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Wednesday, October 22, 2014

The IRS Scandal, Day 531

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

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

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

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

Tuesday, October 21, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at UNLV

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

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

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

Top Scorer on Florida Bar Exam Is IRS Agent

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

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

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

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

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

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

Marian: A Conceptual Framework for the Regulation of Cryptocurrencies

Omri Y. Marian (Florida), A Conceptual Framework for the Regulation of Cryptocurrencies, 81 U. Chi. L. Rev. Dialogue ___ (2015):

BitcoinThis Essay proposes a conceptual framework for the regulation of transactions involving cryptocurrencies. Cryptocurrencies offer tremendous opportunities for innovation and development, but at the same time are uniquely suited to facilitate illicit behavior. The suggested regulatory framework is intended to support (or, at the least, not impair) cryptocurrencies’ innovative potential. At the same time, the aim is to disrupt cryptocurrencies’ utility for criminal activities. To achieve such purposes, this Essay suggests a regulatory framework that imposes costs on the characteristics of cryptocurrencies that make them particularly useful for criminal behavior (in particular, anonymity), but does not impose costs on characteristics that are at the core of the generative potential (in particular, the decentralization of value-transfer processes). Using a basic utility model of criminal behavior as a benchmark, the Essay explains how regulatory instruments can be so designed. One such regulatory instrument is proposed as an example – an elective anonymity tax on cryptocurrency transactions in which at least one party is not anonymous.

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

NY Times: Ireland Still Addicted to Tax Breaks

DOuble IrishNew York Times editorial, Ireland, Still Addicted to Tax Breaks:

The Irish government decided last week to get rid of a tax loophole that has helped big multinational companies like Apple and Google avoid paying billions in taxes to any government at all. But hold the champagne: Ireland could well replace one problematic tax policy with another, leaving aggressive tax avoidance pretty much intact. 

On Oct. 14, Ireland’s finance minister, Michael Noonan, said the country would get rid of the “double Irish” — a provision that allows companies doing business in the country to avoid taxes by making royalty payments to an affiliated firm that is registered in Ireland but has its tax home in another country, often a tax haven like Bermuda that has no corporate income taxes. The provision will disappear for new companies in January, but businesses already using it can continue to do so until 2020.

Still, Ireland, which for years used policies like the double Irish to attract

multinational businesses, appears uninterested in true reform. It will create a new provision known as the Knowledge Development Box that will allow technology, pharmaceutical and other companies that make money from patented products and services to pay a discounted tax rate. Officials haven’t said much about what kinds of profits will qualify for the lower rate or what it will be. Experts expect it to be lower than the already low standard corporate tax rate of 12.5 percent. Ireland is not alone in trying to lure tech companies with very low tax rates. ...

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

Osofsky: Unwinding the Ceiling Rule

Leigh Osofsky (Miami), Unwinding the Ceiling Rule, 33 Va. Tax Rev. 63 (2014):

As is widely known, the so-called “ceiling rule,” which applies under the traditional method for section 704(c) allocations, can create the wrong tax result. Specifically, the ceiling rule can result in misallocations of income, gain, loss, and deduction to both a partner contributing property and to the noncontributing partners. Notwithstanding these predictable misallocations, the Treasury Department still permits application of the ceiling rule under section 704(c). This Article challenges longstanding assumptions regarding the operation of the ceiling rule in the context of section 704(c). Historically, Congress and partnership tax experts assumed that the ceiling rule is perfectly unwound on liquidation or sale of a partnership interest. This assumption still operates to some extent today. The assumption glosses over a significantly more complicated reality. This Article closely examines the history of section 704(c) and the interaction between the ceiling rule and the rules regarding sales and liquidations of partnership interests. Doing so reveals that when and to what extent the perfect unwinding assumption holds depends (perhaps to a surprising degree) on (1) a variety of relatively arbitrary facts regarding the assets held by the partnership on liquidation or sale, and (2) the unintended interactions of inordinately complicated partnership tax rules. In reaching this conclusion, this Article displays that the ceiling rule, which has always been part of the section 704(c) regime, is even worse than it is commonly thought to be.

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

Organ: Will 10% of Law Schools Close by 2019, Just as 10% of Dental Schools Closed 25 Years Ago?

Following up on my previous post, Will Top Tier Law Schools be the First to Close, Like Emory and Georgetown Dental Schools?:  The Legal Whiteboard:  What Law Schools Can Learn from Dental Schools in the 1980s Regarding the Consequences of a Decline in Applicants, by Jerry Organ (St. Thomas):

Dental SchoolAlthough there may be a number of people in the legal academy who continue to believe that somehow legal education is “exceptional” – that market forces may impose financial challenges for law schools in the near term, but will not result in the closing of any law schools -- this strikes me as an unduly optimistic assessment of the situation. 

To understand why, I think those in legal education can learn from the experience of those in dental education in the 1980s. In the 1980s, dental school deans, along with provosts and presidents at their host universities, had to deal with the challenge of a significant decline in applicants to dental school. 

At least partially in response to federal funding to support dental education, first-year enrollment at the country’s dental schools grew throughout the 1970s to a peak in 1979 of roughly 6,300 across roughly 60 dental schools.  ... By the mid-1980s, applicants had fallen to 6,300 and matriculants had fallen to 5,000.  As of 1985, no dental schools had closed.  But by the late 1980s and early 1990s there were fewer than 5000 applicants and barely 4000 first-year students – applicants had declined by more than two-thirds and first-year enrollment had declined by more than one-third from their earlier peaks. ...

How did dental schools and their associated universities respond to this changing market?  Between 1986 and 1993, six private universities closed their dental schools: Oral Roberts University, Tulsa, Oklahoma (1986); Emory University, Atlanta, Georgia (1988); Georgetown University, Washington, D.C. (1990); Fairleigh Dickinson University, Rutherford, New Jersey (1990); Washington University, St. Louis, Missouri (1991); and Loyola University, Chicago, Illinois (1993). ...

In terms of applicants and enrollment over the last decade, the trends law schools have experienced look remarkably comparable to the experience of dental schools in the 1970s and 1980s. ...

Chart 2

The law school experience tracks pretty closely the dental school experience over the first ten years reflected in the charts. For law schools, 2014 looks a lot like 1985 did for dental schools. ...

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October 21, 2014 in Legal Education | Permalink | Comments (10)

Johnson: Repatriation Tax -- Are We Churchill or Chamberlain?

Tax Analysys Logo (2013)Calvin H. Johnson (Texas), Repatriation Tax: Are We Churchill or Chamberlain?, 144 Tax Notes 1459 (Sept. 22, 2014):

Under current law, earnings of a foreign subsidiary are not subject to tax until they are repatriated. At repatriation, the U.S. parent pays 35% corporate tax, less foreign tax credits. A tax on repatriation has no effect on repatriations, by mathematical law, if the tax remains. If the United States reduces or forgives the tax in the foreseeable future, U.S. corporations will delay repatriation to take advantage of the reduction. This project proposes an increase in tax on repatriation after a short window during which the 35% tax, less foreign tax credits, will remain. The increase will induce corporations to repatriate their foreign earnings within the window to take advantage of the relatively generous 35% rate.

October 21, 2014 in Scholarship, Tax | Permalink | Comments (1)

Amidst 13% Enrollment Decline, Wayne State Law School Offers 14% Scholarships to Every Incoming Student

Detroit Free Press, Wayne State Law to Freeze Tuition, Offer Scholarships:

Wayne State LogoWayne State University's Law School will freeze tuition next year and give a scholarship to every incoming student in a move designed to make a law degree more affordable, while boosting sagging enrollment at the Detroit school.

In total, the tuition freeze and additional scholarship money will amount to the equivalent of a 14% tuition cut for all incoming students, the school is to announce this morning. ...

Wayne's law school will also offer nearly $1 million in new scholarship money to its current students and a minimum $4,000 annual scholarship to all incoming students.

While officials said the move was about affordability, the school could also use some growth in enrollment. There were 419 students in the law school this fall, down from 484 students the previous year.

October 21, 2014 in Legal Education | Permalink | Comments (0)

Social Mobility College Rankings

SMISocial Mobility College Rankings:

Unlike the popular periodicals, we did not arbitrarily assign a percentage weight to the five variables in the SMI formula and add those values together to obtain a score. The relative weight of any variable was established by testing how much a realistic change in the value of that variable would move a school within a set of rankings derived from real data. Accordingly, the greatest sensitivity for movement in the SMI rankings comes from making changes in tuition or making changes in the percentage of students within the student body whose family incomes are less than or equal to the national median--$48,000. Simply put, a school can most dramatically move itself upwards in the SMI rankings by lowering its tuition or increasing its percentage of economically disadvantaged students (or both).

While tuition and economic background of the student body are the most sensitive variables in the SMI, three other variables in descending order of sensitivity are also critical. These are: graduation rate, early career salary, and endowment. While capable of producing big movements, graduation rate and early career salary carry approximately ½ the sensitivity of the first two variables. The rationale for this is not only that tuition and economic background are the most critical front end determinants for access, they are also the two variables over which policy makers have almost 100 percent, decisive control. By contrast, improving early career salary or graduation rate—critical outcomes to economic mobility-- require more substantial policy and system changes over a longer term. Finally, endowment carries ½ the sensitivity of the outcome variables. Although a strong indicator of power to act, endowment primarily serves a “tie-breaking” role in the SMI as explained below.

The relative sensitivity of the variables in the 2014 SMI are as follows:

VariableSensitivity
Tuition 126
Economic Background 125
Graduation Rate 66
Early Career Salary 65
Endowment 30

Here are the Top 10 and the bottom 10 coleges in the social mobility rankings:

Oberlin

Princeton, Harvard and Yale, which are 1, 2, and 3 in the U.S. News college rankings, are 360, 438, and 440 in the social mobility rankings.  (Hat Tip: Maureen Weston.)

October 21, 2014 in Law School Rankings, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 530

IRS Logo 2Wall Street Journal editorial:  Defining Dismissal Down: The VA Gives Officials an Opening to Retire Before They’re Fired:

The common theme in the many failures of President Obama’s second term is government incompetence, and a corollary is lack of accountability. Both themes came together in the news late last week that the Veterans Affairs department can’t even successfully fire officials it wants to dismiss.

President Obama and Congress agreed this summer on a bill that made it easier for the VA to fire incompetent officials in return for $16 billion in additional spending to address long patient waiting lines caused by the agency’s incompetence. That looked like another case of government rewarding government failure, and now we learn that two officials targeted for dismissal as part of the VA investigation are retiring instead.

The law gave new secretary Robert McDonald the ability to fire immediately, but the VA says it gave the targeted employees a five-day period to respond so the dismissals would hold up in court. Two of the targets took the opening to retire, including Susan Taylor, the VA’s deputy chief procurement officer in Washington who was the subject of an inspector general report alleging years of misconduct for personal gain. Ms. Taylor declined to comment to a Journal query.

The VA retirees follow the example set by Lois Lerner, who retired from the IRS before she could be dismissed for her role in targeting conservative groups seeking tax-exempt status. They will all presumably suffer no reduction in federal retirement benefits.

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October 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, October 20, 2014

Sanchirico Presents International Tax and Ownership Nationality Today at Northwestern

SanchiricoChris Sanchirico (Pennsylvania) presents As American as Apple, Inc.: International Tax and Ownership Nationality, 68 Tax L. Rev. ___ (2014), at Northwestern today as part of its Law and Economics Workshop Series organized by Bernard Black:

The ownership nationality of large US multinational companies plays an implicit but important role in the current debate over how such companies should be taxed. This paper identifies that role and investigates what is actually known about where these companies’ shareholders reside.

October 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Heath Presents Taxation as Collective Consumption Today at McGill

HeathJoseph Heath (Toronto) presents Taxation as Collective Consumption? at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

Individuals express a surprisingly pervasive error that I refer to as the “government as consumer” fallacy. The picture underlying this fallacy is relatively straightforward. Government services, such as health care, education, national defense, and so on, “cost” us as a society. We are able to pay for them only because of all the wealth that we generate in the private sector, which we transfer to the government in the form of taxes. A government that taxes the economy too heavily stands accused of “killing the goose that lays the golden eggs” by disrupting the mechanism that generates the wealth that it itself relies upon in order to provides its services.

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October 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Dharmapala Presents Interest Deductions in a Multijurisdictional World Today at Loyola-L.A.

DharmapalaDhammika Dharmapala (Chicago) presents ​Interest Deductions in a Multijurisdictional World at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

The tax treatment of interest expenses in a multijurisdictional setting raises numerous complexities. This paper catalogs these difficulties and highlights the particular problems associated with efforts to achieve ownership neutrality among multinational corporations (MNCs) when debt financing is available. We argue that the differential deductibility of debt entailed by various current tax law provisions leads in general to potential distortions in the patterns of asset ownership across MNCs, and that various proposed solutions have significant limitations. We suggest several alternative regimes to address both the ownership distortions that we highlight, as well as other well-established problems of income-shifting through debt. These alternative regimes are extensions to a multinational setting of two general approaches to the neutral treatment of interest expenses - the CBIT (comprehensive business income tax) and ACC (allowance for corporate capital). These regimes – a worldwide debt cap (WDC) and a net financing deduction (NFD) – provide solutions to income-shifting and ownership distortions. However, they have the potential disadvantage of restricting other policy parameters.

Alexander Wu (UCLA) is the commentator.

October 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

TIGTA: IRS Is Not Complying With Homeland Security Laws on Information Security Management and Employee ID Cards

TIGTA The Treasury Inspector General for Tax Administration today released:

Federal Information Security Management Act Report for Fiscal Year 2014 (2014-20-090):

The Federal Information Security Management Act of 2002 (FISMA) was enacted to strengthen the security of information and systems within Federal Government agencies. The IRS collects and maintains a significant amount of personal and financial information on each taxpayer. As custodians of taxpayer information, the IRS has an obligation to protect the confidentiality of this sensitive information against unauthorized access or loss.

As part of the FISMA legislation, the Offices of Inspectors General are required to perform an annual independent evaluation of each Federal agency’s information security programs and practices. This report presents the results of TIGTA’s FISMA evaluation of the IRS for Fiscal Year 2014.

Based on this year’s FISMA evaluation, five of the 11 security program areas met the performance metrics specified by the Department of Homeland Security’s Fiscal Year 2014 Inspector General Federal Information Security Management Act Reporting Metrics. ... Four security program areas were not fully effective due to one or more program attributes that were not met. ... Two security program areas did not meet the level of performance specified due to the majority of the attributes not being met.

Progress Has Been Made; However, Significant Work Re mains to Achieve Full Implementation of Homeland Security Presidential Directive 1 (2014-20-069):

Issued in August 2004, the Homeland Security Presidential Directive 12 (HSPD-12), Policy for a Common Identification Standard for Federal Employees and Contractors, requires Federal agencies to issue identity credentials that meet the HSPD-12 standard and use them for gaining physical access to Federally controlled facilities and logical access to Federally controlled information systems.  Without full implementation of HSPD-12 compliant authentication, IRS facilities, networks, and information systems are at an increased risk of unauthorized access.

This audit was initiated to determine the IRS’s progress in implementing HSPD-12 requirements for accessing IRS facilities and information systems.  The U.S. Department of the Treasury has set a goal for its bureaus to achieve 100-percent HSPD-12 compliance by Fiscal Year 2015.  In Fiscal Year 2012, the Administration identified HSPD-12 as a Cross-Agency Priority initiative needed to improve the security of Federal data.

The majority of the IRS workforce (85%) has been issued HSPD-12 compliant Personal Identity Verification (PIV) cards.  However, full implementation of PIV card electronic authentication for accessing IRS facilities is not scheduled until at least Fiscal Year 2018, and only if funding is available.  In addition, significant challenges remain in the area of implementing PIV card electronic authentication for accessing IRS networks and information systems.  These challenges include many legacy systems and technologies in use at the IRS that are incompatible with PIV cards, and limited HSPD-12 staffing and funding for resolving these conflicts.

October 20, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

Great Advice for New Faculty (and Anyone Starting a New Job)

GossipMarc Roark (Savannah), “Be Careful of Those That Meet You at the Train…”:

Every now and then, a fortune cookie dispenses with advice that is so spot-on you just have to keep the little sliver of paper tucked away.  Here is my fortune cookie keeper of all time:

“Be careful of those that meet you at the train for they know where they want you to go…” ...

In my experience, the people on a faculty who you should be most leery of are those that will tell you either the people or the kinds of people you should be careful of.  What sounds as if it comes from experience and insight most often comes from places of fear, mistrust, manipulation, and insecurity.  What it can tell you, if you did not already know it, is that there are fault lines on the faculty for which a subterranean battle for the institution’s soul may be playing out.  As a young faculty member, don’t choose sides without carefully understanding what is at stake.

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October 20, 2014 in Legal Education | Permalink | Comments (2)

Frye: Crowdfunding as a Solution to the Inefficiency of the Charitable Deduction

Brian L. Frye (Kentucky), Solving Charity Failures, 93 Or. L. Rev. 155 (2014):

Kickstarter Logo“Crowdfunding” is a way of using the Internet to raise money by asking the public to contribute to a project. This Article argues that crowdfunding has succeeded, at least in part, because it makes charitable giving more efficient by solving certain “charity failures,” or inefficiencies created by the inability of the charitable contribution deduction to subsidize the charitable giving from low-income donors. The economic subsidy theory of the charitable contribution deduction explains that the deduction is justified because it solves market failures and government failures in charitable goods. According to this theory, free riding causes market failures in charitable goods, and majoritarianism causes government failures in charitable goods. The charitable contribution deduction solves these market and government failures by indirectly subsidizing charitable contributions, thereby compensating for free riding and avoiding majoritarianism. Crowdfunding is successful because it provides a technological solution to some of those charity failures. While the charitable contribution deduction causes charity failures because the deduction cannot subsidize contributions from low-income donors, crowdfunding can subsidize those contributions by offering rewards instead. As a result, crowdfunding should solve at least some of the charity failures caused by the deduction through providing an incentive for low-income donors to contribute. The remarkable success of crowdfunding suggests that the inefficiency associated with charity failures is quite large.

October 20, 2014 in Scholarship, Tax | Permalink | Comments (0)

Gupta: Will eBay's Spinoff of PayPal Result in an Inversion?

Tax Analysys Logo (2013)Ajay Gupta (Tax Analysts), Will PayPal's Spinoff End in an Inversion -- or Two?, 76 Tax Notes Int'l 188 (Oct. 20, 2014):

Ajay Gupta discusses how Treasury's anti-inversion guidance [Notice 2014-52] could affect PayPal's announced spinoff from parent company eBay.

October 20, 2014 in Tax, Tax Analysts | Permalink | Comments (0)

Call for Book Reviews: Journal of Legal Education

Journal of Legal Education (2014)The Journal of Legal Education has issued a call for book review essays and book review essay proposals:

The Journal of Legal Education, the official scholarly publication of the Association of American Law Schools, solicits submission of book review essays and book review essay proposals. The JLE believes that review essays constitute an important means of communicating scholarly ideas and are particularly well-suited to facilitating dialogue and engagement within and among the legal scholarly community. Accordingly, the JLE has adopted a policy of dedicating space in all of its print issues to the publication of timely reviews of books related to the law (broadly defined). 

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October 20, 2014 in Book Club, Legal Education | Permalink | Comments (0)

Washington & Lee Seeks to Hire Tax Clinic Visitor for Fall 2015

W&L Logo (2014)The Washington and Lee University School of Law invites applications for a Visiting Professor and Interim Director of its Tax Clinic for the Fall 2015 semester:

The visitor would supervise and manage the school’s Low-Income Taxpayer Clinic.  Applicants must be an active member of a state bar or the District of Columbia bar.  The position would begin on July 1, 2015 and end on December 31, 2015.  For additional details or to apply, contact Associate Dean Samuel Calhoun. Applications are due by December 1, 2014.

October 20, 2014 in Tax, Tax Prof Jobs | Permalink | Comments (0)

The IRS Scandal, Day 529

IRS Logo 2Forbes:  UnFair: Exposing The IRS -- Does Not Make Strong Case Or Decent Documentary, by Peter C. Reilly:

[H]ere is my report on UnFair: Exposing the IRS.  I am reacting to both the film and the companion book, which pretty much cover the same ground in the same order. The bottom line is that Craig Bergman's argument does not make a lot of sense.

He discusses IRS abuses in the last several years and proposes that we repeal the income tax, abolish the IRS and enact the Fair Tax. A lmost all the abuses he discusses concern the qualification of organizations for exempt status. It turns out that the same issues exist under the Fair Tax.

The filmmaker I brought along did not think that it was much of a documentary. His biggest issue was that he was expecting an expose` and instead experienced a reiteration of a political and cultural platform. If this review is any indication, he is not alone in his judgement. ...

It is not an exaggeration to say that the film is seeking to make the case that the IRS is a criminal organization . The tip off is the clip of 1930s gangsters with guns. A significant portion of time is spent on Teapartygate. We get brief clips from news programs hearing from George Will, Governor Mike Huckabee, Congressman John Linder, and Bill O’Reilly among others. Craig Bergman, the narrator, then tells us that he put together a crew of talented filmakers to travel across America to talk one-on-one with those affected by the abuses. Craig starts at the Tea Party “Audit The IRS” rally, has an extensive treatment of Lois Lerner including her campaign against the Christian Coalition while working for the Federal Election Commission and moves on to an interview with Jim Jess of the Georgia Tea Party. There is a lot of network footage, most of it from Fox News. There is r eally nothing new in this part if you have been following the scandal. The treatment is entirely one sided. ...

Jonathan Schwartz did not think that UnFair cut it as a documentary. He did not even think that it was very effective propaganda.  It was more of a rally the troops type of piece that would only work on those who were already convinced of the viewpoints expressed.

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October 20, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, October 19, 2014

L.A. Times: Ed Kleinbard's We Are Better Than This Is 'Moral and Farsighted'

Los Angeles Times:  On Fiscal Policy, USC Professor's Viewpoint is Moral and Farsighted, by Michael Hiltzik:

We Are Better Than This (2014)The left sees me as a Wall Street Journal Satanist, and the right as a stealth Marxian bent on destroying free enterprise," Edward D. Kleinbard was saying.

The USC law professor was referring to the reactions elicited by his recent op-ed in the New York Times, in which he asserted that the solution to economic inequality in the U.S. was not to make the tax system more progressive — it's already "the most progressive in the developed world," he wrote — but to make it bigger.

As he explained when we met last week at USC's Gould School of Law, where he has taught tax law since 2009, that would render the entire fiscal system more progressive, because it would fund more spending. Government spending is always progressive, benefiting middle- and lower-income people more than the wealthy. So: If you want to reduce inequality, expanding government is more effective than merely increasing the relative burden on the rich.

One can see why left and right alike felt that their shibboleths were being skewered.

But Kleinbard's viewpoint is both moral and farsighted. It's also an important theme of his newly published book, We Are Better Than This: How Government Should Spend Our Money.

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October 19, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (1)

Linda Beale to Return to Tax Blogging Following the Death of Her Husband

Beale (2014)Tax Prof Linda Beale (Wayne State) has announced that she is returning to blogging after an eight month hiatus following the death of her husband:

To make a long and difficult story short--my husband died in January, and I have gone through an intense personal struggle to cope with life without my soulmate.  The hard winter and too-short summer added their own tribulations, in the form of electrical outages, some basement water, and all those unexpected expenses that go along with weather-related problems, all of which must now be handled by me.

I plan to resume regular postings now.

October 19, 2014 in Tax | Permalink | Comments (1)

Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with new papers debuting on the list at #2 and #5:

  1. [338 Downloads]  2013 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  2. [236 Downloads]  Trying Times 2014: Important Lessons to Be Learned from Recent Federal Tax Cases, by Nancy A. McLaughlin (Utah) & Steven J. Small ( Law Office of Stephen J. Small, Newton, MA)
  3. [139 Downloads]  Rights Without Remedies, by Matthew L. M. Fletcher (Michigan State)
  4. [138 Downloads]  Home-Country Effects of Corporate Inversions, by Omri Y. Marian (Florida)
  5. [136 Downloads]  'Show Me the Money!' -- Analyzing the Potential State Tax Implications of Paying Student-Athletes, by Kathryn Kisska-Schulze (North Carolina A&T) & Adam Epstein (Central Michigan)

October 19, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 528

IRS Logo 2The Hollywood Reporter:  'Unfair: Exposing the IRS': Film Review:

Delivering an attack against the Internal Revenue Service is like shooting fish in a barrel. You'd be hard-pressed to find anyone, whatever their political affiliation, who has anything good to say about this much-reviled government agency. So it seems a bit of a waste that Judd Saul's documentary Unfair: Exposing the IRS, shown as a one-night event in some 680 screens around the country, should have resorted to such relentless overkill.

Before your angry online comments come pouring in accusing this reviewer of being a godless, unpatriotic communist, please be advised that this is a film review, not a political tract. Any criticisms to follow are meant to address the film on cinematic terms, and in that regard it falls woefully short of being convincing to anyone who isn't already fully aligned with its impassioned message. Devoid of thoughtful analysis or divergent opinions, it's little more than agitprop … which is not to say that many of the films emanating from the other side of the political spectrum are any better. ...

Beginning with the usual barrage of inflammatory news clips, it naturally spotlights the recent uproar over the IRS' alleged targeted persecution of Tea Party organizations — President Obama is repeatedly seen denouncing it as a "phony scandal" — and the subsequent embarrassing spectacle of its leaders haplessly testifying before Congress that they had somehow managed to lose over two years' worth of relevant emails. Couple that with evidence of the agency's wild overspending, such as video clips of their bizarre comic sketches performed at lavish getaways, and it's certainly hard not to get one's dander up. ...

Featuring commentary by such usual suspects as Mike Huckabee, Ted Cruz, Glenn Beck, Michele Bachmann and, of course, Grover Norquist, Unfair: Exposing the IRS is not so much an expose as predictable preaching to the choir.

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October 19, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, October 18, 2014

Red States Are More Generous Than Blue States

2012Chronicle of Philanthropy, How America Gives:

Using the IRS data, The Chronicle was able to track gifts to charity at the state, county, metropolitan-area, and ZIP code levels. The data were for gifts to charity among taxpayers who itemize deductions on their tax forms. It captured $180-billion that was given to charity in 2012, or about 80 percent of the total amount given to charity as tabulated by "Giving USA."

In How States Compare and How They Voted in the 2012 Election, the Chronicle of Philanthropy ranked the states by giving as a percentage of adjusted gross income.  The 17 states that gave the most to charity all voted for Mitt Romney in 2012, while 15 of the 17 states that gave the least to charity voted for President Obama:


Red

Blue

October 18, 2014 in Tax | Permalink | Comments (34)

How to Audit the President

Bloomberg, How to Audit the President, by Richard Rubin:

Obama 2013

The presidency is laden with perks: the jet, the mansion, the personal chef. 

But there's some nastiness, too, awaiting the winner of the 2016 election, namely: mandatory audits from the Internal Revenue Service. The tax returns of the commander-in-chief and the vice president get automatic annual scrutiny from the IRS. Compare that to the 1 in 49 audit rate for everyone else in the $200,000 to $500,000 income bracket. 

What got us poking around on this question was a set of documents released from Bill Clinton's presidential library last week, showing White House lawyers preparing for his second consecutive audit amid questions about the Whitewater real estate deal in Arkansas. The audit requirement is so obscure that one former, very senior IRS official didn't even recall it when we started asking questions.

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October 18, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

AbbVie Can Deduct $1.64 Billion Termination Fee From Inversion Cancellation

ShireWall Street Journal, Dept. of Irony: AbbVie Can Take Tax Write-Off for Fees:

Breaking up hurts, but a tax write-off can help ease the sting.

The $1.64 billion termination fee AbbVie would owe Shire for nixing their takeover deal is tax-deductible, experts say. Other transaction expenses, including fees paid to its advisers that are likely to reach into the millions, may also be deductible.

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October 18, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 527

IRS Logo 2American Center for Law and Justice: Finally: IRS Approves Two More Tea Party Groups:

It’s taken years, but IRS approvals are still slowly—very slowly—rolling in.

The ACLJ first sounded the alarm against the Obama Administration’s unlawful targeting of grassroots conservative groups in the spring of 2012. It was not until the following year, in May of 2013, when Lois Lerner admitted that the IRS had in fact singled out and targeted hundreds of tea party and conservative groups. Shortly afterwards, the ACLJ filed suit against the IRS on behalf of 41 groups in 22 states.

Some of those groups are still being targeted and delayed, even today.

Yet we’re still winning victories, even while the case is ongoing.

Today, two more conservative groups received approval of their tax-exempt applications. Laurens County Tea Party of Laurens, South Carolina and Allen Area Patriots from Frisco, TX, both seeking 501(c)(4) status, were just approved.

Laurens County Tea Party and Allen Area Patriots both applied for tax-exemption in July of 2010. It took the IRS more than four years to review their applications and approve these groups.

Of our 41 clients, 28 have now been approved, and seven groups are still awaiting approval. One of these seven groups, Albuquerque Tea Party is less than two months away from “celebrating” five years since they originally applied for tax-exemption. To date, they have still not been approved.

While the mainstream media gave the Administration the benefit of the doubt and ignored, if not completely dismissed the targeting as nothing more sour grapes from angry conservatives, vindication of these groups has come time and time again as the public learns more information from Congressional investigators of how wide scale this scandal really was.

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October 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, October 17, 2014

Open Access Legal Scholarship Is Cited 60% More in Law Review Articles, 40% More in Judicial Opinions

James Donovan (Kentucky), Carol Watson (Georgia) & Caroline Osborne (Washington & Lee), The Open Access Advantage for American Law Reviews:

Open AccessOpen access legal scholarship generates a prolific discussion, but few empirical details have been available to describe the scholarly impact of providing unrestricted access to law review articles. The present project fills this gap with specific findings on what authors and institutions can expect.

Articles available in open access formats enjoy an advantage in citation by subsequent law review works of 53%. For every two citations an article would otherwise receive, it can expect a third when made freely available on the Internet. This benefit is not uniformly spread through the law school tiers. Higher tier journals experience a lower OA advantage (11.4%) due to the attention such prestigious works routinely receive regardless of the format. When focusing on the availability of new scholarship, as compared to creating retrospective collections, the aggregated advantage rises to 60.2%. While the first tier advantage rises to 16.8%, the mid-tiers skyrocket to 89.7%. The fourth tier OA advantage comes in at 81.2%.

Figure 5

Citations of legal articles by courts is similarly impacted by OA availability. While the 15-year aggregate advantage is a mere 9.5%, new scholarship is 41.4% more likely to be cited by a court decision if it is available in open access format.

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October 17, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Weekly Tax Roundup

October 17, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

October 17, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

October 17, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

October 17, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

ATPI Hosts Conference Today on Taxation and Migration

ATPI Logo (2015)The American Tax Policy Institute hosts a conference today on Taxation and Migration organized by Reuven Avi-Yonah (Michigan) and Joel Slemrod (Michigan) in Washington, D.C.:

The conference assesses the effects of taxation on the migration across national and state boundaries of individuals at various stages of their lives. It will also evaluate whether corporate migrations (such as "inversions") involve migration of individuals, and what are the tax policy implications for the US and other jurisdictions. 

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

Albany Law School Dean Steps Down Amidst 34% Enrollment Decline, Faculty Buyouts

Albany logoFollowing up on my previous posts (links below) on the financial troubles at Albany Law School (including a 34% decline in the entering 1L class to 123 students in 2014, from 187 in 2013 (and a 52% decline from 255 in 2009)), Penelope Andrews is stepping down as Dean at the end of this academic year (her third year as Dean), while the Board of Trustees has appointed Alicia Ouellette, Associate Dean for Academic Affairs and Intellectual Life, as Acting Dean.  As Bridget Crawford (Pace) asks, "Does it happen at other schools [that] an interim/acting dean is appointed while the existing dean is still serving out the last year of the dean's term?"

Prior TaxProf Blog coverage:

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

62nd Annual Montana Tax Institute

62The 62nd Annual Montana Tax Institute kicks off today:

  • Jonathan Blattmachr (ILS Management), Asset Protection and Related Tax Consequences
  • Jessica Browde (Montana), Professional Responsibility in Tax Practice: Circular 230 Update
  • Martin Burke (Montana) & Michael Friel (Florida), Income in Respect of a Decedent: Section 691
  • Sam Donaldson (Georgia State), Annual Federal Income Tax Update
  • Elaine Gagliardi (Montana), Annual Wealth Transfer Tax Update
  • Kristen Juras (Montana), Limitations of Activities of Nonprofit Organizations
  • Roberta Mann (Oregon), Earth, Wind and Fire: Comparing the Taxation of Energy Sources
  • Nancy McLaughlin (Utah), Conservation Easements: Contemporary Issues and Challenges
  • Martin McMahon (Florida), Corporate and Partnership Tax Recent Developments
  • Daniel Simmons (UC-Davis), Impact of Partner and Partnership Liabilities under Subchapter K
  • Chris Treharne, (Gibraltar Business Appraisals), Justifying Discounts for Farm and Ranch Minority Ownership Interests

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

NPR: The Most Common Jobs For The Rich, Middle Class And Poor

The IRS Scandal, Day 526

IRS Logo 2Statesman Journal:  Wehby Attempts to Tie Sen. Jeff Merkley to IRS Scandal:

Republican Senate candidate Monica Wehby released a web video Thursday with the goal of tying Sen. Jeff Merkley to the scandal surrounding the Internal Revenue Service targeting tax-exempt groups for their political leanings.

The 35-second video entitled "Corrupt" explains that Merkley was one of several Democratic Senators who wrote a letter to the IRS in 2012 requesting the agency "immediately change the administrative framework for enforcement of the tax code as it applies to groups designated as 'social welfare' organizations." ... The ad lays that targeting of conservative groups at Merkley's feet and asks whether voters can trust him.

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October 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, October 16, 2014

Call for Nominations: CALI Board of Directors

CALI Logo (2014)The Center for Computer-Assisted Legal Instruction (CALI) is seeking nominations to fill vacant positions on its Board of Directors:

If you know of someone who would like to contribute to the research and development, strategic planning and governance of CALI, then consider nominating them for the CALI Board of Directors. Self-nominations also are welcome. ...

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October 16, 2014 in Legal Education | Permalink | Comments (0)

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2014)The Virginia Tax Review has published Vol. 33, No. 4 (Spring 2014):

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Cauble: Relying on the IRS

Emily Cauble (DePaul), Relying on the IRS:

The IRS issues different types of guidance to taxpayers, and the extent to which taxpayers can rely on IRS guidance depends on the form in which it was offered. For instance, taxpayers generally cannot rely on oral advice provided over the phone but can rely on more formal types of advice. The current state of the law harms unsophisticated taxpayers who disproportionately obtain informal advice -- the least reliable type of IRS guidance.

Existing literature lacks a thorough discussion of why, as a policy matter, we allow taxpayers to rely on some forms of IRS guidance more than others. This Article fills that gap by suggesting and critically evaluating potential justifications for this practice.

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October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

A Case for Simpler Gain Bifurcation for Real Estate Developers

Florida Tax ReviewBradley T. Borden (Brooklyn), Nathan Brown (Proskauer Rose, Boca Raton) & John Wagner II (Williams Parker Harrison Dietz & Getzen, Sarasota), A Case for Simpler Gain Bifurcation for Real Estate Developers, 15 Fla Tax Rev. 279 (2014):

This Article examines the judicially-sanctioned bifurcation of real estate developers’ gain. The Article recognizes that even though some commentators oppose granting favorable tax treatment to capital gains, the law most likely will not change. With that in mind, the Article examines the all-or-nothing approach of characterizing gain from the sale of real estate as either capital gain or ordinary income. The Article rejects the all-or-nothing approach of characterizing income under the current statutory system. Instead, it embraces gain bifurcation in the second-best setting that taxes capital gains and ordinary income differently. Illustrating the policy justification for gain bifurcation and judicially-sanctioned bifurcation structures, the Article recommends that lawmakers should more fully embrace gain bifurcation for real estate developers by creating a simple statutory election for bifurcating gain that would enhance equity, accuracy, and transparency of gain bifurcation. Although the Article limits its analysis to real estate developers, the idea of gain bifurcation, once improved in this area, could be a catalyst for exploring bifurcation in other areas.

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Dharmapala: Base Erosion and Profit Shifting -- A Simple Conceptual Framework

Dhammika Dharmapala (Chicago), Base Erosion and Profit Shifting: A Simple Conceptual Framework:

BEPSThe issue of tax-motivated income shifting within multinational firms – or “base erosion and profit shifting” (BEPS) – has attracted increasing global attention and has become the subject of an ongoing OECD initiative. This paper provides a simple conceptual framework that helps to clarify aspects of governments’ responses to the BEPS phenomenon and the potential role of the OECD initiative. An important implication of this framework is that multilateral cooperation of the type envisaged in the BEPS initiative has the potential to reduce the deadweight costs of MNCs’ tax planning and compliance activities, thereby enhancing global welfare. 

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

The Top 55 Law School Buildings

Prelaw Magazine, Best Law School Facilities:

MemphisPreLaw magazine did an exhaustive review of the nation's 200-plus law schools to identify the very best facilities. We started by looking at numerous sources, including our own staff visits and The Princeton Review's 2014 edition of The Best 169 Law Schools to narrow the pool down to the top 60 based primarily on student satisfaction. ...

[A]esthetics and student feedback accounted for 35% of our score, library hours and seating for 27.5%, amenities [dining, fitness center, lockers, study carrels] for 20%, and square footage per student for 17.5%. ... In the end, even though we had initially set out to identify the 50 best buildings, we felt compelled to honor 55.

  1. Memphis
  2. Marquette
  3. Duke
  4. Baylor
  5. Colorado
  6. Richmond
  7. Villanova
  8. Yale
  9. Notre Dame
  10. Penn State-Dickinson
  11. Washington University
  12. Stetson
  13. Southwestern
  14. Nebraska
  15. Connecticut
  16. Penn State
  17. Fordham
  18. Stanford
  19. Quinnipiac
  20. Catholic
  21. William Mitchell
  22. UNLV
  23. Arizona
  24. Chapman
  25. Cornell

October 16, 2014 in Law School Rankings, Legal Education | Permalink | Comments (5)

Penalizing Tax Petitions: Why the Erroneous Refund Penalty in § 6676 Violates Taxpayers’ First Amendment Rights

Derek T. Ho & Christopher Klimmek (both of Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, D.C.), Penalizing Tax Petitions: Why the Erroneous Refund Penalty in Code § 6676 Violates Taxpayers’ First Amendment Rights, 68 Tax Law. ___ (2015):

In 2007, Congress enacted the so-called “erroneous refund penalty,” which imposes a 20% penalty on any taxpayer who submits a claim for tax refund that the IRS deems “inaccurate,” even if the taxpayer’s position is legally non-frivolous and asserted in good faith. In part because the IRS has rarely imposed the penalty since its enactment, the statute has thus far not been analyzed extensively by legal scholars or policymakers. However, the penalty continues to impose a significant chilling effect on tax refund claims, and the Treasury Department has now signaled the possibility of more aggressive application in the future. This article argues that the erroneous refund penalty is unconstitutional under the Petition Clause of the First Amendment. Penalizing taxpayers financially for asking their government to return money they believe is legally theirs strikes at the heart of the Petition Clause’s protections. Indeed, protecting citizens’ right to complain about abusive taxation by the national Government was one of the Framers’ core motivations for enacting the First Amendment. The article draws on the history of the First Amendment, the Supreme Court’s Petition Clause jurisprudence, and recent lower court decisions in exposing the constitutional infirmity of the penalty. The article also explains that the erroneous refund penalty is unjustified as a matter of tax policy, because it fails to promote voluntary compliance, is irrationally harsh and unfair to taxpayers, and is not necessary to solve the narrow, targeted problems that Congress intended to address in enacting the statute. Finally, the article suggests ways in which the penalty could be amended, if it is not repealed altogether, to avoid infringing on taxpayers’ First Amendment rights and ensure that refund claims are treated fairly.

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Symposium: Expanding the Boundaries of Legal Education

On TaskSymposium, On Task? Expanding the Boundaries of Legal Education, 65 S.C. L. Rev. 519-638 (2014) (Video):

October 16, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Afield: A Market for Tax Compliance

W. Edward Afield III (Ave Maria), A Market for Tax Compliance, 62 Clev. St. L. Rev. 315 (2014):

It is becoming increasingly clear that, due to political realities and budgetary constraints, the IRS is going to have to attempt to enforce the tax laws by doing more with less. Current enforcement efforts have yielded a tax gap (i.e., the difference between the amount of taxes that should be paid and the amount that are collected) of roughly $450 billion annually. Faced with this task, one of the steps that the IRS has recently taken is to try to improve the quality in services performed by paid tax preparers, a group that historically has been subject to little IRS regulation or monitoring but that continues to play an increasingly important role in the tax system.

Although the IRS’s recent efforts to better regulate paid preparers is a good step in improving the quality of tax services, its current structure as a mandatory regulatory regime causes it to miss a number of compliance oriented advantages that could be achieved through a voluntary system of tax preparer regulation in which tax preparers could choose to seek certifications indicating whether they had a positive track record of compliance.

This paper explores in detail for the first time in the literature how preparer regulation could achieve significantly more compliance gains if it were structured as a voluntary system designed to create a market that rewards tax compliance.

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October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 525