News, Tax | Permalink | Comments (11)

New UC-Irvine Dean Is Only Woman Of Color To Lead A Top 30 Law School

Song 2Los Angeles Times, New UC Irvine Dean Will Be Only Woman of Color to Lead a Top Law School, University Says:

UC Irvine announced that L. Song Richardson will be the new dean of its 9-year-old School of Law following the departure of founding dean Erwin Chemerinsky.

Richardson will take the helm Monday as the only woman of color to lead one of U.S. News & World Report’s 30 top-rated law schools, according to the university.

Richardson was named interim dean after Chemerinsky began his new position as dean of UC Berkeley’s law school in July. Richardson has been part of UCI’s law school faculty since 2014 and was a senior associate dean for academic affairs from 2016 to 2017. She teaches and writes in criminal law, criminal procedure and law and social science.

“It’s rare to find an elite law school with a world-class faculty that excels at both teaching and scholarship, a creative and multi-disciplinary approach to legal education and a commitment to creating and disseminating knowledge that improves lives and communities around the world,” Richardson said in a statement.

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December 29, 2017 in Legal Education | Permalink | Comments (0)

President Trump: 'I Know The Details Of Taxes Better Than Anybody. Better Than The Greatest CPA.'

From the New York Times thirty minute interview with President Trump:

"I know the details of taxes better than anybody. Better than the greatest C.P.A."

December 29, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Thursday, December 28, 2017

Feminist Judgments: Rewritten Tax Opinions

Feminist JudgmentsFeminist Judgments: Rewritten Tax Opinions (Bridget J. Crawford (Pace) & Anthony C. Infanti (Pittsburgh), eds.) (Cambridge University Press Dec. 28, 2017):

Could a feminist perspective change the shape of tax laws? Feminist reasoning and analysis are recognized as having tremendous potential to affect employment discrimination, sexual harassment, and reproductive rights laws - but they can likewise transform tax law (as well as other statutory or code-based areas of the law). By highlighting the importance of perspective, background, and preconceptions on reading and interpreting statutes, this volume shows what a difference feminist analysis can make to statutory interpretation. Feminist Judgments: Rewritten Tax Opinions brings together a group of scholars and lawyers to rewrite tax decisions in which a feminist emphasis would have changed the outcome, the court's reasoning, or the future direction of the law. Featuring cases including medical expense deductions for fertility treatment, gender confirmation surgery, tax benefits for married individuals, the tax treatment of tribal lands, and business expense deductions, this volume opens the way for a discussion of how viewpoint is a key factor in statutory interpretation.

Tax Prof contributors: 

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December 28, 2017 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Indiana Law Schools Remain Predominantly White But Women Are Gaining Ground

Indiana Road SignIndiana Lawyer, Indiana Law Schools Remain Predominantly White But Women Are Gaining Ground:

Three of Indiana’s four law schools have shrunk in recent years but overall, minority enrollment has slipped while the number of women has been increasing since 2015, according to the recently released in the Fall 2017 Standard 509 Reports from the American Bar Association.

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December 28, 2017 in Legal Education | Permalink | Comments (3)

Tax Reform’s Growth Whisperer

ToomeyWall Street Journal, Tax Reform’s Growth Whisperer:

President Trump signed tax reform into law Friday, but in late November it almost had a heart attack in committee. Sens. Ron Johnson of Wisconsin and Bob Corker of Tennessee were balking, the former over the details of business taxation and the latter over the deficit. The GOP has a bare 12-11 majority on the Senate Budget Committee, and Democrats were united in opposition, so a single Republican dissenter would have stalled the bill. But Messrs. Corker and Johnson voted aye, and it advanced.

Much of the behind-the-scenes credit for tax reform belongs to Sen. Pat Toomey of Pennsylvania, who as a member of both the Budget and Finance committees helped persuade a rotating cast of Republican critics. When the GOP celebrated its victory at the White House this week, Nevada’s Dean Heller mugged for the cameras toward the front. Mr. Toomey stood less conspicuously a row back. He’s the player who doesn’t dance in the end zone but stays up watching game film.

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December 28, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

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 December 1, 2017) 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.)

74,442

Gladriel Shobe (BYU)

22,319

2

Michael Simkovic (USC)

38,095

Reuven Avi-Yonah (Mich.)

13,009

3

Paul Caron (Pepperdine)

33,900

D, Dharmapala (Chicago)

3569

4

D. Dharmapala (Chicago)

32,606

Lily Batchelder (NYU)

3519

5

Louis Kaplow (Harvard)

28,866

Richard Ainsworth (BU)

3443

6

Vic Fleischer (San Diego)

24,212

Michael Simkovic (USC)

3388

7

Ed Kleinbard (USC)

23,871

Michael Graetz (Columbia)

3020

8

James Hines (Michigan)

23,354

David Gamage (Indiana)

2895

9

Gladriel Shobe (BYU)

22,768

Andy Grewal (Iowa)

2878

10

Richard Ainsworth (BU)

22,690

Hugh Ault (Boston College)

2676

11

Richard Kaplan (Illinois)

22,477

David Weisbach (Chicago)

2579

12

Ted Seto (Loyola-L.A.)

22,388

Kyle Rozema (Chicago)

2532

13

Katie Pratt (Loyola-L.A.)

20,774

Daniel Hemel (Chicago)

2517

14

David Weisbach (Chicago)

19,999

Ed Kleinbard (USC)

2412

15

Robert Sitkoff (Harvard)

19,713

William Byrnes (Texas A&M)

2283

16

Chris Sanchirico (Penn)

18,905

Omri Marian (UC-Irvine)

2127

17

Brad Borden (Brooklyn)

18,887

Darien Shanske (UC-Davis)

1967

18

Carter Bishop (Suffolk)

18,513

Louis Kaplow (Harvard)

1895

19

Daniel Shaviro (NYU)

18,198

Chris Sanchirico (Penn)

1853

20

Francine Lipman (UNLV)

18,144

Steven Bank (UCLA)

1796

21

Bridget Crawford (Pace)

17,946

Daniel Shaviro (NYU)

1746

22

Jen Kowal (Loyola-L.A.)

17,867

Jordan Barry (San Diego)

1650

23

Dennis Ventry (UC-Davis)

16,676

Stephen Shay (Harvard)

1617

24

Steven Bank (UCLA)

16,046

Bridget Crawford (Pace)

1591

25

David Walker (BU)

15,860

Paul Caron (Pepperdine)

1508

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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December 28, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)