TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, January 13, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new article by Omri Marian (UC-Irvine), The Other Eighty Percent: Private Investment Funds, International Tax Avoidance, and Tax-Exempt Investors, BYU L. Rev (forthcoming 2016).

Glogower (2016)Omri Marian’s new work highlights the role of private investment funds (“PIFs”) in international tax planning and avoidance by PIF-controlled multinational enterprises (“MNEs”).  Marian argues that PIFs active in cross-border investments can take advantage of tax planning opportunities unavailable to purely domestic funds, and provides evidence that PIF-controlled MNEs are more likely to engage in aggressive planning.  Consequently, income earned by PIFs can more readily escape taxation entirely, in both the source jurisdiction where investments are made, and in the residence jurisdiction of investors and managers.   

This groundbreaking work lies at the intersection of two literatures, on cross-border tax planning by MNEs, and on the taxation of PIFs, and fills critical gaps in both.  The MNE literature, Marian notes, generally focuses on tax planning by corporate MNEs, particularly in industries with mobile IP such as technology and pharmaceuticals, but not on the role of investor and PIFs in MNE tax planning.  Marian’s work also calls for (and makes significant strides towards) a broader account of the full scope PIF tax planning activities, beyond traditional areas of concern such as manager compensation and carried interest. 

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January 13, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

PwC Hires GE's 600-Person Global Tax Team

GEPWCWall Street Journal, GE Tax Trade: Sending Hundreds of Accountants to PwC:

PricewaterhouseCoopers and General Electric Co. have agreed to move GE’s in-house global tax team over to PwC as the accounting firm adds global expertise and the industrial conglomerate continues slimming down.

PWC will absorb more than 600 employees under the agreement announced Thursday. GE’s tax employees in 42 countries will move to PwC, where they will provide tax planning, advice, compliance and other tax services to both GE and other PwC tax clients.

PwC will also take over GE’s tax technologies as part of the five-year renewable agreement.

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January 13, 2017 in Tax | Permalink | Comments (2)

Weekly Legal Education Roundup

Percentage Of Law Students Paying Full Tuition Falls To 28%, Down From 48% In 2011

Matt Leichter, 2015: Full-Time Law Students Paying Full Tuition Fell ~5 Percentage Points (Again):

As with 2014, the proportion of full-time law students paying full freight fell substantially at the average law school not in Puerto Rico. In 2015, the last year for which data are available, the average was 28.1 percent, down from 32.9 percent. In 2011, the average was 20 points higher.

Leichter 1

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January 13, 2017 in Legal Education | Permalink | Comments (7)

Alex Brill, David Schizer Interviewed By Trump Transition Team For Assistant Secretary Of The Treasury For Tax Policy

BSBloomberg is reporting that Alex Brill (Research Fellow, American Enterprise Institute) and David M. Schizer (Dean Emeritus and Harvey R. Miller Professor of Law and Economics, Columbia Law School) have been interviewed by the Trump transition team for the position of Assistant Secretary of the Treasury for Tax Policy.

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January 13, 2017 in Tax | Permalink | Comments (3)

Batchelder:  Fixing The Estate Tax

Democracy Logo (2018)Democracy: A Journal of Ideas: Fixing the Estate Tax, by Lily Batchelder (NYU):

Liberals and conservatives have long disagreed about how much economic inequality is fair. But one thing they generally share is a vision of America as a land of opportunity—a nation where, at least compared to other countries, one’s financial success should depend relatively little on the circumstances of one’s birth. To be sure, we have had, and continue to have, great failings in this regard, with slavery and disenfranchisement just two conspicuous examples. But as President Obama has said, “What makes us Americans is our shared commitment to an ideal—that all of us are created equal, and all of us have the chance to make of our lives what we will.”

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January 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1345:  Donald Trump, The Intelligence Community, And Lois Lerner

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Communities Digital News, Chuck Schumer and the CIA Like Their Targets Shaken, Not Stirred:

Between 2010 and 2012, roughly 426 conservative organizations were targeted for extra scrutiny by the IRS. A 298-page report by the Office of Inspector General says the IRS targeted organizations for harassment with names that included the words “tea,” “liberty,” “patriot” or “constitution” in their titles.

Subsequent congressional hearings revealed the IRS colluded with the Justice Department, the Federal Election Commission and leading Democratic members of Congress on which tea party groups to target. One of those congressional members is today’s Democratic Senate Minority Leader, Chuck Schumer.

In 2012, Schumer joined several of his Democratic colleagues in drafting a letter urging the IRS to investigate tea party organizations “focused on federal election activities” and applying for 501(c)(4) tax-exempt status.

When Democrats lost control of the U.S. Senate in 2014, Schumer expressed his fear to members of the Center for American Progress that tea party groups could out fundraise Democratic-friendly organizations, thus purchasing more commercial time for political ads.

“It is clear that we will not pass anything legislatively [to curtail tea party influence] as long as the House of Representatives is in Republican control, but there are many things that can be done administratively by the IRS and other government agencies—we must redouble those efforts immediately,” Schumer said.

When Lois Lerner, who headed the tax-exempt division of the IRS, was subpoenaed to appear before congress to explain her agency’s targeting, she exercised her Fifth Amendment right against self-incrimination. She eventually resigned, with the Obama Justice Department exonerating her of any criminal wrongdoing.

Lerner is retired and drawing a comfortable federal pension.

History, they say, is prelude. ...

MSNBC host Rachel Maddow described Trump’s skepticism of America’s spy agencies as “taking shots,” “antagonism” and “taunting of the intelligence community.”

Schumer, her guest, peered over his bifocal readers and spoke in hushed tones, “[If] you take on the intelligence community, they have six ways from Sunday to come back at you. So, even for a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.”

Tuesday, Buzzfeed released a leaked, 35-page dossier supposedly compiled by British intelligence officer Christopher Steele—and in the possession of U.S. intelligence agencies—containing unsubstantiated claims Russian intelligence possess compromising information on Trump for purposes of blackmail and, incredibly, claiming Trump is in essence a Russian spy. ...

Move over IRS. The shadowy U.S. intelligence community, with its state-of-the-art domestic and global spying operations, missile-bearing drones and license to kill, is morphing into a political targeting apparatus beyond Lois Lerner’s wildest dreams.

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January 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, January 12, 2017

Morse Presents Entrepreneurship Incentives For Resource-Constrained Firms Today At Duke

Morse (2017)Susan Morse (Texas) presents Entrepreneurship Incentives for Resource-Constrained Firms at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

How should entrepreneurship and innovation policy account for the fact that different firms have different access to capital? The firms that can more easily claim tax and other legal incentives targeted at encouraging innovation are often large established firms with ready access to capital. But there is no reason to think that large, established firms are best suited to the pursuit of entrepreneurial goals. To the contrary, new firms, such as resource-constrained startups, may have an advantage when it comes to pursuing entrepreneurship and innovation.

The typical resource-constrained firm considered in this chapter is a new, loss-making firm. Legal incentives, including tax incentives, for entrepreneurial action often offer a deal that is unappealing to such a firm. This is because such incentives often require an up-front investment in exchange for a delayed, uncertain payoff.  A firm must expend resources to respond to the law. But the legal incentives often do not offer any definite benefit, let alone any immediate benefit, in exchange for the up-front expenditure. ...

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January 12, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NY Times:  Facing Fierce Competition For Clients, Elite Law Firms Take Unusual Steps To Bolster Their Brands

NY Times Dealbook (2013)New York Times Deal Book: With Competition Fierce, Even Elite Law Firms Resort to the Unusual, by Elizabeth Olson:

America’s law firms, even the most prominent, are mired in an era of noticeably modest growth and volatility in the industry, and 2017 promises to be no better.

Fierce competition is prompting firms to take unusual steps to bolster their profiles. Top firms are hiring groups of lawyers to expand specific practice areas, changing pay practices, jettisoning or demoting some partners and staff members and seeking ways to distinguish their brands to set them apart from competitors.

Beyond that, the top-drawer firms are increasingly jostling with one another to win lucrative legal work. It is getting tougher for firms to hang onto traditional portfolios of corporate business and avoid elbowing from rivals.

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January 12, 2017 in Legal Education | Permalink | Comments (3)

Reflections On The AALS

Sugin:  Invisible Taxpayers

Linda Sugin (Fordham), Invisible Taxpayers, 69 Tax L. Rev. 617 (2017):

The paradigm tax dispute involves a taxpayer on one side and the government on the other. In that traditional dyad, only the taxpayer matters, even though the interrelatedness of taxpayers across the fiscal system means that the outcome of any one dispute often affects the interests of many other taxpayers. Yet everyone else is invisible to the legal system, without enforceable rights in the administrative or judicial structure. This article focuses attention on such invisible taxpayers and what justice for them would require. It proposes a theory of tax injury that is determined by “legal shares” and argues that conventional standing doctrine can accommodate broader taxpayer access if courts acknowledge the financial interrelatedness of taxpayers. Invisibility deprives taxpayers of both economic fairness (a traditional tax policy norm) and democratic fairness (a norm requiring tax institutions to treat people with equal respect and concern). This article explains how the Supreme Court has turned tax expenditures into invisible laws. It evaluates tax expenditures as tax law, challenging the standard scholarly approach that assumes tax expenditures should be not only economically, but also legally, equivalent to direct spending programs.

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January 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Charleston, Florida Coastal Law Schools Fail 'Gainful Employment' Test, Will Lose Federal Student Loans If They Fail Again Next Year; Three Other Law Schools In Danger Zone

CFNational Law Journal, Two Law Schools Get an ‘F’ for High Student Debt from Education Dept.:

Two law schools have landed on the U.S. Department of Education’s list of college programs with extremely high student loan debt compared with graduates’ earnings.

Florida Coastal School of Law and Charleston School of Law are identified as failing on the department’s “gainful employment list,” released Monday. Should those schools fail a second year in a row, they will lose access to federal student loans—a situation that is currently rocking the Charlotte School of Law as it struggles to remain open after losing federal loan access at the start of the year.

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January 12, 2017 in Legal Education | Permalink | Comments (0)

Hasen:  A Partnership Mark-To-Market Tax Election

David Hasen (Colorado), A Partnership Mark-to-Market Tax Election:

The rules of subchapter K of the Internal Revenue Code impose substantial compliance burdens on partnerships and substantial administrative burdens on the government. These burdens could make the option to have periodic deemed realizations of gains and losses on partnership assets attractive to many partnerships. Although deemed realizations would impose valuation costs and a slightly higher expected tax liability for partners than they bear under current law, for many partnerships, the tradeoff likely would prove worthwhile, especially if partners could continue to take advantage of the long-term capital gain preference for gains that would be taxed at preferential rates in the absence of deemed realizations.

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January 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Nurturing The Law Student’s Soul: Law Schools Struggle To Teach Professionalism In an Age of Consumerism

Elizabeth Adamo Usman (Belmont), Nurturing the Law Student’s Soul: Why Law Schools Are Still Struggling to Teach Professionalism and How to Do Better in an Age of Consumerism, 99 Marq. L. Rev. 1021 (2016):

The pronounced increase over the past few decades of the role of consumerism in higher education in general and in law schools specifically, in which schools and students view themselves, respectively, as consumers and sellers of an educational product, has only been accelerated in recent years with the competition over the declining number of potential entering law students. With no end to this trend in site, consumerism appears to have become a part of the reality of legal education.

This Article explores the intersection of consumerism and professionalism in the law school setting with a specific focus on the “Millennial” law student. This Article first explores the contours of what constitutes “professionalism,” concluding that at essence it involves aspirational values of the legal profession. The Article also delineates the unique characteristics of law students from the Millennial generation, focusing on Millennials’ penchant for service and desire for greater meaning through work.

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January 12, 2017 in Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 1344:  Democrats Remind Jeff Sessions AG Enforces 'Every Law,' Yet Were Silent When DOJ Declined To Prosecute Lois Lerner

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Western Journalism Review, Democrats Remind Jeff Sessions AG Enforces 'Every Law,' They Were Silent These 7 Times Under Obama:

Sen. Dianne Feinstein (D-CA) reminded Sessions and America that the Attorney General must enforce every law, regardless of the nation's top law enforcement official's views on those laws. ...

While it's absolutely imperative that Sessions uphold the rule of law if he's confirmed, that charge is a little hypocritical as President Obama's Attorney Generals ignored laws that went against the Obama Administration's agenda.

Here are seven times Obama's Attorney Generals side-stepped the law. ...

3. DOJ Concluded IRS Scrutiny Of Tea Party Groups Wasn't Politically Motivated, Despite Evidence To The Contrary

On October 23, 2015, the Department of Justice announced that it would not bring charges against Lois Lerner, the former Internal Revenue Service (IRS) official who was at the center of the conservative targeting controversy.

The IRS admitted to inappropriately targeting groups with the words “patriot” or “tea party” in their names for increased scrutiny of their tax-exempt applications.

Lerner, who oversaw the tax-exempt section of the IRS, denied that the targeting was politically motivated and DOJ announced that it concluded the IRS's actions were not politically motivated. In a letter to Congress, Assistant Attorney General Peter Kadzik said:

We found no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution.”

Republicans blasted the IRS when it was discovered that 24,000 of Lerner's emails were lost and could not be recovered.

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January 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (10)

Wednesday, January 11, 2017

At The Universities Of Michigan And Virginia, Faculty Salaries Are Tied To Research Productivity, Not The Number Of Students Taught—And That's A Good Thing

Inside Higher Ed, Study Explores How Universities Deploy Faculty and Link Professor Pay:

A common criticism of the faculty reward system is that it tends to value research over teaching. A just-released working paper from the National Bureau of Economic Research offers new evidence in support of that contention, suggesting that the number of students a professor teaches has relatively little to do with their compensation [Paul N. Courant (Michigan) & Sarah Turner (Virginia), Faculty Deployment in Research Universities].

Disciplines with bigger class sizes do tend to offer better pay. But the highest-paid faculty members within departments tend to teach fewer undergraduates and fewer undergraduate courses than their lower-paid colleagues. The paper also suggests that changes in faculty pay over time have more to do with discipline than number of students taught, and that universities adjust to various cost pressures by increasing class size and other means.

Yet the paper asserts that universities behave “rationally” in making such decisions, and suggests that prizing research output over teaching doesn’t necessarily affect educational quality. Over all, the paper seems to dispute assertions that higher education spending -- at least on instruction -- is wasteful or inefficient.

Figure 5A

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January 11, 2017 in Legal Education, Scholarship | Permalink | Comments (1)

Tillerson Seeks To Defer Tax On Gains From Sale Of Exxon Stock To Comply With Ethics Rules, Using Aggressive Interpretation Of I.R.C. § 83

TillersonBloomberg: Tillerson’s Exxon-Ethics Plan Has a $72 Million Tax Advantage, by Lynnley Browning:

The exit package Exxon Mobil Corp. has agreed to pay Rex Tillerson if he’s confirmed as secretary of state is structured to preserve roughly $180 million in deferred compensation for him — and might let him avoid an immediate federal income tax bill of as much as $72 million, according to tax specialists who have reviewed the plan.

The arrangement was designed to sever Tillerson’s ties to the global oil company he led since 2006 and allow him to comply with federal ethics law. Under the plan, Exxon would make a cash payment into an independent trust managed by Northern Trust Corp. for Tillerson. In exchange, Tillerson, 64, would give up his rights to more than 2 million restricted shares and restricted stock units that haven’t vested yet.

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January 11, 2017 in Political News, Tax | Permalink | Comments (0)

The Course Source: The Casebook Evolved

Stephen Johnson (Mercer), The Course Source: The Casebook Evolved, 44 Cap. U. L. Rev. 591 (2016)

Psychologist Abraham Maslow once noted that “it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” Law students are changing, law schools are criticized for failing to prepare practice-ready lawyers, and there is nearly universal consensus that legal education must transform. However, the principal tool that many faculty rely on to prepare their courses, the Langdellian casebook, is ill-suited for the transformation. The prototypical casebook that is still the standard for many courses today was designed for the Socratic dialogue and case method mode of instruction. While there is still a place for that method of instruction in legal education, other methods of instruction, the carriage bolts and lag screws of modern legal education, cannot be hammered down with the traditional casebook.

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January 11, 2017 in Legal Education, Scholarship, Teaching | Permalink | Comments (1)

Nguyen & Maine:  Branding Taxation

Xuan-Thao Nguyen (Indiana-Indianapolis) & Jeffrey A. Maine (Maine), Branding Taxation, 50 Ga. L. Rev. 399 (2016):

Brand advertising and enforcement represent a significant investment by most firms. Yet, surprisingly, little scholarship is devoted to the ideal tax regime that should govern investments in both brand building and brand enforcement. Current tax rules governing branding evolved in the absence of an appropriate legal framework. The result is a regime with incoherent tax distinctions that lack theoretical justification, suggesting that legislative or administrative changes are warranted. This Article concludes that the current tax treatment of ordinary brand advertising (expensing) serves legitimate goals--expensing stimulates economic growth, furthers administrative efficiency, and creates an even playing field between businesses that advertise their own brands and businesses that choose instead to license from others the right to use well-known trademarks.

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January 11, 2017 in Scholarship, Tax | Permalink | Comments (0)

Is Doomsday Imminent For Charlotte Law School? Is The ABA Going To Do Anything About The Other 2 InfiLaw Schools?

Charlotte Logo (2016)National Law Journal, Is Doomsday Imminent for Charlotte Law School?:

After Charlotte School of Law officials announced Friday that it would open for its spring semester on Jan. 19, officials at the troubled school backtracked on Monday and delayed the start until Jan. 27 as it works to secure tuition financing after losing its federal loan eligibility.

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January 11, 2017 in Legal Education | Permalink | Comments (1)

National Taxpayer Advocate Delivers Annual Report To Congress

NTAIR-2017-02 (Jan. 10, 2017), National Taxpayer Advocate Delivers Annual Report to Congress; Urges IRS Reform and Tax Reform:

National Taxpayer Advocate Nina E. Olson today released her 2016 annual report to Congress, recommending that the IRS revamp its “Future State” plan to adopt a taxpayer-centric focus and urging Congress to emphasize simplification when it considers tax reform later this year.

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January 11, 2017 in IRS News, Tax | Permalink | Comments (1)

After 3 Years As Interim Dean, Rachel Janutis Named Dean Of Capital University Law School

Janutis 3Press Release, Capital University Names Rachel Janutis Dean of Law School:

Capital University announced today the appointment of Rachel Janutis as dean of Capital University Law School, effective immediately.

Serving in the position of interim dean for nearly three years, Dean Janutis has distinguished herself as a strategic thinker and innovator, a collaborator across multiple valued stakeholder groups, and a student-centered decision-maker. ...

Dean Janutis is a champion of extending the institution’s mission to multiple communities and articulating its value in a modern-day context. Under her leadership, the Law School has enhanced its support for student success; pioneered a career blueprint program to better position students for post-graduate success; and conducted an extensive analysis of bar passage data leading to the launch of several pilot projects aimed at early intervention for law students who struggle in their first year, and increased bar preparation. ...

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January 11, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1343:  IRS Let Lois Lerner Off The Hook By Paying $12 Million For Email Backup System It Did Not Use

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Daily Caller, ‘Wastebook’ Reveals IRS Wrong-Doing, IT Errors During Lerner Scandal:

Even as the Internal Revenue Service (IRS) was struggling to explain to Congress why it could not produce copies of former IRS official Lois Lerner’s emails, the agency was paying $12 million for an email backup system that it could not and did not use.

The agency’s inability helped Lerner get off the hook for using the IRS to target conservative and Tea Party nonprofit applicants during the 2010 and 2012 campaigns.

Soon after the Lerner scandal, IRS officials bought the system designed to prevent the loss of emails, but then didn’t bother to turn it on. They also broke federal procurement rules in how they bought the system.

The fiasco was highlighted by Sen. Jeff Flake, an Arizona Republican, in the latest edition of his Wastebook, released Tuesday.

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January 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, January 10, 2017

ABA Legal Ed Section Council, Law School Deans Voice Different Views On Proposed 75% Bar Passage Requirement

ABA JournalNot So Standard: Legal Ed Section's Council and Law Deans Voice Different Views on Proposal to Link Accreditation to Bar Passage Results, ABA Journal 64-65 (Jan. 2017):

No ABA-accredited law school has ever been out of compliance with a standard regarding bar passage percentages, and that may indicate that the standard is not working well. Although some law school officials support a plan to tighten the standard, others are concerned about what it would mean for diversity—both in schools and in the legal profession—if the proposal is implemented.

Under the proposal approved in late 2016 by the council of the Section of Legal Education and Admissions to the Bar, being in compliance with Standard 316 of the section’s law school accreditation standards would require that at least 75 percent of an accredited school’s graduates pass a bar exam within a two-year time period. The ABA House of Delegates is expected to consider the proposal in February at the association’s 2017 midyear meeting in Miami.

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January 10, 2017 in Legal Education | Permalink | Comments (3)

NY Times:  Elizabeth Warren, Media Mischaracterize I.R.C. § 1043 As Tax Boondoggle For Trump Appointees

NY Times Dealbook (2013)Following up on my previous posts (links below):  New York Times DealBook: Critics Say Trump Appointees Can Dodge a Huge Tax Bill. That’s Not the Case, by Aaron Ross Sorkin:

“Not only is Donald Trump giving a gang of billionaires control of our government, he’s offering them a special tax break just for signing up.”

That was Senator Elizabeth Warren, Democrat of Massachusetts, last week criticizing what has been called a “loophole” in the tax code that allows government appointees to defer paying taxes on stock sales. These appointees — who currently include some of the wealthiest people in the country — are typically required to sell all of their stock in individual companies to comply with conflict-of-interest rules, and this tax-deferring aspect of a 1989 law is meant to help offset that requirement. (President-elect Donald J. Trump is not covered by the same rules. But that’s another column.)

You’re going to be hearing a lot about this “loophole” over the next couple of weeks, if you haven’t already, as Mr. Trump’s nominees — many of them billionaires with huge holdings that they will most likely have to sell — get grilled in hearings and their financial disclosure forms become public.

If you just read the headlines, you might be convinced that Mr. Trump’s nominees were about to receive the windfall of the century, a gift that would allow them to eliminate capital gains taxes on much of their wealth. ...

But that’s not how the tax rule works. The rule has been repeatedly misconstrued and misexplained, including by me.

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January 10, 2017 in Tax | Permalink | Comments (3)

Chemerinsky, Schill Debate First Amendment Implications Of University Of Oregon's Punishment Of Law Prof For Wearing Blackface To Halloween Party

Shurtz

Erwin Chemerinsky (Dean, UC-Irvine), Worries About Offensiveness Threaten Free Speech on Campuses:

Professor Shurtz exercised poor judgment in choosing her costume and not realizing that some would be very offended by it. But poor judgment and offending people cannot be a basis for a university punishing speech. In countless cases, the courts have been adamant that speech cannot be punished because it is offensive. The Nazi party had the right to march in Skokie, Ill., despite the offense to its largely Jewish population and the many Holocaust survivors who lived there. Members of the Westboro Baptist Church have the right to go funerals of those who died in military service and express a vile, anti-gay and anti-lesbian message. The government would have almost limitless power to censor speech if offensiveness is a sufficient ground for punishing expression.

Likewise, it cannot be that a university can punish a professor’s expression on the grounds that it offends students and thereby will make their learning more difficult. That is the primary justification for punishing Professor Shurtz. If that is enough to justify suspending or removing a professor, it would provide a basis for doing so any time a faculty member participates in activities that make a significant number of students uncomfortable. ...

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January 10, 2017 in Legal Education | Permalink | Comments (5)

White:  Cost Sharing Agreements And The Arm's Length Standard

Florida Tax Review  (2015)Sienna Carly White (Jones Day, Cleveland), Cost Sharing Agreements & The Arm's Length Standard: A Matter of Statutory Interpretation?, 19 Fla. Tax Rev. 191 (2016):

The arm’s length standard has been the touchstone of international transfer pricing and Internal Revenue Code Section 482 for the better part of a century, but its relevance is under scrutiny. A growing consensus among the international community suggests the arm’s length standard is no longer adequate to accurately and fairly tax the multinational enterprises that make up the modern global economy. In this paper, I examine the implications of the Xilinx saga and conclude that both the Ninth Circuit and the IRS were incorrect: the arm’s length standard should function as a legal principle, with explicit exceptions, rather than as a legal rule.

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January 10, 2017 in Scholarship, Tax | Permalink | Comments (0)

Charlotte Dean Fires Associate Dean For Academics And Faculty Development Who 'Acted As Shield Between InfiLaw And Faculty And Students'

DavidsonFollowing up on yesterday's post, Charlotte Law School To Reopen Jan. 17, Despite Feds' Decision To Cut Off Student Loans:  Charlotte Observer, Top Academic Dean Forced to Resign as Turmoil at Charlotte School of Law Continues:

The turmoil at Charlotte School of Law appeared to continue Monday with the dean in charge of curriculum telling students she had been forced out of her job.

In an email, Camille Davidson said she was asked to resign as the school’s head of academics by Jay Conison, the head dean of the school. Davidson, a Georgetown University law graduate, said she would remain on the CSL faculty. The change comes less than a week before the beleaguered school is scheduled to reopen for classes.

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January 10, 2017 in Legal Education | Permalink | Comments (1)

Brooks:  Quasi-Public Spending

John R. Brooks (Georgetown), Quasi-Public Spending, 104 Geo. L.J. 1057 (2016):

The United States has increasingly designed certain public spending programs not as traditional tax-financed programs, but rather as mixtures of private expenditures, subsidies, and limited taxes. Thus part of what could have gone to the government as a tax is instead used to purchase the good or service directly, with only incremental taxes and subsidies to manage distributional goals. This Article terms this “quasi-public spending,” and argues that it is descriptive of our evolving approaches to both health care and higher education.

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January 10, 2017 in Scholarship, Tax | Permalink | Comments (0)

Merritt:  What Happened To The Law School Class Of 2010?

Deborah Jones Merritt (Ohio State), What Happened to the Class of 2010? Empirical Evidence of Structural Change in the Legal Profession, 2015 Mich. St. L. Rev. 1043:

Poor employment outcomes have plagued law school graduates for several years. Legal scholars have debated whether these outcomes stem from macroeconomic cycles or from fundamental changes in the market for legal services. This Article examines that question empirically, using a database of employment outcomes for more than 1,200 lawyers who received their JDs in 2010. The analysis offers strong evidence of structural shifts in the legal market. Job outcomes have improved only marginally for the Class of 2010, those outcomes contrast sharply with results for earlier classes, and law firm jobs have dropped markedly. In addition to discussing these results, the Article examines correlations between job outcomes and gender, law school prestige, and geography. In a concluding section, it offers four predictions about the future of the legal market and the economics of legal education.

Table 4A

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January 10, 2017 in Legal Education, Scholarship | Permalink | Comments (4)

The IRS Scandal, Day 1342:  New Chair of House Oversight Committee Pledges To Increase IRS Accountability

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The Hill, Oversight Panel Will Focus on IRS, Medicare, New Chairman Says:

Rep. Vern Buchanan (R-Fla.), the new chairman of the House Ways and Means Committee's oversight panel, said the subcommittee's priorities in the 115th Congress will include combating fraud in Medicare and Social Security, increasing IRS accountability, and protecting people from identity theft.

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January 10, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 9, 2017

Charlotte Law School To Reopen Jan. 17, Despite Feds' Decision To Cut Off Student Loans

Charlotte Logo (2016)Following up on my previous posts (links below):  National Law Journal, Troubled Charlotte Law School Will Open for Spring Semester:

The embattled Charlotte School of Law will remain open — for now. Administrators informed students in an email Friday evening that the school will hold classes this spring semester despite the U.S. Department of Education's decision in December to withhold access to federal student loans.

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January 9, 2017 in Legal Education | Permalink | Comments (0)

Kaplan Test Prep Predicts Fall 2017 Law School Applicants Will Increase, Despite Early Declines, Due To Later LSAT Test-Taking

KaplanFollowing up on last month's post, Fall 2017 Law School Applicants Down 5.1%:  Jay Thomas, Executive Director of  Pre-Law Programs for Kaplan Test Prep, predicts that this early decline in law school applicants will reversed due to a shift toward later LSAT test-taking:

In 2015, the fall LSAT administration — the most popular administration each year — was October 3rd. This year's fall administration date was September 24th. Many students, particularly undergraduates, will ramp up their LSAT preparation after Labor Day when the semester is earnestly in swing. This year given the early administration date, we are finding many students shifting their desired test date to December, rather than the traditional fall.

While LSAC has not released test-taker numbers for the December exam date yet, we are anticipating a fairly sizable year-over-year increase (at least by recent standards). In fact, the 1% increase we saw for this fall's administration was probably 5-10 points "better" than we would've predicted, suggesting the December increase year-over-year could be 10 or even 15 points. As you know, an applicant's law school application is not complete until they have a reportable LSAT score. December LSAT scores will be returned in early January, at which point, I'd anticipate a sizable bounce/rebound in your trends — and ultimately, a likely increase in both applicants and applications.

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January 9, 2017 in Legal Education | Permalink | Comments (1)

Law Prof Objects To Vilification Of Nancy Shurtz, But Concedes 'Her Social Skills May Need Work': Tax Faculty 'Tend To Be A Bit 'Different''

Shurtz

David Barnhizer (Cleveland State), The Vilification of Nancy [Shurtz]:

I don’t know Oregon law professor Nancy Shurtz. But I do know that no American law professor at this point in time would knowingly or intentionally use racist language or dress up in “blackface” as a demonstration of personal racial bias against Americans of African ancestry. I believe her when she says what she was doing was intended as the opposite of racial disparagement and that it represented her intention to bring out to colleagues at a social gathering the continuing discrimination and denial of opportunity that blacks in America still disproportionately suffer. Professor Shurtz’s attempted message about the continuing effects of racial discrimination obviously fell flat.

Perhaps, unlike most law professors, Shurtz’s social skills need work. After all, she teaches tax and we know that many tax faculty members tend to be a bit “different”. One thing I have no difficulty concluding, however, is that while her execution wasn’t the smartest thing to do, her intentions were good (and perhaps even noble). I also have no doubt that given the attacks on her professional and personal character by some extremely vocal and hyper-sensitive law students, by the “usual suspects” who feed on accusations of racial bias, and by “trusted colleagues” at the law school and in the University of Oregon’s administration bleating about “sensitivity”, “inclusiveness”, “offensiveness” and the like that Nancy Shurtz has been dehumanized and objectified to such a degree that she must feel she is traveling the “road to Hell” regardless of her intentions.

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January 9, 2017 in Legal Education, Tax | Permalink | Comments (0)

The Intersection Of EU State Aid And U.S. Tax Deferral

Florida Tax Review  (2015)Romero Tavares, Bret Bogenschneider & Marta Pankiv (Vienna University), The Intersection of EU State Aid and U.S. Tax Deferral: A Spectacle of Fireworks, Smoke, and Mirrors, 19 Fla. Tax Rev. 121 (2016):

The Advance Pricing Agreements or transfer pricing rulings granted to U.S. multinationals by Ireland, the Netherlands, and Luxembourg were principally designed to achieve U.S. tax deferral and not EU tax avoidance. Adverse BEPS effects within the European Union would be immaterial in comparison to the deferral of U.S. tax on residual IP related profits, and would have occurred primarily in countries other than those charged with the granting of unlawful State aid. The Irish, Dutch, and Luxembourgish treasuries have not foregone tax revenues in favor of the U.S. multinationals they allegedly aided, which is a requirement for a finding of prohibited State aid.

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January 9, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Most Downloaded Tax Professors Of 2016

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1

Reuven Avi-Yonah (Michigan)

10,604

2

Lily Batchelder (NYU)

6851

3

Michael Simkovic (Seton Hall)

5016

4

D. Dharmapala (Chicago)

4069

5

Ed Kleinbard (USC)

2585

6

Richard Ainsworth (BU)

2539

7

Paul Caron (Pepperdine)

2464

8

Dan Shaviro (NYU)

2372

9

William Byrnes (Texas A&M)

2234

10

Robert Sitkoff (Harvard)

2205

11

Louis Kaplow (Harvard)

2155

12

Omri Marian (UC-Irvine)

1854

13

David Weisbach (Chicago)

1823

14

Jeff Kwall (Loyola-Chicago)

1808

15

Steven Bank (UCLA)

1775

16

Yariv Brauner (Florida)

1636

17

Brad Borden (Brooklyn)

1626

18

Brian Galle (Georgetown)

1517

19

Christopher Hoyt (UMKC)

1507

20

Vic Fleischer (San Diego)

1490

21

Bridget Crawford (Pace)

1484

22

Richard Kaplan (Illinois)

1471

23

Michael Graetz (Columbia)

1469

24

Francine Lipman (UNLV)

1450

25

Jordan Barry (San Diego)

1442

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January 9, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Three Four Law Profs Criticize 'Smug Self-Delusion' Of 1,400 Law Prof Signatories To 'Scandalous' Letter By 'Partisan Hacks' Opposed To Jeff Sessions

DOJ Logo (2016)Following up on last week's post, Tax Profs Join Over 1,300 1,400 Law Profs In Opposing Jeff Sessions For Attorney General:

Stephen B. Presser (Northwestern), Sen. Sessions and the Smug Self-Satisfaction of the Law Professoriate (Chicago Tribune):

The first striking thing about the recent letter signed by 1,100 law professors urging the U.S. Senate not to confirm attorney general nominee Sen. Jeff Sessions, R-Ala., is its extraordinary arrogance and presumption. ...

The exaggerated self-importance of the teacher of law is buttressed by immersion in an ideology very different from what most senators and most Americans believe about the law in particular and the world in general. It is strongest in the elite bastions of the Ivy League and on the coasts, where most American law professors trained. Now, one can find it dispersed in most of our centers of legal education. ...

It is time for law professors to emerge from the smugness and self-delusion in which they have been mired for some time, and to recommit themselves to the noble task of teaching the law as a repository of timeless truths, as something above politics, and certainly above character assassination.

Michael I. Krauss (George Mason), The Law Professors' Scandalous Statement Against Jeff Sessions (Forbes):

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January 9, 2017 in Legal Education | Permalink | Comments (24)

The IRS Scandal, Day 1341:  Another View Of The Republicans' Reactivation Of The Holman Rule And Lois Lerner

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The Moderate Voice: Preventing the Upcoming Barbarian Apocalypse, by Hart Williams:

House Republicans this week reinstated an arcane procedural rule that enables lawmakers to reach deep into the budget and slash the pay of an individual federal worker — down to a $1 — a move that threatens to upend the 130-year-old civil service. The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to offer an amendment to an appropriations bill that targets a specific government employee or program. ...

[W]hat does this mean? Well it means that any congressman or senator (almost exclusively GOP) can, in essence, terminate/eliminate almost any civil service employee who incites their wrath. ...

This is a de facto prescription to overturn ALL regulatory enforcement that the “Free Market” pirates of the House GOP deem “bad for business.” And, for a year, the Republicans in Congress can PURGE the Civil Service of all those “obstructionist” employees who insist on doing their jobs as prescribed by law. Think of what they did to Lois Lerner of the IRS, for example, who only attempted to enforce the charitable regulations of the IRS code. In a little-noted move thereafter, the GOP congress essentially gutted all 501(c)4 provisions, making it perfectly legal to launder dark money with zero accountability for political purposes — a complete overturning of the original intent of Congress in CREATING the section 501 provisions prohibiting charitable activities from being partisan POLITICAL activities, or, in essence, allowing the rich to engage in politics on your dime, Mr. and Mrs. US Taxpayer.

The implications of this “rule” are staggering when you apply the “if this goes on” test to it. And recall that you don’t really need to go after ALL civil service employees to create a chilling effect. Just make a few examples of “uppity” civil servants.

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January 9, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (13)

TaxProf Blog Weekend Roundup

Sunday, January 8, 2017

Hari Osofsky (Minnesota) Named Dean At Penn State After Failed Search Last Year

HariFollowing up on my previous post, Penn State Law Faculty 'Discontent' Amidst Failed Dean Search, Two Year 'Downward Descent (From #51) Into Rankings Oblivion (#86)':  Press Release, New Dean Named for Penn State Law and School of International Affairs:

A leading scholar of and contributor to public policy work on energy transition and climate change has been named the new dean of Penn State Law and the School of International Affairs (SIA) at University Park beginning July 1, pending approval of the Board of Trustees.

Hari M. Osofsky, the Robins Kaplan Professor of Law, faculty director of the Energy Transition Lab and director of the Joint Degree Program in Law, Science and Technology, all at the University of Minnesota Law School, was the successful candidate following a national search. ...

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January 8, 2017 in Legal Education | Permalink | Comments (0)

This Week's Ten Most Popular TaxProf Blog Posts

Students In College Bible Class Get Trigger Warning, Permission To Skip Studying Crucifixion Of Jesus Christ

TWCNational Review, If You Are Too Triggered by Lessons About the Crucifixion, You Cannot Be a Religious Scholar:

Students in a Bible course at the University of Glasgow are being given trigger warnings before being shown images of the crucifixion — and permission to skip those lessons altogether if they are worried they’ll feel too uncomfortable.

Predictably, much of the conversation surrounding this has been focused on the cultural implications of the policy, and how it contributes to creating a generation of weak little snowflakes. ... But the problems with this policy go far beyond the abstract cultural implications. It’s also objectively, indisputably wrong on a logical level — because receiving credits for a class signifies that you have learned enough about the subject matter to earn those credits, and no student in an introductory Bible course could meet that qualification without having learned about the crucifixion.

The crucifixion may be a traumatic Biblical event, but it is also arguably the most monumental one. The crucifixion and corresponding resurrection of Jesus Christ are the entire foundation of the Christian religion, and yet somehow we have an institution willing to give students credit for a class about that religion’s holy book without them having to learn anything about the book’s most consequential event?

I would have no problem with professors offering warnings before displaying graphic images — giving the squeamish ones time to cover their eyes — but giving students the opportunity to opt out of crucifixion-related lessons entirely? Sorry, but . . . nope. Giving a student who did not learn class material about the crucifixion credit for a Bible class is like giving a student who did not learn to do a cartwheel a spot on the gymnastics team, and Glasgow University should be ashamed of itself.

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January 8, 2017 in Legal Education | Permalink | Comments (12)

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. [489 Downloads]  Problems with Destination-Based Corporate Taxes and the Ryan Blueprint, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Kimberly A. Clausing (Reed College)
  2. [322 Downloads]  IRS Issues Final and Temporary Debt-Equity Regulations Under Section 385, by David S. Miller (Proskauer, New York) & Janicelynn Asamoto Park (Proskauer, New York)
  3. [195 Downloads]  Is Something Rotten in the Grand Duchy of Luxembourg?, by Omri Marian (UC-Irvine)
  4. [136 Downloads]  Protecting Trump's $916 Million of NOLs, by Steve Rosenthal (Tax Policy Center)
  5. [135 Downloads]  The Right Tax at the Right Time, by Edward Kleinbard (USC)

January 8, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1340:  Tax Professors Discuss The Future Of Tax Administration And Enforcement After 'What The Media Often Refer To As The 'IRS Targeting Scandal''

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Association of American Law Schools Annual Meeting Discussion Group, The Future of Tax Administration and Enforcement (Jan. 7, 2016):

AALS Discussion Groups provide an in-depth discussion of a topic by a small group of invited discussants selected in advance by the Annual Meeting Program Committee. In addition to the invited discussants, additional discussants were selected through a Call for Participation. There will be limited seating for audience members to observe the discussion groups on a first-come, firstserved basis.

Enforcement and effective administration of tax laws pose challenges for every country, developed and developing. Moreover, how the tax law is administered determines the substantive effects of the laws on the books.

In the United States, the agency responsible for helping taxpayers voluntarily comply with federal tax laws and for coercing the recalcitrant into complying—the Internal Revenue Service (IRS)—is not only underfunded, its image was badly damaged by what the media often refer to as the “IRS targeting scandal.” The IRS is thus in crisis. Over the last couple of years, it has reduced service to taxpayers, reduced enforcement efforts, experienced hacks of its confidential taxpayer information, and sent out billions of dollars in fraudulent refunds claimed by identity thieves. Other tax collection agencies, both in U.S. and abroad, also struggle with resource and cybersecurity issues.

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January 8, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 7, 2017

Today's AALS Annual Meeting Highlight

AALS (2018)Today's highlight at the 2017 AALS Annual Meeting in San Francisco:

AALS Discussion Group, The Future of Tax Administration and Enforcement:

Enforcement and effective administration of tax laws pose challenges for every country, developed and developing. Moreover, how the tax law is administered determines the substantive effects of the laws on the books.

In the United States, the agency responsible for helping taxpayers voluntarily comply with federal tax laws and for coercing the recalcitrant into complying—the Internal Revenue Service (IRS)—is not only underfunded, its image was badly damaged by what the media often refer to as the “IRS targeting scandal.” The IRS is thus in crisis. Over the last couple of years, it has reduced service to taxpayers, reduced enforcement efforts, experienced hacks of its confidential taxpayer information, and sent out billions of dollars in fraudulent refunds claimed by identity thieves. Other tax collection agencies, both in U.S. and abroad, also struggle with resource and cybersecurity issues.

Discussion Group Participants:

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January 7, 2017 in Conferences, IRS News, Tax | Permalink | Comments (0)

Op-Ed:  Critics Of University Of Oregon's Punishment Of Tax Prof Nancy Shurtz For Wearing Blackface To A Halloween Party In Her Home Need To "Move On' And 'Get Over It'

Shurtz

Following up on my previous posts (links below):  Register-Guard op-ed: UO Is Right to Insist Upon Cultural Competency, by Martha Moultry:

Get over it!”

“It’s no big deal!”

“You’re too sens­itive!”

“There are people with real problems in the world!”

“Let it go and move on with your life!”

As an African-American woman who grew up in the segregated South and has spent the past 30-plus years in liberal Eugene, I’ve heard these messages all of my life — and they are now being played in stereo in letters to the editor regarding the recent blackface incident at the University of Oregon.

Well, let me add my two cents’ worth.

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January 7, 2017 in Legal Education | Permalink | Comments (6)

Penis-Proud Former Energy CEO With Ties To Platinum Partners Pleads Guilty To Tax Fraud

PlatinumDealbreaker, Penis-Proud Former Energy CEO With Ties To Platinum Partners Pleads Guilty To Tax Fraud:

Remember Gary Mole?

Well, the the wacky Aussie with a proclivity for pulling his pecker out at the dinner table and a very intriguing link to Platinum Partners seems to have found himself in another pickle.

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January 7, 2017 in Tax | Permalink | Comments (0)

Law Students Performed 2.2 Million Pro Bono Hours Worth $52 Million In 2016

Pro BonoNational Law Journal, Law Students Performed 2.2 Million Pro Bono Hours Last Year:

In between reading cases and studying for exams, law students found time in 2016 to take on volunteer legal work — a lot of it.

The law class of 2016 performed more than 2.2 million hours of pro bono work while on campus, which is valued at more than $52 million.

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January 7, 2017 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 1339:  House GOP Reactivates 'Holman Rule,' Would Have Permitted Reducing Lois Lerner's Pay To $1

IRS Logo 2Washington Post, House Republicans Revive Obscure Rule That Allows Them to Slash the Pay of Individual Federal Workers to $1:

House Republicans this week reinstated an arcane procedural rule that enables lawmakers to reach deep into the budget and slash the pay of an individual federal worker — down to $1 — a move that threatens to upend the 130-year-old civil service.

The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to propose amending an appropriations bill to single out a government employee or cut a specific program.

The use of the rule would not be simple; a majority of the House and the Senate would still have to approve any such amendment. At the same time, opponents and supporters agree that the work of 2.1 million civil servants, designed to be insulated from politics, is now vulnerable to the whims of elected officials. ...

Democrats and federal employee unions say the provision, which one called the “Armageddon Rule,” could prove alarming to the federal workforce because it comes in combination with President-elect Donald Trump’s criticism of the Washington bureaucracy, his call for a freeze on government hiring and his nomination of Cabinet secretaries who in some cases seem to be at odds with the mission of the agencies they would lead.

Weekly Standard, House GOP Revives Rule Allowing Them To Slash Salaries of Corrupt Federal Workers:

[T]here can be no question that federal workers have far too many civil service protections. After the IRS held a press conference admitting that they had improperly targeted conservative groups, Lois Lerner, the IRS official deemed most responsible, didn't face any meaningful consequences. Instead it was revealed that she recently received $129,000 in bonuses and retired with an annual pension that could possibly exceed $100,000.

Even after Lerner left, John Koskinen, the new interim head of the IRS, ignored congressional subpoenas as the IRS destroyed evidence relating to the investigation of Lerner and engaged in egregious stonewalling. It's pretty clear that the IRS was in no way fearful of suffering any consequences for persecuting thousands of ordinary Americans and flouting Congress.

Western Journalism, GOP House Revives 140-Year-Old Rule That Has Swamp-Dwelling Bureaucrats Sweating Bullets:

The rule would let lawmakers target civil servants who abuse their posts but still have union protections. The rule could, for instance, have been used on former Internal Revenue Service official Lois Lerner, locus of the IRS’ intimidation scandal.

While Lerner faced minimal consequences for her wide-ranging role in the scandal — she refused to reveal much of anything to congressional investigators — The Weekly Standard pointed out that she received $129,000 in bonuses and a yearly pension that could top $100,000.

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January 7, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (12)

Friday, January 6, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) uses a recent IRS ruling to discuss how the accumulated earnings tax on C corporations may take on increased importance in a reformed tax code emerging from the Trump Administration and the 115th Congress. 

KristanLiving fossil tax bites cashless C corporation

The accumulated earnings tax on C corporations is one of the more obscure items in the tax law. Designed to force corporations to distribute earnings as taxable dividends, it rarely comes up even in tax nerd get-togethers. A few years ago some populist politicians talked of strengthening it to force corporations to pay more dividends as a perverse form of economic stimulus, but interest soon faded.

The new administration may make C corporations much more attractive and more popular. If so, this living fossil may again rise from obscurity to bite taxpayers and their advisors. That makes a legal memorandum recently released by the IRS timely.

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January 6, 2017 in IRS News, Tax, Weekly Tax Roundup | Permalink | Comments (0)