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Friday, April 17, 2015

Pepperdine Law Review Symposium Today On International Arbitration And The Courts

Brochure 2I am sitting in on a wonderful Pepperdine Law Review symposium on International Arbitration and the Courts, organized by my friends and colleagues Trey Childress and Jack Coe. There is an all-star cast of speakers, including George Bermann (Columbia), Andrea Bjorklund (McGill), Christopher Drahoal (Kansas), Alan Rau (Texas), Jan Schaefer (King & Spalding, Frankfurt), Maxi Scherer (Queen Mary University of London), Abby Cohen Smutny (White & Case, Washington, D.C.), and Jarrod Wong (McGeorge). You can view the live stream here.

April 17, 2015 in Conferences, Legal Education | Permalink | Comments (0)

NY Times: Welcome To Your First Year As A Lawyer. Your Salary Is $160,000.

NY Times Dealbook (2013)New York Times Deal Book, Welcome to Your First Year as a Lawyer. Your Salary Is $160,000.:

Salaries for lawyers starting out at firms have remained flat, with an annual pay of $160,000 continuing to be the top of the market, according to a new survey from the National Association for Law Placement. [First-Year Associate Salaries at Large Law Firms Have Become Less Homogenous, Though $160,000 Continues to Define the Top of the Market].

Some 39 percent of the largest firms — those with 700 lawyers or more — reported paying that amount in the association’s 2015 law associates’ salary survey. This was up from last year, when only 27 percent of the big firms reported paying their new legal hires at the uppermost level. But the percentage was still below 2009, when nearly two-thirds of the first-year salaries were at the top point of $160,000. [Click on chart to enlarge.]

NALP

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April 17, 2015 in Legal Education | Permalink | Comments (4)

David Han And Greg McNeal Receive Pepperdine Faculty Scholarship Award

Congratulations to my friends and colleagues David Han and Greg McNeal, recipients of Pepperdine Law School's 2015 Dean's Award For Excellence in Scholarship for their outstanding 2014 publications:

HanDavid Han:

Courts generally craft speech-tort jurisprudence as a binary proposition. Any time state tort law and the First Amendment come into potential conflict, courts typically hold either that the First Amendment comes into play and the defendant is completely exempt from traditional tort liability, or that it does not come into play and the plaintiff is entitled to the full complement of tort remedies. In other words, courts generally adopt an unspoken assumption that in speech-tort cases, liability and full tort remedies necessarily go hand-in-hand.

This rigid approach, however, significantly limits courts’ ability to craft a nuanced balance between First Amendment and tort interests. In individual cases, it forces them to choose only one set of interests to be vindicated to the complete exclusion of the other, and on a jurisprudential level, it gives courts only the bluntest of instruments to tailor speech-tort doctrine to widely varying facts. Furthermore, the current approach exacerbates the distributional problem inherent to speech-tort cases: any time the First Amendment intervenes to completely invalidate a subset of common law tort liability, plaintiffs left without liability or remedy are effectively forced to subsidize the costs of free speech, the benefits of which are shared broadly by the public at large.

In this Article, I argue that courts should incorporate a greater degree of remedial flexibility into speech-tort doctrine. Rather than simply adhere to an all-or-nothing approach, courts should consider intermediate approaches in which the First Amendment applies not to vitiate a finding of tort liability but merely to limit or eliminate the damages to which plaintiffs are entitled. These approaches allow courts to shape the complex balance of speech and tort interests with a scalpel rather than a chain saw, both on a case-by-case basis and on the broader level of doctrinal design.

In recent years, this remedy-based approach to speech-tort jurisprudence has rarely been discussed by courts and commentators, while the shadow cast by the First Amendment over tort law has expanded well beyond the defamation context. This calcification of a rigid, binary approach to speech tort cases represents a significant lost opportunity for courts to design more sensible and equitable doctrines. By providing a detailed account of the benefits underlying the use of flexible remedies, evaluating potential critiques to such an approach, and laying out concrete examples of what a remedy-based regime might look like in practice, this Article seeks to rekindle judicial, legislative, and academic interest in adopting such approaches within speech-tort doctrine.

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April 17, 2015 in Legal Education | Permalink | Comments (0)

House Votes To Repeal Estate Tax, Preserve Step-Up In Basis At Death

Estate Tax LogoFollowing up on Monday's post, the House voted 240-179 yesterday to repeal the estate tax and preserve step-up in basis at death:

April 17, 2015 in Congressional News, Tax | Permalink | Comments (8)

Loyola-L.A. Law School Shrinks Enrollment By 20%, Taps $20 Million From University Endowment For Student Scholarships

Loyola-L.A. Logo (2013)Los Angeles Loyolan, LMU Approves Special Payout for Loyola Law:

Law school enrollment has seen a dramatic decline in the last five years. Since hitting its peak of 52,488 in 2010, enrollment at U.S. law schools has steadily fallen, plummeting to 37,924 this year, according to the ABA. Law schools around the country have adopted various strategies in order to deal with this 27.7 percent decrease.

Loyola Law School (LLS) has seized this opportunity to restructure and intentionally get smaller. LMU has also approved an approximately $20 million special payout from the University’s endowment towards student scholarships at the law school. ...

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April 17, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 708

IRS Logo 2Wall Street Journal editorial, How Lois Lerner Got a Pass: The Prosecutor Absolved the IRS Witness on His Last Day on the Job:

If Americans know anything about the IRS it’s that it accepts no excuses, and so they trudged wearily on Wednesday to pay their taxes. That’s in notable contrast to the free passes that keep flowing to the tax agency’s most famous former employee, Lois Lerner.

The Obama Administration’s latest gift to the former IRS tax-exempt chief came recently when U.S. Attorney for the District of Columbia Ron Machen informed the House of Representatives that he would not file charges on its formal contempt citation against Ms. Lerner. This absolution, which shields Ms. Lerner from a grand jury probe, came on Mr. Machen’s final day on the job.

To review: Ms. Lerner was summoned to the House on May 22, 2013, to answer questions about her role in the IRS’s politically biased review of Tea Party nonprofit group applications for tax-exempt status.

She began her testimony with a statement recounting her career, reprising the scandal and proclaiming her innocence. She ended by saying: “I have not done anything wrong. I have not broken any laws, I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee.” Only after she offered this long defense did she claim her right not to incriminate herself by citing the Fifth Amendment, refusing to answer questions.

House lawyers determined that, in making that statement, Ms. Lerner had forfeited her right to remain silent. The House on May 7, 2014 held her in contempt of Congress and sent the citation to Mr. Machen.

The law clearly explains that the U.S. Attorney’s only “duty” “shall be” to “bring the matter before the grand jury for its action.” Mr. Machen instead sat on the contempt citation for 11 months, and on March 31 sent Speaker John Boehner a letter explaining he’d unilaterally decided not to investigate Ms. Lerner.

According to Mr. Machen’s rationale, Ms. Lerner’s statement made only “general claims of innocence” that did not forfeit her Fifth Amendment rights to refuse to answer questions. To reach this conclusion, Mr. Machen had to willfully ignore that Ms. Lerner, in her statement, rebutted specific accusations against her.

“[M]embers of this committee have accused me of providing false information when I responded to questions about the IRS processing of applications for tax exemption,” she said, before claiming she had never done so. Those accusations had been detailed to her in a letter from former House Oversight Committee Chairman Darrel Issa, eight days before she testified.

Mr. Machen also had to ignore that Ms. Lerner had prior to her House appearance voluntarily met for an interview with Justice prosecutors. As the Heritage Foundation’s Hans von Spakovsky has noted, the D.C. Circuit Court of Appeals in its 1969 Ellis v. U.S. decision found that “once a witness has voluntarily spoken out, we do not see how his protected interest is jeopardized by testifying in a subsequent proceeding, provided he is not required to disclose matters of substance which are unknown to the Government.”

Since Ms. Lerner had already disclosed to the “government” (prosecutors), she lost her privilege to clam up before Congress. And we’d note that after her House stonewall, she again chose to speak in an interview with the Politico website. Ms. Lerner wants the right not to answer questions except when it suits her public-relations purposes.

In any event, the job of making these legal calls belonged to a grand jury—not Mr. Machen. Then again, this is the prosecutor who in an exit interview with the National Law Journal about his tenure touted his allegiance to Attorney General Eric Holder, describing him as a “tremendous mentor and a tremendous friend.”

After Mr. Machen’s performance in shielding Ms. Lerner from the consequences of her actions, Mr. Holder would no doubt return the compliment. The handling of the IRS scandal is a blot on both of their careers.

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April 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, April 16, 2015

Omri Marian Leaves Florida For UC-Irvine

Marian (2015)Omri Marian, a rising tax scholar at Florida, has accepted a lateral offer from UC-Irvine. Omri spent three years as a tax associate at Sullivan & Cromwell and joined the Florida tax faculty in 2012. His recent tax scholarship includes (in addition to reviews and op-eds):

Omri joins Sarah Lawsky in giving UC-Irvine a powerhouse tax faculty and strengthening my not entirely disinterested view that Southern California boasts the strongest collection of tax scholars of any region in the country, which includes, among others:  UCLA (Steve Bank, Jason Oh, Kirk Stark, Eric Zolt), USC (Tom Griffith, Ed Kleinbard, Ed McCaffery), San Diego (Howard Abrams, Jordan Barry, Victor Fleischer, Miranda Perry Fleischer, Bert Lazerow), and Loyola-L.A. (Ellen Aprill, Ted Seto, Katie Pratt), not to mention (ahem) the tax faculty at Pepperdine.

April 16, 2015 in Scholarship, Tax, Tax Prof Moves | Permalink | Comments (3)

NY Times Op-Ed: The Declining Support For Redistribution

New York Times op-ed:  Has Obamacare Turned Voters Against Sharing the Wealth?, by Thomas B. Edsall:

With the advent of the Affordable Care Act, the share of Americans convinced that health care is a right shrank from a majority to a minority.

This shift in public opinion is a major victory for the Republican Party. It is part of a larger trend: a steady decline in support for redistributive government policies. Emmanuel Saez, an economics professor at Berkeley and one of the nation’s premier experts on inequality, is a co-author of a study [How Elastic Are Preferences For Redistribution? Evidence From Randomized Survey Experiements] that confirms this trend, which has been developing over the last four decades. A separate study, The Structure of Inequality and Americans’ Attitudes Toward Redistribution, found that as inequality increases, so does ideological conservatism in the electorate.

The erosion of the belief in health care as a government-protected right is perhaps the most dramatic reflection of these trends. In 2006, by a margin of more than two to one, 69-28, those surveyed by Gallup said that the federal government should guarantee health care coverage for all citizens of the United States. By late 2014, however, Gallup found that this percentage had fallen 24 points to 45 percent, while the percentage of respondents who said health care is not a federal responsibility nearly doubled to 52 percent. ...

The conservative shift in public attitudes on health care and on issues of redistribution and inequality pose a significant threat to the larger liberal agenda.

The 2013 paper published in Public Opinion Quarterly that I mentioned at the beginning of this article, The Structure of Inequality and Americans’ Attitudes Toward Redistribution, suggests that Democratic programs providing tax-financed benefits to the poor are facing growing hostility.

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April 16, 2015 in Tax | Permalink | Comments (0)

Moody's: Rich Colleges and Universities Are Getting a Lot Richer

Moody'sWashington Post, Rich Colleges and Universities Are Getting a Lot Richer, Study Finds:

The 10 richest universities in America hold nearly a third of the total wealth, in cash and investments, amassed by about 500 public and private institutions. The 40 richest hold almost two-thirds of the total wealth.

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April 16, 2015 in Legal Education | Permalink | Comments (1)

NY Times Op-Ed: Shaming Those Who Skip Out on Taxes

New York Times op-ed:  Shaming Those Who Skip Out on Taxes, by Ricardo Perez-Truglia (Harvard) & Ugo Troiana (Michigan):

In 2006, according to an estimate by the United States Treasury Department, Americans underpaid their taxes by about $450 billion. For that year, that’s roughly equal to Pentagon spending, and more than the gross domestic products of Sweden and Switzerland.

A good chunk of the missing tax revenues comes from underreporting income, or tax evasion. The rest, roughly 25 percent — about $110 billion — comes from failure to pay taxes, or tax delinquency.

Some people are hard up and can’t afford to pay their taxes. But others simply choose not to pay. When traditional enforcement strategies, like charging above-market interest rates on the debt, don’t work, the government uses a number of tools to collect these taxes. For instance, some states, like Kentucky, can order employers to take a bigger tax bite from the wages of tax delinquents, as allowed by federal and state law.

But traditional collection methods don’t always work. In a recent study [Tax Debt Enforcement: Theory and Evidence from a Field Experiment in the United States], we used another strategy that got results: publicly shaming tax delinquents. It should be a key part of government efforts to increase the collection of tax debts, and thanks to the Internet and social media, the government has the means to make it even more effective.

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April 16, 2015 in Tax | Permalink | Comments (0)

'Culture of Cheating' Prevalent at Stanford, Other Elite Colleges

LogoLos Angeles Times, Colleges Grapple With Cheating in the Digital Age:

Stanford University's honor code dates to 1921, written by students to help guide them through the minefield of plagiarism, forbidden collaboration, copying and other chicaneries that have tempted undergraduates since they first arrived on college campuses.

Exams aren't proctored, and students are expected to police themselves and speak up when they see others committing violations.

But there appears to have been a massive breakdown during the recent winter quarter, culminating in "an unusually high number of troubling allegations of academic dishonesty" reported to officials, according to a letter to faculty from Provost John Etchemendy.

"Among a smattering of concerns from a number of winter courses, one faculty member reported allegations that may involve as many as 20% of the students in one large, introductory course," Etchemendy said in the March 24 letter. ...

Although the Stanford allegations may have surprised some, for many others they cemented the belief that a culture of cheating pervades higher education. Harvard, Dartmouth, the Air Force Academy and other prominent institutions have recently grappled with allegations of large-scale cheating.

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April 16, 2015 in Legal Education | Permalink | Comments (4)

North Carolina Law Review Festschrift In Honor Of Bill Turnier

TurnierJohn Charles Borger (Dean, North Carolina), An Issue in Tribute to a Splendid Career William J. Turnier: UNC Law Colleague, 1973–2014, 93 N.C. L. Rev. 643 (2015):

It is not every senior faculty member whose fondest wish upon retirement is less a dinner hosted in his honor or a public celebration in the Rotunda of Van Hecke-Wettach, but rather an issue of the North Carolina Law Review devoted to tax scholarship. Yet it seems completely fitting that William J. Turnier, a member of the University of North Carolina law faculty for the past forty-one years, has acquiesced in the tribute that appears in these pages, a series of tax articles his scholarly colleagues have assembled in this issue of the Review to mark his departure from full-time academic life. ...

There is always some sadness in watching the departure from our halls of learning of someone who has built such a rich career and commanded such gratitude from more than two generations of students. Yet Bill Turnier’s impact on Carolina Law will remain, and by suggesting this special issue, designed in tribute to his chosen field, Bill has afforded us one last gift that will endure as long as readers strive to read, research, and understand law and its potential for ordering the commonweal.

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April 16, 2015 in Legal Education, Scholarship, Tax | Permalink | Comments (1)

Adler: How The IRS Repeatedly Rewrites Obamacare Tax Credit Provisions

The Volokh Conspiracy:  How the IRS Repeatedly Rewrites Obamacare Tax Credit Provisions, by Jonathan H. Adler (Case Western):

The plaintiffs in King v. Burwell argue that an IRS regulation unlawfully extends tax credit eligibility beyond what is expressly authorized under Section 1401 of the Patient Protection and Affordable Care Act (PPACA). It appears that this sort of administrative rewrite of the PPACA may be more the rule than the exception, as there are at least two other instances of the IRS rewriting the PPACA’s tax credit eligibility requirements. 

In a series of posts at “Notice & Comment,” the blog of the Yale Journal on Regulation, Professor Andy Grewal documents two additional cases in which the IRS has rewritten the PPACA’s tax credit eligibility requirements so as to expand eligibility beyond what Congress authorized.  Combined with other instances of the IRS and HHS disregarding the PPACA’s plain text, it appears the federal government has little regard for what the PPACA actually says. ...

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April 16, 2015 in Tax | Permalink | Comments (5)

Georgetown Launches 'Low Bono' Law Firm With DLA Piper, Arent Fox

The Mob Museum: The Treasury Department's Special Intelligence Unit

Mob MuseumThe Mob Museum Presents Follow The Money: The Unsung Intelligence Unit That Put Away Some Of The Most Notorious Mobsters:

Who put some of the most notorious mobsters behind bars? Many people don’t realize it was, in fact, the IRS. On Thursday, April 16 at 8 p.m., The Mob Museum, the National Museum of Organized Crime and Law Enforcement, presents its next installment in the Courtroom Conversations series, “Follow the Money: The Unsung Intelligence Unit That Brought Down the Mob.”

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April 16, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 707

IRS Logo 2Wall Street Journal, House Passes Package of Bills Aimed at Curbing IRS Abuses:

The House on Wednesday passed a package of bills aimed at preventing future abuses at the Internal Revenue Service, in the wake of a series of controversies at the agency.

The bills, which were largely noncontroversial, passed the House on voice votes, with support from some Democrats.

Despite the bipartisan agreement on Wednesday, the bills’ future in the Senate remains somewhat unclear, as there is ongoing partisan rancor over the IRS.

Republicans have been harshly critical of the IRS, particularly after an inspector general’s report in 2013 said agency officials had targeted dozens of tea party-type groups for intrusive scrutiny as they sought tax-exempt status, starting in 2010. That controversy in turn led to a series of other scandals, for example over how and why the agency had mishandled some confidential taxpayer information. ...

Democrats have acknowledged problems with some of the agency’s processes. But they have generally blamed bureaucratic incompetence, saying the agency wasn't motivated by political bias. ...

The bills passed on Wednesday were mostly narrow in focus. One would streamline the application process for nonprofit social-welfare groups seeking to become tax-exempt, effectively eliminating the IRS’s ability to hold up their applications indefinitely.

Another would make it a firing offense for an IRS official to target taxpayers for their political beliefs. Still another would clarify that gift taxes don’t apply to donations to social-welfare groups organized under section 501(c)(4). 

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April 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 15, 2015

Shay Presents Designing a U.S. Minimum Tax on Foreign Business Income Today at Penn

Shay (2014)Stephen Shay (Harvard) presents Designing a U.S. Minimum Tax on Foreign Business Income (with Cliff Fleming (BYU) & Robert Peroni (Texas)) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Chris William Sanchirico and Reed Shuldiner:

This paper continues an exploration of second best international tax reforms, in this case, how a U.S. minimum tax on foreign income earned by a controlled foreign corporation should be designed to protect the U.S. against erosion of its corporate income tax base and combat tax competition by low-tax intermediary countries. A minimum tax should be an interim tax that preserves the residual U.S. tax on foreign income. Such a tax would more effectively limit incentives to seek low-taxed foreign income while ameliorating pressure to retain excess earnings abroad. Corresponding changes should be made to the U.S. corporate residence definition, to the residence taxation of U.S. portfolio investors in foreign corporations and to the source taxation of foreign MNCs to reduce tax advantages under current law for investments in foreign corporations. These changes would reduce tax advantages for foreign parent corporate groups and incentives for U.S. corporations to expatriate as a consequence of increased U.S. taxation of foreign income.

April 15, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Chodorow: What It Would Mean For The IRS If Scientists Defeat Mortality

WilliamsSlate, Death and Taxes: What It Would Mean for the IRS If Scientists Defeat Mortality, by Adam Chodorow (Arizona State):

It has long been said that the only things certain in life are death and taxes. If you still haven’t filed your taxes, or if you were hit with a big bill this year, the former might seem more appealing than the latter right now. However, the aphorism is death and taxes, not death or taxes. Even kicking the bucket cannot provide an escape.

But what if death isn’t so certain? How would that affect taxes? In a 2012 law review article titled “Death and Taxes and Zombies,” I considered the important question of whether those who die and come back as zombies should be considered dead for estate tax purposes. The answer to this question is important both for the government, which will need significant revenues to protect the living, and for individual taxpayers, who may be tempted to escape the estate tax by becoming zombies.

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April 15, 2015 in IRS News | Permalink | Comments (0)

IRS in Space: How Will We Tax a Mars Mission?

ESASpace.com, IRS in Space: How Will We Tax a Mars Mission?:

Paying taxes is an inescapable reality — even in space.

Taxes are going to play a big role in a Mars mission, both in getting there and upon arrival, Adam Chodorow, a law professor at Arizona State University in Tempe, said April 9 at an event hosted by Future Tense, a partnership of Slate, the nonprofit New America Foundation and Arizona State University.

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April 15, 2015 in Tax | Permalink | Comments (1)

A Dozen University of Texas Law Profs Are Victims of Tax Identity Theft

Texas LawAustin American-Statesman, UT Law School Faculty Members Fall Victim to ID Theft, Tax Scam:

University of Texas officials are investigating whether a data breach may have led to the identity theft of at least a dozen Law School faculty members who appear to be victims of a tax scam.

The identity theft was discovered when faculty members attempted to file their federal tax returns only to have the Internal Revenue Service reject the submissions, stating that their returns had already been filed, Law School spokesman Christopher Roberts said Tuesday.

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April 15, 2015 in Legal Education | Permalink | Comments (1)

NY Times: Would You Let The IRS Prepare Your Taxes?

Turbo Tax (2015)New York Times, Would You Let the I.R.S. Prepare Your Taxes?:

Around this time every year, Joseph Bankman, a professor of tax law at Stanford Law School and a longtime advocate of using technology to simplify tax filing, gets on the phone with reporters to explain what is wrong with how we do our taxes in the United States. Every year he says pretty much the same thing: No other industrialized country asks its citizens to jump through as many hoops to calculate their taxes as ours.

It isn’t just lawmakers or the hapless-seeming Internal Revenue Service that is perpetuating the annoyance of tax time, he adds. Instead it is the private sector — specifically, the software company Intuit, which makes TurboTax, the most popular tax program in the country.

For more than a decade, Mr. Bankman and a small group of tax experts have called on the government to create a tax preparation method that they say would vastly reduce the time and cost of tax-filing for most people. Intuit has been a primary obstacle to the effort.

The reform plan would work like this: Today, employers, banks, brokerage firms and pretty much every other financial organization in the country send the federal government detailed records about our economic activity every year. These organizations also send you, the taxpayer, a similar set of documents, which are forms with names like W2 and 1098. After you file your taxes, the government matches its two sets of documents to make sure you have filed correctly.

To Mr. Bankman, this double documentation doesn’t make much sense. If the government is already collecting financial data from employers and banks, why can’t the I.R.S. use that information to precalculate our tax returns for us? At the very least, why can’t tax software just connect to the government’s database to download all the information that the government has collected, saving us all that record-keeping and data entry?

“Imagine if your vehicle registration fee was done the same way,” Mr. Bankman asked in a recent interview. “Imagine if the state said, ‘Go to your car, find your VIN number and then look at this table that has different tax rates to find out how much you owe.’ If they did, people would probably need to hire an expert for that too.”

The idea of the government filling our tax returns for us, known as “return-free filing,” has been met with much opposition from several groups, including conservatives suspicious of the I.R.S. And as the investigative news organization ProPublica reported in 2013 and 2014, some of the most intense opposition has come from Intuit, which has spent millions lobbying to oppose methods for the I.R.S. to create a tax-filing system that might free us from having to use software like TurboTax. ...

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April 15, 2015 in Tax | Permalink | Comments (3)

World Premiere of Loopholes, A Pain In The I.R.S.

Tonight is the world premiere of Loopholes, A Pain In The I.R.S. at the Hudson Mainstage Theatre in Hollywood, Calijfornia

Loopholes

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April 15, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Call for Book Reviews: Michigan Law Review

Michigan The Michigan Law Review has asked me to post its solicitation of book reviews for its 2016 Survey of Books Related to the Law:

The Michigan Law Review publishes an Annual Survey of Books. These book reviews are not included in any other issue of the Law Review. Typically, the Survey includes only reviews of books published in the past year. The Volume 114 Book Review issue will be published in spring 2016.

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April 15, 2015 in Book Club, Legal Education, Scholarship, Tax | Permalink | Comments (1)

GE's Effective Tax Rate To Double (To 20%) Once It Sheds Its Capital Business

GE 2016Following up on Monday's post, GE Bites Tax Bullet, Repatriates $36 Billion in Foreign Profits: Wall Street Journal, GE to Lose Tax Breaks As It Sheds Capital Unit:

In cutting loose its banking business, General Electric Co. isn’t just shedding a profitable lending operation. It’s also losing a rich source of tax breaks.

GE has long used the financial operations of GE Capital to hold down its overall tax rate, a strategy that has allowed the conglomerate to pay taxes at a lower rate than its peers. The impact has been significant enough that GE discusses it in its securities filings and was deterred for a long time from seriously considering a spinoff.

But the company will lose access to some of those tax efficiencies as it sells off the bulk of GE Capital’s business over the next two years. An early hit will come from the decision to repatriate $36 billion in GE Capital profit that it had been sheltering overseas—a move that will bring a $6 billion tax bill—but the full impact will be broader. GE says its effective tax rate could rise to 20% or more in the future, roughly double last year’s rate of just over 10%. That rate would put the company in line with other industrial businesses and would be likely to hold relatively steady, analysts who cover the company said.

GE

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April 15, 2015 in Tax | Permalink | Comments (1)

Camp: Overlooked Costs of IRS Budget Cuts Will Hit Taxpayers Hardest

IRS Logo 2Bryan Camp (Texas Tech), Overlooked Costs of IRS Budget Cuts Will Hit Taxpayers Hardest:

The Internal Revenue Service takes a lot of hits, both from those who are paid to be critics like the National Taxpayer Advocate and from those who just pile on for the fun of it – politicians, pundits and the public.

The nastiest hit has come from Congress in the form of relentless budget cuts for the past five years. While there has been a fair bit of commentary on the effect of these cuts, commentators have missed two important points: (1) the cuts are deeper than most people think, and (2) their effect is both more subtle and insidious.

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April 15, 2015 in IRS News | Permalink | Comments (2)

The IRS Scandal, Day 706

IRS Logo 2Forbes, Lois Lerner Emails Defend Targeting, Warn IRS Employees Emails Can Be Seen By Congress, by Robert W. Wood:

At tax time, is it any wonder that Americans are afraid of the IRS? Talk of secret emails, and political targeting criteria are worrisome. President Obama said there was not a smidgen of corruption at the IRS. He said any missteps were innocent and entirely the fault of bonehead decisions in local offices. If you are still not convinced it is all so innocent, just in time for your April 15 tax filing, a new batch of IRS documents has been released.

One email from former IRS firebrand Lois Lerner is particularly revealing. Sure, she said she did nothing wrong, she was the victim, and she still took the Fifth. But in February 2012, she wanted to “put together some training points to help them [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress. This is the IRS version of don’t tell.

The documents also contain a Lerner email from 2013 in which she says she is willing to take the blame on some aspects of the scandal. Of course, she would later take the Fifth, something the Justice Department just said was OK despite Congress’ contempt citation. Ms. Lerner also wrote in one of those sticky emails that she “understands why the IRS criteria” leading to the targeting of Tea Party and other opponents of the President Obama “might raise questions.”

Just questions? The documents were released in the case of Judicial Watch v. IRS. Although the latest release still does not reveal all of Lerner’s actions, it is Lerner’s most extended public discussion, including her defenses.

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April 15, 2015 in IRS Scandal | Permalink | Comments (0)

Tuesday, April 14, 2015

Eissa Presents The Technology of Tax Collection and Compliance Today at Georgetown

EissaNada Eissa (Georgetown) presents The Technology of Tax Collection and Compliance: Electronic Billing Machines and The VAT at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John BrooksItai Grinberg, and David Schizer:

The expansion of the tax base in developing countries is increasingly recognized as an important policy goal, as an increase in domestic revenue sources promises to reduce aid dependence and reduce distortionary consequences of taxes on externally traded goods. This paper analyzes the adoption rate and tax compliance impacts of an innovative program in Rwanda, which introduced Electronic Billing Machines to strengthen VAT compliance. To do so, we combine quarterly data on all VAT payments from 2012 through 2014q3 with data on EBM activation over the same period.

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April 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Zelenak Presents The Differing Income Tax Treatments of Marriage at Different Income Levels Today at NYU

Zelenak (2014)Lawrence Zelenak, (Duke) presents For Better And Worse: The Differing Income Tax Treatments of Marriage at Different Income Levels, 93 N.C. L. Rev. 783 (2015), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

Although both marriage penalties and marriage bonuses exist at all income levels under the federal income tax, the system is tilted toward penalties for lower-income couples, toward bonuses for middle-income couples, and back toward penalties for upper-income couples. This Article begins by explaining how the tax rules produce these differing treatments of marriage at different points in the income distribution. It then argues that the increase in recent decades in the social acceptability and prevalence of cohabitation makes tax marriage effects a more serious concern—in terms of both behavioral effects and fairness—than in earlier decades.

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April 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

NY Times Debate: The Worst Tax Breaks

NY Times Room for DebateNew York Times Room for Debate, The Worst Tax Breaks:

The pain of last-minute tax filing is compounded by the thought not just of what you’re paying but what others aren’t. Each year the federal government essentially spends more on individual breaks for things like housing, education, retirement and savings than on all nondefense discretionary spending. That’s not to mention corporate tax breaks. What are the most useless, unfair or counterproductive personal tax breaks?

April 14, 2015 in Tax | Permalink | Comments (0)

The Temperature Rises In Law School Crisis Debate

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April 14, 2015 in Legal Education | Permalink | Comments (31)

Organ Projects 2.6% Decline in Fall 2015 1L Enrollment, With 12.4% Decline in 165+ LSATs, 4.1% Increase in <150 LSATs

The Legal Whiteboard:  Projections for Law School Enrollment for Fall 2015, by Jerry Organ (St. Thomas):

This blog posting is designed to do three things.  First, following up on recent discussions regarding trends in applicants by Al Brophy at The Faculty Lounge and Derek Muller at Excess of Democracy, I provide a detailed analysis to project the likely total applicant pool we can expect at the end of the cycle based on trends from March through the end of the cycle in 2013 and 2014 [54,000, down 3.1% from 2014].  Second, using the likely total pool of applicants, I estimate the number of admitted students and matriculants, but also question whether the estimates might be too high given the decline in quality of the applicant pool in this cycle [36,975, down 2.6% from 2014].  Third, building on the second point, I suggest that law schools in the lower half of the top tier are likely to see unusual enrollment/profile pressure that may then have a ripple effect down through the rankings.

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April 14, 2015 in Legal Education | Permalink | Comments (1)

Ten Percent of S&P 500 Companies Avoid Paying U.S. Taxes

Bloomberg, Ten Percent of S&P 500 Companies Avoid Paying U.S. Taxes:

When it comes to taxes, corporate America is getting a bit less corporate. And a bit less American.

Fueled by a wave of inversions, a record 54 companies in the Standard & Poor’s 500 Index of leading U.S. firms are now at least partially exempt from the corporate income tax. That’s more than twice the number four years ago.

Bloomberg

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April 14, 2015 in Tax | Permalink | Comments (0)

Tax Court: A Snickers Bar Is Not a Deductible Business Expense

SnickersIn Cvancara v. Commissioner, T.C. Memo. 2013-20, the Tax Court disallowed a business expense deduction for a Snickers bar consumed while working.

 

April 14, 2015 in Tax | Permalink | Comments (7)

Graetz: How Do We Fix America’s Tax System?

Michael Graetz (Columbia), How Do We Fix America’s Tax System?:

The United States hobbles itself in today’s international economy by continuing to rely so heavily on income taxation. The truth is that we need a tax reform that is considerably bolder than either Congress or the president is now contemplating. We need to rebalance our federal tax system to take advantage of our status as a low-tax country by relying less rely less heavily on income taxation. To create a simple, internationally competitive and viable long-term solution to our fiscal requirements, we should return the income tax to its original purpose: the collection of a simpler tax on high-income earners who tend to have multiple income sources. In order to do that, we need to tax consumption—that is, sales of goods and services. By enacting a broad-based tax on sales of goods and services now used by more than 150 countries worldwide, we could use the revenues to finance an income-tax exemption of $100,000 of family income and to lower substantially the individual income-tax rate on income above that amount—freeing over 150 million Americans from ever having to deal with the IRS. Through payroll-tax cuts and debit cards to be used at checkout counters, we can protect low- and middle-income families from any tax increase.

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April 14, 2015 in Tax | Permalink | Comments (0)

Tacha: Who Needs a Lawyer Anyway?

Deanell Reece Tacha (Dean, Pepperdine), Who Needs a Lawyer Anyway?, 66 Rutgers L. Rev. 729 (2014):

You are the people who must be the spokespersons for the enduring and essential need for well-trained lawyers who can guide the nation and the world through the challenging and exciting issues and disputes that lie ahead. The lawyers’ ability to focus on germane issues, negotiate reasoned practical resolutions, and settle and litigate disputes, will be in high demand in this complex society. The debate about the value of legal education goes to the core of our understanding of what it is to prepare legal professionals for a world we cannot see with any particularity. That is what lawyers do. What we must foresee clearly, is that the legacy of freedom and of people governed by the rule of law is our highest calling and the source of our professional responsibility. The modes of delivering legal services, and even the understanding of what is a legal service, will change. What will not change is the need for lawyers who are problem solvers, client servers, articulators of the American ideal of self-government, models of the rule of law, and servants of the common good. We will always need lawyer-patriots.

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April 14, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 705

IRS Logo 2Letter From Orrin Hatch (Chair, Senate Finance Committee) to John Koskinen (Commissioner, IRS) (Apr. 13, 2015):

At a recent Senate Finance Committee hearing, I noted the long, historic relationship of the Internal Revenue Service and the Senate Finance Committee. The challenges of the IRS in the coming years will be great, as your agency struggles with the implementation of new federal programs and doing more with limited resources. The next chapter in our relationship is a critical one, and I hope a good one, but as I noted at the hearing, that is ultimately up to you.

I also warned that attempts to limit political speech through the tax code would not be tolerated, and would only serve to “further entangle your agency in political debate and controversy.” Two years ago, your agency put forth proposed regulations that would upend half-century-old rules regarding get out the vote drives, voter registration, and other activities by tax exempt organizations. This rule was withdrawn after intense opposition across the political spectrum. You recently announced that the IRS would seek to broaden the rule, restricting the speech and activities of an even wider range of tax exempt organizations. You are starting down a very dangerous road.

You have explained that this attempt to restrict the rights of groups to organize and speak out was in response to the IRS’s targeting of conservative groups and 2013 recommendations by the Inspector General. You have also explained that new rules were necessary to prevent further targeting. Both claims are false.

Congressional investigations have established that the Treasury Department began work on the proposal in 2011, long before the Inspector General’s recommendations and during the height of the political targeting, rather than in response to it. Furthermore, interviews with front-line IRS employees established that those workers were processing applications from conservative groups in a timely fashion and without difficulty, until political officials in Washington, DC intervened. The problem was not the rules governing tax exempt entities – the problem was officials at IRS and Treasury Department headquarters further involving your agency into the political speech of Americans across the country. Rather than preventing further targeting, the new proposal – should you proceed with it – will be the systemization of targeting through law.

As it is, the IRS faces seemingly insurmountable challenges in implementing the President’s health care overhaul and the Foreign Account Tax Compliance Act with limited resources. The IRS is just beginning to recover its reputation, and your agency is just beginning to regain trust from lawmakers. Do not throw all of that away in a quixotic and bizarre mission to regulate the political activity of Americans. If you do so, in light of your agency’s recent history, your actions will be viewed with the presumption of political bias and bad faith. If you issue this proposed rule, Congress will have no choice but to investigate the reasons behind this power grab, be it political motivation or orders from officials at the Treasury Department or the White House. To that end, and in anticipation of the Administration moving ahead on this issue, I ask that you begin putting in place document retention policies for all documents and communication related to your agency’s work regarding these proposals. This retention should include, but is not limited to, all handwritten notes, memoranda, and electronic communication on the matter.

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April 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, April 13, 2015

Republicans Seek to Repeal Estate Tax, Preserve Step-Up In Basis At Death

Estate Tax LogoBloomberg, Why Republicans Want a Bigger U.S. Estate Tax Repeal Than Ever:

Congressional Republicans have narrowed the estate tax so much that it affects only about 5,500 wealthy American households a year. Now they want to eliminate the tax altogether -- with a bonus for heirs.

Under the latest plan, backed by farmers and business groups, estates would pay no taxes. Furthermore, heirs wouldn’t owe any capital gains taxes on the increased value of assets over the deceased’s life.

That move -- simpler and more generous than previous repeal efforts -- would let billions of dollars in income and assets escape all U.S. taxes. The plan would cost the U.S. government $269 billion in lost revenue over a decade. ...

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April 13, 2015 in Tax | Permalink | Comments (1)

WaPo Fact Checker: Who Wrote the 'IRS Code'?

WaPo Fact CheckerWashington Post Fact Checker, Who Wrote the ‘IRS Code’? Hint: It Wasn’t the Internal Revenue Service:

On tax reform, we, right now, have more words in the IRS code than there are in the Bible — not a one of them as good.
–Sen. Ted Cruz (R-Texas), speech at International Association of Fire Fighters legislative conference, March 10, 2015

The Fact Checker previously wrote that Cruz’s comparison was ultimately meaningless — not worthy of a Geppetto Checkmark nor a Pinocchio — because saying one piece of text has more words than another doesn’t really tell you anything. A lot of readers responded to us via e-mail and social media — some critical, some appreciative and a few amused.

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April 13, 2015 in Congressional News, IRS News, Tax | Permalink | Comments (3)

Blair-Stanek: Crisis-Proofing Tax Law

Andrew Blair-Stanek (Maryland), Crisis-Proofing Tax Law, 57 Wm. & Mary L. Rev. __ (2016):

While Congress and the Federal Reserve battled the 2008-09 financial crisis with high-profile bailouts, the IRS fought a parallel, little-noticed battle to ensure that many harsh tax rules did not deepen the crisis. Remarkably, the IRS’s crisis responses cost the government more money than the bailouts, with a handful of companies receiving huge tax windfalls. Yet the IRS also kept its responses too narrowly tailored, causing preventable layoffs and foreclosures.

This Article proposes a novel framework for tax law to handle future crises efficiently and equitably, using the law-and-economics concept of property rules and liability rules.

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April 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

John Oliver and Michael Bolton Defend The IRS

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

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April 13, 2015 in IRS News, Tax | Permalink | Comments (0)

GE Bites Tax Bullet, Repatriates $36 Billion in Foreign Profits

GE 2016Wall Street Journal, GE Bites Tax Bullet in Move to Help Share Buybacks:

As General Electric Co. unveiled a reshaping of its balance sheet and operations, the company’s decision to repatriate $36 billion in foreign cash brings a large tax bill and raises concerns about whether multinationals’ efforts to minimize taxes are taking too heavy a toll back home.

The U.S. tax system, with one of the world’s highest corporate rates, has led U.S. companies with significant overseas operations to park much of their cash offshore. But that decision comes with its own cost in the form of lost opportunities at home, and GE’s decision suggests more companies may be reaching a tipping point, some observers said.

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April 13, 2015 in Tax | Permalink | Comments (0)

HeinOnline Law Faculty Scholarly Influence Rankings

HeinMy colleague Rob Anderson blogs the new HeinOnline faculty scholarship rankings called ScholarCheck, which counts how often your articles have been:

  • Cited in cases
  • Cited in law review articles
  • Accessed on HeinOnline over the past 12 months

Rob notes that measuring the number of times each author's papers have been accessed on HeinoOnline "reduce[s] the 'lag time' between the time a scholar is active and the time that citations accumulate."

Your ScholarCheck ranking is the average of your ranking in each of these three categories.  HeinOnline has released the Top 250 Authors; individual faculty rankings outside the Top 250 are available here.

Two tax professors are in the Top 250:

Kaplow, Louis:

Cited by Cases 23 (Rank 1703)
Cited By Articles 3285 (Rank 80)
Accessed (Past 12 Months) 1219 (Rank 191)
Scholar Check Rank 213

Asimow, Michael:

Cited by Cases 45 (Rank 649)
Cited By Articles 747 (Rank 1002)
Accessed (Past 12 Months) 860 (Rank 421)
Scholar Check Rank 233

Here are the Top 50 law faculty authors:

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April 13, 2015 in Legal Education | Permalink | Comments (0)

Top 20% of Earners Pay 84% of Income Tax

Wall Street Journal Tax Report, Top 20% of Earners Pay 84% of Income Tax:

The tables show just how progressive the income tax is. The three million people in the top 1% of earners pay nearly half the income tax.

Why is the share of income taxes negative for 40% of Americans? In recent decades Congress has chosen to funnel important benefits for lower-income earners through the income tax rather than other channels. Some of these benefits, such as the Earned Income Tax Credit and the American Opportunity Credit for education, make cash payments to people who don’t owe income tax. ...

The share of tax paid by the top 20% of Americans also changes when such social-insurance levies are included: It drops from more than 80% of income taxes to about 67% of all federal taxes.

WSJ

WSJ 2

Bloomberg, How Much Americans Really Pay in Taxes:

The average American pays an income tax rate of 10.1 percent, the Joint Committee shows, although that varies quite a bit depending on income:

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April 13, 2015 in Tax | Permalink | Comments (2)

Kerr: New (And Free) Legal Research Tool From Google

Google Scholar (2015)Orin Kerr (George Washington), New (and Free) Legal Research Tool:

If you use the Google Chrome browser, and you do legal research online, you should add the new Google Scholar Button to your browser. It’s really easy to do. Just click here and add the button. At that point you can use the button to research academic articles using Google Scholar’s database.

 

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April 13, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 704

IRS Logo 2CNS News, Lerner Email Warned IRS Employees of Emails That ‘Can Be Seen By Congress’:

Lois Lerner, former director of the Exempt Organizations Unit at the Internal Revenue Service (IRS), warned other IRS officials that lower-level employees “are not as sensitive as we are to the fact that anything we write can be public--or at least be seen by Congress,” according to documents obtained by Judicial Watch and released on Thursday.

In the latest batch of documents the IRS released to Judicial Watch under the Freedom of Information Act (FOIA), which the agency heavily redacted before handing over, Lerner proposed training to help IRS employees “understand the pitfalls” of discussing “specific Congress people, practitioners and political parties” in emails that could be "seen by Congress" or the public.

“We are all a bit concerned about the mention of specific Congress people, practitioners and political parties. Our filed folks are not as sensitive as we are to the fact that anything we write can be public--or at least be seen by Congress,” Lerner wrote in an email to Holly Paz, former director of the IRS Office of Rulings and Agreements, on Feb. 16, 2012.

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April 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, April 12, 2015

WSJ: Airbnb, The Masters, And Policing The Short-Term Rental Tax Boondoggle

AMWall Street Journal, Airbnb Income May Be Tax-Free–But There’s a Catch:

It is one of the tax code’s best freebies: a provision allowing people to rent out their homes for fewer than 15 days a year and pocket the income-tax-free. This break is often called the Masters exemption because of its popularity in Augusta, Ga., during the famous April golf tournament.

Now services such as Airbnb, HomeAway, Onefinestay and FlipKey are making it easier for people to take advantage of the Masters exemption by offering short-term rentals of their homes. Airbnb alone had more than one million listings at the end of 2014, more than triple the number it had at the end of 2012.

But this boon also is putting some so-called hosts on a collision course with the Internal Revenue Service, tax experts say.

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April 12, 2015 in Tax | Permalink | Comments (0)

Going Clear Filmmaker: Scientology Abuses Its Tax-Exempt Status

Scientology 2Los Angeles Times op-ed:  Going Clear Filmmaker: Scientology Abuses its Tax-exempt Status, by Alex Gibney:

When I made the film Going Clear: Scientology and the Prison of Belief, which aired on HBO on March 29, I assumed that the response from the Church of Scientology would be vitriolic. I was right; but I hold out hope that this reaction may lead to the reform of an organization that has harassed its critics and, in my view, abused its tax-exempt status. ...

A number of articles have even raised the question of whether the church should be permitted to maintain its tax-exempt status in the face of so many alleged or documented civil rights abuses, such as the videotaped harassment of ex-Scientologist Marty Rathbun and his wife, Monique. It's an important question, since it implicates all of us.

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April 12, 2015 in Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

The IRS Scandal, Day 703

IRS Logo 2Washington Examiner, Lerner Pushed Treasury Watchdog to Back Off 'Targeting' Charge in Probe:

Former IRS senior executive Lois Lerner appeared to be pressuring Treasury Department inspector general investigators to back off their conclusion that the federal tax agency had improperly targeted conservative and Tea Party nonprofit tax exemption applicants.

In an email on Jan. 31, 2013, Lerner encouraged Troy Patterson of the Treasury Inspector General for Tax Administration to back off of his investigators' view that the tax agency was targeting political groups for excessive attention.

"We feel your folks are being too narrow in their view and have decided that because of the language on the earlier BOLO list regarding Tea Party, everything that followed was tainted. They seem to believe that if a case was initially sent to the advocacy group, but ultimately determined to be an approval, that our action in putting it into the advocacy group in the first place is incorrect, and illustrates 'targeting,'" she said.

"BOLO" was the tax agency's abbreviation for categories of nonprofit applicants to "be on the lookout" for as they were received.

PJ Media, Lerner Email Shows Attempt to Pressure IG Conclusions in IRS Targeting Scandal:

About 5 months before former director of the IRS exempt division Lois Lerner casually let slip the revelation that her department had been targeting conservative organizations for special scrutiny, she sent an email to the inspector general investigating the matter, accusing the IG of being “too narrow” in their scope of the targeting investigation, claiming that she was just doing her job.

It is unusual for the subject of an investigation to plead their case so directly with the inspector general. But the email also shows that Lerner was well aware of the problems in her office with targeting and was looking for a break from the IG in reaching his conclusions.

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April 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)