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Wednesday, May 20, 2015

The IRS Scandal, Day 741

IRS Logo 2National Review, Conservative Group Uncovers New Roots of IRS Scandal:

A group of lawyers who have been investigating the origins of the IRS scandal for the past year-and-a-half say they’ve uncovered the real roots of the IRS scandal — and they’ll surprise both liberals and conservatives alike. The group, Cause of Action, which has subpoenaed thousands of pages of documents from the agency and is still embroiled in litigation with it, says the targeting of conservative groups resulted as much from IRS personnel merely following the instructions laid out in their employee handbook, the Internal Revenue Manual, as from any political bias at the top.

When the scandal broke nearly two years ago, the IRS and the Obama administration pointed the finger at a few bad apples in the agency’s Cincinnati office. The agency’s inspector general blamed the inappropriate targeting of tea-party groups on the “ineffective management” of top bureaucrats. Many reporters, particularly on the right, including here at National Review, concluded that top D.C. official Lois Lerner and her colleagues in the IRS’s Exempt Organizations office had orchestrated events from the outset.

Dan Epstein, executive director of Cause of Action, is a former attorney and investigator for the House Oversight Committee. He and his team, a group of 13 attorneys funded by the Koch brothers’ sprawling network of donors, say none of these stories fully explain what happened at the IRS between 2010 and 2014 and that, in fact, the targeting was baked in the cake. That is, the Internal Revenue Manual, the handbook by which IRS employees are required to abide, mandates the sort of scrutiny that delayed the processing of the applications of hundreds of conservative nonprofit organizations. Cause of Action has laid out its case in a confidential, 35-page memo obtained by National Review. They concluded that many of the IRS officials involved in the scandal were just following the rules. ...

Epstein’s team at Cause of Action is adamant that most of the IRS personnel involved in the scandal executed their duties properly. “Clearly, Jack Koester, John Shafer, and Cindy Thomas executed their employee obligations precisely,” their report says. “Indeed, in the course of merely two business days, the employees in the Exempt Organizations group accurately elevated this Tea Party issue as ‘newsworthy’ or having the ‘potential to become newsworthy.’”

The team’s conclusion: The Internal Revenue Manual must be fundamentally reformed in order to prevent future targeting. “While there are certainly complex or new issues that would warrant or even require an employee to elevate the issue to a manager, the IRS’s desire to be portrayed in a positive light by the media is certainly not one of those issues,” they say.

Tax-law experts agree. Craig Engle, the founder of the bipartisan political-law group at the Washington law firm Arent Fox, says that allowing IRS personnel, ultimately at the national level, to determine what issues are newsworthy creates a sort of self-fulfilling prophecy. The Internal Revenue Manual as it stands now virtually “requires the national office to do something” about cases it deems newsworthy, Engle says. As a result, he says, the IRS “created a task for itself that it would be impossible to administer evenhandedly, let alone on a bipartisan basis. It’s no wonder they got caught.”

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May 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, May 19, 2015

Mason Presents Citizenship Taxation Today At Oxford

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation, 88 S. Cal. L. Rev. ___ (2015), at the Oxford University Centre for Business Taxation today as part of its Research Seminar Series:

The United States is the only country that taxes its citizens’ worldwide income, even when those citizens live indefinitely abroad. This Article critically evaluates the traditional equity, efficiency, and administrability arguments for taxing nonresident citizens. It also raises new arguments against citizenship taxation, including that it puts the United States at a disadvantage when competing with other countries for highly skilled migrants. 

Citizenship taxation was originally designed to punish “economic benedict Arnolds” who fled the United States during the Civil War to avoid Civil War taxes and the draft. In the modern era, migrating from the United States is not the disloyal act of a wealthy few. Our global economy and our increasingly interconnected world create professional and personal opportunities that Americans can only claim by moving abroad. Concerns about a few high-profile, rich tax defectors who can be sanctioned with targeted anti-abuse regimes should not drive tax policy governing seven million Americans who reside abroad.

May 19, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Professor Marks 100th Birthday At Brooklyn Law School

CreaSeattle Times, Professor Marks 100th Birthday at Brooklyn Law School:

Professor Joseph Crea ... marked a milestone — his 100th birthday — with a gathering of colleagues and friends Monday at the law school where he’s been a student, librarian and professor since 1944. Crea, whose birthday was last month, taught until September and still advises faculty members, sits on the admissions committee and attends faculty meetings. ...

Crea taught some 22 different classes over the years but came to focus on banking and corporations law. ... Another highlight, he told the school magazine, was teaching tax law in the 1950s to a class full of accountants and treasury agents. Professor and students learned from each other as they debated whether expenses were tax-deductible: “Deduct!” ”Disallow!” ...

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May 19, 2015 in Legal Education | Permalink | Comments (0)

Supreme Court Denies Cert. In Case Challenging President's Authority To Remove A Tax Court Judge

Supreme Court (2014)Following up on my previous posts (links below):  the Supreme Court yesterday denied the taxpayers'  cert. petition arguing that the President’s authority under 26 U.S.C. §  7443(f) to remove Tax Court judges violates the Constitution’s separation of powers. Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014).

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May 19, 2015 in New Cases, Tax | Permalink | Comments (0)

Denver Law School Blazes New Trail, Scores World's First Pot Professorship From Marijuana Law Firm

Marijuana (2015)Chronicle of Higher Education, U. of Denver Law School Scores a Marijuana Professorship:

The University of Denver’s law school is blazing a new trail in the professoriate.

Thanks to a $45,000 donation from Vicente Sederberg LLC, a self-described “full-service marijuana law firm” based in Denver, the Sturm College of Law has established what the firm says is the first professorship of marijuana law in the world.

The three-year professorship will be held first by Sam Kamin, a professor and director of the school’s Constitutional Rights and Remedies Program, the firm said in a news release.

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May 19, 2015 in Legal Education | Permalink | Comments (0)

Kwall & Wilbur: The Outer Limits of Realization

Florida Tax ReviewJeffrey L. Kwall (Loyola-Chicago) & Katie K. Wilbur (Varnum, Grand Rapids, MI), The Outer Limits of Realization: Weiss v. Stearn and Corporate Dilution, 17 Fla. Tax Rev. 47 (2015):

The Supreme Court’s 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation (“Oldco”) transferred its business to a new corporation (“Newco”) in a transaction where the Oldco shareholders surrendered all their stock for 50% of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100% to 50%. Because the Oldco shareholders surrendered control of the enterprise, the 50% interest they received in Newco was fundamentally different from the 100% interest they had owned in Oldco. Nevertheless, the Court held that the receipt of the Newco shares was not a taxable event (a “realization event”) to the Oldco shareholders. The Court reached this result by ignoring the dilution that occurred in the case.

In 1991, the Supreme Court resurrected the Weiss v. Stearn decision in the Cottage Savings case. There, the Court relied on Weiss v. Stearn to establish that the exchange of property triggers a realization event only if the property received is “materially different” from the property surrendered. Once again, the Court ignored the dilution that occurred in Weiss v. Stearn. As a result, Supreme Court jurisprudence sheds no light on the question of whether corporate dilution can trigger realization.

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May 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

Two William Mitchell Law Profs Drop Lawsuit Over Abrogation Of Tenure In Merger With Hamline After Four Faculty Accept Buyouts, Part Time Status

MitchellFollowing up on my previous post, Two William Mitchell Law Profs Sue Over Abrogation of Tenure in Merger With Hamline Law School:  Minneapolis Star-Tribune, Professors Drop Lawsuit Against William Mitchell in Tenure Fight:

Two William Mitchell College of Law professors are dropping their lawsuit against the school, ending an ugly public fight about its merger with another law school.

MoyRadsanProfessors John Radsan and Carl Moy filed a voluntary dismissal this week to end the suit “without prejudice and without an award of fees or costs to any party.”

An order for dismissal was signed Thursday by Ramsey County District Judge William Leary.

Radsan and Moy filed the suit in April, alleging that their employer, in an effort to cut faculty numbers as it prepares to merge by fall with Hamline University School of Law, tried to change its tenure code. The code currently allows the dismissal of tenured faculty if they refuse or fail to perform their job, or in the event of a financial crisis. Radsan and Moy alleged that the school wanted the ability to terminate tenured faculty “without adequate cause.”

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May 19, 2015 in Legal Education | Permalink | Comments (0)

Rosenzweig: Defining A Country's 'Fair Share' Of Taxes

Adam H. Rosenzweig (Washington University), Defining a Country's 'Fair Share' of Taxes, 42 Fla. St. U. L. Rev. 373 (2015):

The international tax regime is facing a defining moment. As stories of multinational companies expatriating and shifting income around the world with seeming impunity continue to emerge, the question of how to divide the international tax base among the countries of the world increasingly draws attention from policy-makers and academics. To date, however, the debate has tended to devolve into one over the two traditional tools used to divide worldwide tax base — transfer pricing and formulary apportionment. This Article demonstrates that such focus is misplaced on the instruments of dividing the worldwide tax base rather than on first principles. Instead, this Article will adopt the first principle of maximizing the efficiency of the worldwide tax regime under two key, but realistic, assumptions: first, that the presence of multiple states in the world is efficient and, second, that there is a declining marginal utility to public goods. Under these assumptions, dividing worldwide tax base efficiently requires balancing the goals of maximizing the neutrality of tax laws and the provision of public goods across all countries.

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May 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

Rise Of The Robots: How 'The Job-Eating Maw Of Technology Threatens Even The Nimblest And Most Expensively Educated,' Including Lawyers

New York Times Sunday Book Review, ‘Rise of the Robots’ and ‘Shadow Work’:

RiseIn the late 20th century, while the blue-collar working class gave way to the forces of globalization and automation, the educated elite looked on with benign condescension. Too bad for those people whose jobs were mindless enough to be taken over by third world teenagers or, more humiliatingly, machines. The solution, pretty much agreed upon across the political spectrum, was education. Americans had to become intellectually nimble enough to keep ahead of the job-destroying trends unleashed by technology, both robotization and the telecommunication systems that make outsourcing possible. Anyone who wanted a spot in the middle class would have to possess a college degree — as well as flexibility, creativity and a continually upgraded skill set.

But, as Martin Ford documents in Rise of the Robots: Technology and the Threat of a Jobless Future, the job-eating maw of technology now threatens even the nimblest and most expensively educated. Lawyers, radiologists and software designers, among others, have seen their work evaporate to India or China. Tasks that would seem to require a distinctively human capacity for nuance are increasingly assigned to algorithms, like the ones currently being introduced to grade essays on college exams. Particularly terrifying to me, computer programs can now write clear, publishable articles, and, as Ford reports, Wired magazine quotes an expert’s prediction that within about a decade 90 percent of news articles will be computer-­generated. ...

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May 19, 2015 in Book Club, Legal Education | Permalink | Comments (2)

Land Taxes And Inequality

ProgressSlate, The Land Taxers of Fairhope:

More than a century ago, Henry George proposed a property tax he hoped would remedy inequality. Here’s what happened to a town that tried it.

In 1879 the American political economist Henry George proposed a policy to address economic inequality: Tax land—not what’s built on top of it. Tax a parking lot, a seven-story building, and a skyscraper based solely on the value of their footprints. Tax landowners that way, George reasoned in Progress and Poverty, and they couldn’t afford not to develop their holdings. The “single tax” on land would create a strong incentive for bigger buildings, more offices, and more apartments, lowering costs for businesses, shops, and residential tenants. It would remedy the regressive advantage of the urban landowner, to whom George wrote: “[W]ithout doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich!"

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May 19, 2015 in Book Club, Tax | Permalink | Comments (1)

The IRS Scandal, Day 740

IRS Logo 2The Federalist, The 5 Biggest Lies, Myths, And Debunked Claims Of The IRS Scandal:

Remember the Lois Lerner emails the Internal Revenue Service said were lost? Thousands of them were just uncovered, and according to one investigator, they were “right where you would expect them to be.” It was just the latest iteration of a recurring trend in the IRS targeting scandal: investigators debunking attempts by the agency and its apologists to excuse, downplay, or cover up IRS’s abuse of conservative and tea-party groups.

Two years after it was first publicly exposed, here are the five biggest lies, myths, and debunked claims about the IRS scandal.

  1. There Is ‘Absolutely No Targeting’ Program
  2. Agents in Cincinnati Were to Blame
  3. The IRS’s Actions Were Politically Neutral
  4. The IRS Proposed New Rules to Solve the Problem
  5. The E-mails Were Lost

Either through ignorance or dishonesty, the IRS and its defenders have consistently misrepresented the facts of the scandal. Two years after the public was first outraged, it’s clearer than ever that the IRS cannot be trusted to play the role of speech cop.

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May 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, May 18, 2015

NLJ: Law Schools Special Report — This Is The Moment For Clinics

NLJNational Law Journal, Law Schools Special Report: This Is The Moment — For Clinics:

Law school clinics are having a moment. They have become an increasingly important part of the law school curriculum during the past five years, as schools faced pressure to provide students with practical, hands-on experience. In this special report, we highlight six law school clinics taking new approaches to student learning, breaking into new areas of the law or that have impressive track records of success.

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May 18, 2015 in Legal Education | Permalink | Comments (0)

Survey Of Law Firm Managing Partners: There Are Too Many Lawyers; BigLaw Is Running Out Of Work

Bloomberg, There Are Too Many Lawyers, Say Law Firms; Big Law Is Running Out of Work:

Work-life balance has traditionally been an unfamiliar concept at big law firms, but that might be changing. A majority of managers at firms say they employ too many lawyers and those lawyers are not busy enough, according to a survey released Tuesday by consultancy Altman Weil. 

Among the 320 managing partners and chairmen Altman Weil polled, 60 percent reported that overcapacity was making their firms less profitable. At large firms—more than 250 attorneys—the problem was even worse: 74 percent of leaders said idleness was hurting profit.

Bloomberg

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May 18, 2015 in Legal Education | Permalink | Comments (3)

5-4 Supreme Court Rules Against Maryland In Double Taxation Case (Comptroller v. Wynne)

Supreme Court (2014)A 5-4 Supreme Court ruled today that Maryland unconstitutionally failed to provide a full credit for  taxes paid to other states.  Comptroller v. Wynne, No. 13-485 (May 18, 2015).  Justice Aliton wrote the majority opinion, joined by Chief Justice Roberts and Justices Breyer, Kennedy, and Sotomayor.  There were three separate dissenting opinions:  Justice Ginsburg (joined by Justices Kagan and Scalia); Justice Scalia (joined in part by Justice Thomas); and Justice Thomas (joined in part by Justice Scalia).

The majority opinion cites the amicus brief filed by Tax Profs Michael Knoll (Pennsylvania) and Ruth Mason (Virginia), as well as Ruth Mason's article, Made in American for European Tax: The Internal Consistency Test, 49 B.C. L. Rev. 1277 (2008). 

For the Vanderbilt Law Review roundtable on the case, see here.  For press and blogosphere on today's decision, see:

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May 18, 2015 in New Cases, Tax | Permalink | Comments (0)

Bill Gates Scoffs At Suggestion That 35% Corporate Tax Rate Is Stifling Economic Growth

Bill GatesBloomberg, Gates, Richest Man, Says $40,000 Goes Further These Days:

Microsoft Corp. co-founder Bill Gates, the world’s richest person, said the U.S. economy is strong and that it’s “just nonsense” to suggest current tax rates restrain growth by discouraging innovation.

The world’s largest economy is struggling to gain momentum, and tepid wage growth continues even as the unemployment rate is at the lowest level since May 2008.

Gates, whose net worth is estimated at $86 billion, according to the the Bloomberg Billionaires Index, said a person making $40,000 a year is better off now than someone making an equivalent salary decades ago because inventions like the Internet boost the quality of life. ...

Gates scoffed at comparisons linking taxes and regulation to slower growth. “The idea that there’s some direct connection, that all these innovators are on strike because tax rates are at 35 percent on corporations, that’s just such nonsense.”

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May 18, 2015 in Tax | Permalink | Comments (3)

Stanford Law Students Are Crowdsourcing Graduation Speech

Stanford Law School Logo (2015)The Recorder, Stanford Law Students Are Crowdsourcing Graduation Speech:

Don't expect the staid old student address at Stanford Law School's June 13 graduation. Instead, the commencement will feature a crowd-written "wiki speech" that includes contributions from more than 80 members of the class.

The idea came from Marta Belcher, a graduating 3L who won the November classwide speaker's election with the proposal.

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May 18, 2015 in Legal Education | Permalink | Comments (0)

Desai & Dharmapala: Interest Deductions in a Multijurisdictional World

Mihir A. Desai (Harvard) & Dhammika Dharmapala (Chicago), Interest Deductions in a Multijurisdictional World:

This paper proposes and evaluates alternative methods for addressing the tax treatment of interest expenses in a multijurisdictional setting. The differential deductibility of debt entailed by various current tax law provisions leads to potential distortions in the patterns of asset ownership across MNCs and various proposed solutions have significant limitations. We suggest alternative regimes – a worldwide debt cap (WDC) and a net financing deduction (NFD) – to address the ownership distortions that we highlight along with 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). While these regimes provide solutions to ownership distortions and to problems of “base erosion and profit shifting,” they have the potential disadvantage of restricting other policy parameters.

May 18, 2015 in Scholarship, Tax | Permalink | Comments (0)

U2 Hits Back At Criticism Over Tax Havens

Bono 2Sky News, U2 Hit Back At Criticism Over Tax Havens:

In an interview with Sky News, lead singer Bono insisted the band pays a fortune in tax and it was "sensible" to move some of their business to the Netherlands.

"It is just some smart people we have working for us trying to be sensible about the way we are taxed," he said.

"We pay a fortune in tax, a fortune, just so people know, and we're happy to pay a fortune in tax.

"Because you're good at philanthropy and because I am an activist people think you should be stupid in business and I don't run with that."

(Hat Tip: Mike Talbert.) Prior TaxProf Blog coverage:

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May 18, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Jacoby: The Legislature Should Close UMass Law School

UMass 2Following up on last week's post, UMass Law School Cuts Incoming Class By 33%, Faces $3.8 Million Deficit:  Jeff Jacoby (Boston Globe), Repeal That Law School:

When the University of Massachusetts agreed in 2010 to acquire the Southern New England School of Law, there were skeptics aplenty. The decision to take over the small private institution and transform it into a state-run facility, rechristened the UMass School of Law, was disparaged by critics who said the merger was unnecessary, unrealistic, and unwise. ...

Now, five years later, the University of Massachusetts School of Law has a record it can be judged by. And as recent reporting on the school’s performance by the Globe’s Laura Krantz makes clear, the skeptics were right all along.

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May 18, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 739

IRS Logo 2Fox News, GOP Has Waited Two Years for Info on IRS Correspondence with Dem Senators:

Washington Republicans said this week that their requests to the IRS for correspondences between the agency and congressional Democrats remain unfulfilled after two years, raising questions about whether the Obama administration is trying to withhold information for a third-straight election cycle.

“Instead of holding the IRS accountable, Democrats are trying to cover-up their involvement in the IRS targeting scandal,” National Republican Senatorial Committee spokeswoman Andrea Bozek said Friday.

The group, which focuses on getting Republicans elected and reelected to the Senate, provided documents earlier this week showing 10 letters in which the IRS has asked for more time to respond to Freedom of Information Act requests since May 21, 2013.

"On January 14, 2015, I asked for more time to obtain the records you requested,” IRS tax law specialist Denise Higley wrote NRSC lawyer Megan Sowards on April 29. “I am still working on your request and need additional time.” Higley also said she would contact the NRSC by July 6 if she needs more time. ...

Republicans and others have also speculated about whether the administration is stalling on providing information until Obama retires from office after the November 2016 elections.

Thursday will mark the second anniversary of the requests.

The agency could not be reached Saturday for additional comment.

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May 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, May 17, 2015

Would A Teaching-Intensive Tenure Track Help Solve The Law School Crisis?

Book CoverInside Higher Ed,  New Book Proposes Teaching-Intensive Tenure Track Model to Address Higher Ed Crisis:

A new book from Michael Bérubé, the Edwin Erle Sparks Professor of Literature at the Pennsylvania State University, and Jennifer Ruth, associate professor of English at Portland State University, ...  The Humanities, Higher Education and Academic Freedom: Three Necessary Arguments, [argues that] the real crisis in the humanities is the large-scale employment of non-tenure-track professors with no academic freedom who are hired, rehired and fired relatively informally and noncompetitively. Bérubé and Ruth also propose a solution to the “deprofessionalization” of the professoriate: a teaching-intensive tenure track that would grandfather long-serving adjuncts but for everyone else prioritize the competitive hiring of those with terminal degrees.

“We propose that many full-time faculty lines off the tenure track be converted to teaching-intensive tenured positions,” the book says. “The tenure process for such faculty would involve rigorous peer review, conducted by their tenured colleagues at the same institution, but would carry no expectations for research or creative activity,” although service would still be required. Another, more traditional tenure track would remain for professors with research responsibilities. ...

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May 17, 2015 in Book Club, Legal Education | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

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

  1. [250 Downloads]  The Historical Origins of the Debt-Equity Distinction, by Camden Hutchison (Wisconsin)
  2. [231 Downloads]  Using the 'Smart Return' to Reduce Tax Evasion, by Joseph Bankman (Stanford), Clifford Nass (Stanford) & Joel Slemrod (Michigan)
  3. [186 Downloads]  Scholarship Against Desire, by Shari Motro (Richmond)
  4. [162 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S Treasury Department)
  5. [118 Downloads]  Believing in Life After Loving: IRS Regulation of Tax Preparers, by Alex H Levy (NYU)

May 17, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

After 16%-20% Enrollment Declines, New Cardozo ('Slight') And Suffolk (30%) Deans Plan Further Cuts In 1L Class Size

LogoFollowing up on my previous posts (links below):  National Law Journal, New Cardozo, Suffolk Law Deans Plan Smaller Classes:

Two law schools have tapped faculty members as top administrators.

Vice dean Melanie Leslie will become dean of the Yeshiva University Benjamin N. Cardozo School of Law on July 1 as the school’s first female leader. And Suffolk University Law School has selected professor Andrew Perlman as its dean, effective on Aug. 1. Perlman will replace Camille Nelson, who has led the school for five years. ...

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

The IRS Scandal, Day 738

IRS Logo 2Brookings Institution, Lois Lerner Shows the GOP Why It Should Invest in Government:

Republicans in Congress have held up Lois Lerner as the embodiment of everything they despise about government. As a member of the agency that administers the tax side of “tax and spend liberalism” GOP legislators have accused Lerner of politicizing IRS inquiries in order to target conservative political groups. Claims of partisan behavior followed by an array of missing emails made political waves that the GOP hoped would drown its most disliked federal agency in a sea of scandal.

But, a funny thing happened on the way to the political theater: congressional Republicans showed why it is important to spend money and invest in government. In fact, while the IRS scandal put the Treasury Department at the center of congressional criticism, it is another division of Treasury that has swooped in to save the day, and the GOP owes it a debt of gratitude. The foil in this political drama is a little known institution: the Treasury Inspector General for Tax Administration or TIGTA. ...

As the IRS scandal and the investigation around Lois Lerner’s behavior intensified, congressional efforts were ultimately stymied by an IRS claim that thousands of Lerner’s emails had been lost—and were unrecoverable. The lost emails frustrated congressional investigators and led to charges of “cover up” and “corruption.” And frankly, those accusations were not misplaced. Any party investigating the actions of the other, faced with the same set of facts and circumstances would have cried foul just as loudly.

Imagine for a moment if an investigation into political targeting in the Bush administration (a la its mid-2000s GSA scandal) resulted in a claim that emails were lost, but that those emails contained nothing incriminating anyways. Would Democratic leaders like Nancy Pelosi and Harry Reid have simply responded, “phew, glad that’s resolved”? Absolutely not. Such claims would have simply intensified Democrats’ resolve to get to find the truth.

Back to present day: the Lerner emails were lost; congressional investigators could not find them. The IRS, charged with looking into the matter, could not find the emails either. Enter TIGTA. As the IRS’ watchdog, fighting against mismanagement, waste, fraud, and abuse, it began an investigation of its own. As part of its investigation, TIGTA found the “lost” emails—thousands of them—and turned them over to both IRS officials and Congress to aid in the Lerner investigation. These emails that the IRS believed would be vindicating and Congress thought would be the smoking gun in a political scandal were found. And all of that came as a result of the hard work of an inspector general charged with overseeing IRS.  ...

As unpalatable as the Lerner case is to congressional Republicans, they should be delighted by the actions of TIGTA and other OIGs across government who perform their jobs in a highly effective, cost-saving way. Rather than cutting budgets in these offices, Congress should consider boosting inspectors’ general budgets in an effort to make government work better. As we noted in our paper, not only can cutting budgets raise deficits, but often leads to government becoming more dysfunctional. If Congress is serious about stopping future scandals like the one surrounding IRS, the solution is not to exact punishment on budgets of the Treasury Department. The solution might be to give Treasury a raise. 

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May 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, May 16, 2015

This Week's Ten Most Popular TaxProf Blog Posts

Tax Papers at Today's American Law & Economics Association Annual Meeting at Columbia

ALEATax papers at today's American Law & Economics Association Annual Meeting at Columbia:

Empirical Research in Taxation
Panel Chair:  Kyle Rozema (Cornell)

In addition, two Tax Profs are chairing other panels and presenting papers:

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May 16, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

75% Of Charleston Faculty Put Their Jobs On The Line, Blast Law School's Management

Charleston LogoSeventeen (75%) of the Charleston law school faculty have published a remarkable op-ed in the Post and Courier, Charleston School of Law Faculty Wants to Return to Founding Principle. The founding Charleston Dean (and current Mississippi Dean) Richard Gerson notes that "[t]he faculty who signed this letter are aware that publishing it will likely cost them their jobs."

When five South Carolinians opened the Charleston School of Law in 2004 as an “elegant” local law school, it was greeted enthusiastically by the Charleston community. ... In the years that followed, the Charleston School of Law flourished beyond all expectations. ... By any measure, the school was trending towards national distinction.

What happened?

InfiLaw arrived. What follows is the perspective of faculty of the law school. We are teachers, committed to the special “student-first” culture that has come to define the Charleston School of Law. (Don’t take our word for that; ask any law student for an opinion.) Questioning this sale is certainly not in any faculty member’s best personal interest. As one Charlestonian quipped, we sure aren’t earning any “gold stars” from the InfiLaw folks. But this cause has been too important for us to stand aside. ...

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May 16, 2015 in Legal Education | Permalink | Comments (7)

The IRS Scandal, Day 737

IRS Logo 2Wall Street Journal op-ed:  How Congress Botched the IRS Probe, by Cleta Mitchell (Foley & Lardner, Washington, D.C.):

Two years ago this week, a report by the Treasury Inspector General for Tax Information confirmed what hundreds of tea party, conservative, pro-life and pro-Israel organizations had long known: The Internal Revenue Service had stopped processing their applications for exempt status and subjected them to onerous, intrusive and discriminatory practices because of their political views.

Since the report, additional congressional investigations have revealed a lot about IRS dysfunction—and worse. But they’ve also revealed Congress’s inability to exercise its constitutional oversight responsibilities of this and other executive agencies. ...

Lying to Congress is a felony. But the Obama Justice Department has not lifted a finger to prosecute anyone responsible for the IRS scandal, including top brass who repeatedly gave false testimony to Congress.

Neither has Congress done much about being lied to by the IRS. Mr. Issa’s oversight committee first subpoenaed Lois Lerner’s emails in August 2013, then issued another subpoena in February 2014. The committee conducted a hearing on the subject in March 2014, during which Mr. Koskinen testified that, finally, the IRS would produce the Lerner emails. However, as he testified in June 2014, the agency didn’t even begin to look for her emails until February 2014. Why didn’t the House seek to enforce its first subpoena when the IRS failed to respond in the fall of 2013?

Congressional oversight has devolved into a series of show hearings after which nothing happens. No one gets fired for lying. No changes are made in the functioning of the agencies. No programs are defunded. Congress issues subpoenas that are ignored, contempt citations that aren't enforced, criminal referrals that go into Justice Department wastebaskets.

If it is to function as a coequal branch of government, Congress should establish—either through the rules of each House, or by legislation, that it has standing to independently enforce a congressional subpoena through the federal courts. Congress also should use its purse strings to change specific behavior in federal agencies. Rather than across-the-board reductions, Congress should zero out specific departments and programs as agency misconduct is uncovered. It is the only way to stop the executive branch from running roughshod over the American people.

This will be a difficult challenge as long as partisans in both houses of Congress see their role as political gatekeepers who must protect executive agencies when a president of their own party is in the White House. Congressional Democrats have done all in their power to thwart the IRS investigation, arguing with Republicans at hearings and engaging behind-the-scenes with the IRS to undermine the inquiry.

Yet it is a challenge that cannot be shirked. Congress needs to relearn how to flex serious legislative muscle to guard against future executive abuses like those from the IRS.

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May 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, May 15, 2015

Tax Papers at Today's American Law & Economics Association Annual Meeting at Columbia

ALEATax panels at today's American Law & Economics Association Annual Meeting at Columbia:

Topics in Tax Policy Design I 
Panel Chair:  Yehonatan Givati (Hebrew University of Jerusalem)

Topics in Tax Policy Design II
Panel Chair: Zachary Liscow (Yale)

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May 15, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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May 15, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Chilton & Posner Present An Empirical Study Of Political Bias In Legal Scholarship At Today's ALEA Annual Meeting at Columbia

Adam S. Chilton (Chicago) & Eric A. Posner (Chicago) present An Empirical Study of Political Bias in Legal Scholarship at the American Law & Economics Association Annual Meeting today at Columbia:

Law professors routinely accuse each other of making politically biased arguments in their scholarship. They have also helped produce a large empirical literature on judicial behavior that has found that judicial opinions sometimes reflect the ideological biases of the judges who join them. Yet no one has used statistical methods to test the parallel hypothesis that legal scholarship reflects the political biases of law professors. This paper provides the results of such a test. We find that, at a statistically significant level, law professors at elite law schools who make donations to Democratic political candidates write liberal scholarship, and law professors who make donations to Republican political candidates write conservative scholarship. These findings raise questions about standards of objectivity in legal scholarship.

Figure 3

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

Wolves Of The Revenue

WolvesPete Johnson (Lawyer, Southern California), Wolves of the Revenue:

When lawyer Pete Johnson's clients experienced harassment by the IRS, his response was unique: To pursue taxpayer vengeance in fiction.

Johnson's new novel, Wolves of the Revenue, is a riveting thriller that confronts the IRS about taxpayer abuse.

"In my experience the IRS fails to atone, or even officially apologize, for its wrongs when in error," Johnson said. "Unlike with the CIA and FBI, the Service is rarely a focal point in fiction."

"Wolves of the Revenue" relates the story of a taxpayer coping with two IRS agents' harassing audits, assessments and seizures.

To absolve himself and experience the satisfaction of vindication, this leads the protagonist down a path where betrayal, forbidden love and revenge awaits him.

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May 15, 2015 in Book Club, Tax | Permalink | Comments (0)

Chaffee: Answering The Call To Reinvent Legal Education

Eric C. Chaffee (Toledo), Answering the Call to Reinvent Legal Education: The Need to Incorporate Practical Business and Transactional Skills Training into the Curricula of America's Law Schools, 20 Stan. J.L. Bus. & Fin. 121 (2014):

The legal academy must make the conscious decision to change, or the pressures upon it will combine to transform legal education in ways that may be extremely harmful. The media, the law school applicant pool, the job market, the legal profession, and the legal academy itself have created an unprecedented need for reimagining legal education.

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

Bartlett: Is The Only Purpose Of A Corporation To Maximize Profit?

Bruce Bartlett, Is the Only Purpose of a Corporation to Maximize Profit?:

Historically, corporations were expected to serve some public purpose as justification for the benefits and privileges they receive from the state. But since the 1970s, the view has become widespread that corporations exist solely to maximize profits and for no other purpose. While the shareholder-first doctrine was supposed to solve the agency problem, in fact it has gotten worse as corporate executives enrich themselves at the expense of shareholders. Moreover, the obsession with current share prices as the only measure of corporate success may be destroying long-term value as companies cut back on investment to raise short-term profits. Tax policies designed to raise after-tax profits have done nothing to reverse these trends.

May 15, 2015 in Scholarship, Tax | Permalink | Comments (1)

Legal Blogging And The Rhetorical Genre Of Public Legal Writing

Jennifer Murphy Romig (Emory), Legal Blogging and the Rhetorical Genre of Public Legal Writing:

This article brings scholarly attention to the blog posts, tweets, updates and other writing on social media that many lawyers generate and many others would consider generating, if they had the time and skill to do so. In the broadest terms, this genre of writing is “public legal writing”: writing by lawyers not for any specific client but for dissemination to the public or through wide distribution channels, particularly the Internet. Legal blogging is a good entry point into public legal writing because legal blog posts often share some analytical features of longer articles alongside conversational conventions typical of writing on social media. Legal blogging is certainly not new, but this article brings new attention to it.

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May 15, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 736

IRS Logo 2Fox News, House Members Push for IRS Clinton Probe:

Rep. Marsha Blackburn, R-Tenn., is circulating a letter among her colleagues asking IRS Commissioner John Koskinen to review the tax-exempt status of the Clinton Foundation. In the letter, a draft of which was obtained by Chief Congressional Correspondent Mike Emanuel, Blackburn says, “recent media reports have revealed that the Foundation failed to report millions of dollars in grants from foreign governments that it accepted while Hillary Clinton was Secretary of State and that it facilitated private business transactions between foreign entities” and as such, “given the substantial public interest involved, we feel a prompt review of the Foundation’s tax-exempt status is appropriate to determine whether it is acting within the scope of its charitable mission.”

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May 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, May 14, 2015

Pedigree: How Elite Students Get Elite Jobs

PedigreeLauren A. Rivera (Northwestern, Kellogg School of Management), Pedigree: How Elite Students Get Elite Jobs (2015):

Americans are taught to believe that upward mobility is possible for anyone who is willing to work hard, regardless of their social status, yet it is often those from affluent backgrounds who land the best jobs. Pedigree takes readers behind the closed doors of top-tier investment banks, consulting firms, and law firms to reveal the truth about who really gets hired for the nation’s highest-paying entry-level jobs, who doesn’t, and why.

Drawing on scores of in-depth interviews as well as firsthand observation of hiring practices at some of America’s most prestigious firms, Lauren Rivera shows how, at every step of the hiring process, the ways that employers define and evaluate merit are strongly skewed to favor job applicants from economically privileged backgrounds. She reveals how decision makers draw from ideas about talent—what it is, what best signals it, and who does (and does not) have it—that are deeply rooted in social class. Displaying the “right stuff” that elite employers are looking for entails considerable amounts of economic, social, and cultural resources on the part of the applicants and their parents.

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May 14, 2015 in Book Club, Legal Education | Permalink | Comments (5)

Estimating Inequality With Tax Data: The Problem of Pass-Through Income

Patrick Allan Sharma (J.D. 2016, Harvard), Estimating Inequality with Tax Data: The Problem of Pass-Through Income:

In recent decades, a growing share of U.S. business income has been taxed on a pass-through basis. When taxed on a pass-through basis, business income is attributed to a firm’s owners and taxed to them as individual income, rather than being subject to a separate entity-level tax. Among its many implications, the growth of pass-through taxation complicates our ability to estimate historical trends in income inequality. Prominent studies of income inequality use data from individual income tax returns to measure changes in the distribution of income over time yet fail to control for the increasing amounts of business income reflected in this data. Accordingly, to the extent that pass-through income flows to high-income individuals, such studies may overestimate the recent growth in income inequality.This paper explores the effect of pass-through income taxation at the high-end of the income distribution. Using data from the World Top Incomes Database, it shows that the growth of pass-through income has been concentrated among the top 0.5 percent of taxpayers. The trend towards taxing business income on a pass-through basis may thus be responsible for some of the growth in income inequality that researchers have observed.

 Figure 2

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May 14, 2015 | Permalink | Comments (4)

NY Times: The Declining Role Of Professors As Mentors

New York Times Sunday Review Essay:  What’s the Point of a Professor?, by Mark Bauerlein (Emory, Department of English):

In the coming weeks, two million Americans will earn a bachelor’s degree and either join the work force or head to graduate school. They will be joyous that day, and they will remember fondly the schools they attended. But as this unique chapter of life closes and they reflect on campus events, one primary part of higher education will fall low on the ladder of meaningful contacts: the professors. ...

[W]hile they’re content with teachers, students aren’t much interested in them as thinkers and mentors. They enroll in courses and complete assignments, but further engagement is minimal. ... For a majority of undergraduates, beyond the two and a half hours per week in class, contact ranges from negligible to nonexistent. In their first year, 33 percent of students report that they never talk with professors outside of class, while 42 percent do so only sometimes. Seniors lower that disengagement rate only a bit, with 25 percent never talking to professors, and 40 percent sometimes. ...

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May 14, 2015 in Legal Education | Permalink | Comments (3)

Galle: Law and the Problem of Restricted-Spending Philanthropy

Brian Galle (Boston College), Pay It Forward? Law and the Problem of Restricted-Spending Philanthropy, 92 Wash. U.L. Rev. ___ (2016):

American foundations and other philanthropic giving entities hold about $1 trillion in investment assets, and that figure continues to grow every year. Even as urgent contemporary needs go unmet, philanthropic organizations spend only a tiny fraction of their wealth each year, mostly due to restrictive terms in contracts between donors and firms limiting the rate at which donations can be distributed. Law has played a critical role in underwriting and encouraging this build-up of philanthropic wealth. For instance, contributors can typically take a full tax deduction for the value of their contribution today, no matter when the foundation spends their money, and pay no tax on the investment earnings the organization reaps in the meantime.

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

Givati: Economic Theory And The Taxation of Fringe Benefits

Yehonatan Givati (Hebrew University of Jerusalem, Faculty of Law), Googling a Free Lunch: The Taxation of Fringe Benefits, 68 Tax L. Rev. ___ (2015):

How should fringe benefits be taxed? Though fringe benefits are covered in every basic law school course on federal income taxation, no widely accepted economic framework has developed for thinking about their taxation. As a result, policymakers lack a clear picture of the benefits and costs of alternative tax regimes, when faced with situations such as the free luxurious meals provided by Google and Facebook to their employees. This Article fills this gap in the literature, by developing an economic theory of the provision of fringe benefits.

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

In Wake of 35% Enrollment Decline, Pace Law School Dean Cuts Faculty Pay 10%, Eliminates Research Stipends And Sabbaticals, And Warns Faculty Not To Speak To Press

Pace (2015)Brian Leiter (Chicago) reports that in the face of a $5 million deficit, Pace Law School Dean David Yassky has pledged to cut $2.1 million of that deficit through a 10% salary cut for all faculty, elimination of all research stipends and sabbaticals, and a 5% salary cut for senior staff. Perhaps most curiously:

[T]he Dean, according to one source, "forbade anyone from speaking to the press about this. The materials he passed out carried two watermarks, one large across the text, and another secret one (or so he said), with each faculty member's name so he will know who the leak is, he said.

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May 14, 2015 in Legal Education | Permalink | Comments (13)

Dan Halperin To Retire From Harvard Law School Faculty

HalperinHarvard Law Today:  Legacies of Selfless Scholarship: Undisguised Value, by Alvin C. Warren Jr. (Harvard):

Daniel I. Halperin ’61 will retire at the end of this academic year after more than a half-century as a tax lawyer, professor and government official. Unlike most law professors starting out today, Dan worked as a lawyer for a decade—at the firm Kaye Scholer and in the government—before entering law teaching. Serendipitously, he became Kaye Scholer’s expert in the new field of pension law in his second year, after the sudden departure of the only lawyer at the firm with any experience in the field.

In 1996, Dan was appointed the first Stanley S. Surrey Professor of Law at Harvard Law School. Over the past 19 years, he has continued to write about tax law and policy, and has taught a variety of tax-related courses, covering income taxation, tax policy, pension law, and nonprofit organizations.

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May 14, 2015 in Legal Education, Tax | Permalink | Comments (0)

Senator Hatch Blasts IRS For Retaining Law Firm To Go After Microsoft

Microsoft (2015)Wall Street Journal, Top Republican Sides With Microsoft in IRS Offshore-Profits Scuffle:

A top Republican lawmaker is siding with Microsoft Corp. in its legal scuffle with the Internal Revenue Service involving profits the firm has parked offshore.

In a letter on Wednesday, Finance Committee Chairman Orrin Hatch (R., Utah) questioned the IRS’s unusual decision last year to hire a private law firm to help it go after the high-tech giant.

“The IRS’s hiring of a private contractor to conduct an examination of a taxpayer raises concerns because the action: 1) appears to violate federal law and the express will of the Congress; 2) removes taxpayer protections … and 3) calls into question the IRS’s use of its limited resources,” Mr. Hatch wrote in the letter to IRS Commissioner John Koskinen.

The lawmaker asked the agency to stop using the contractor and also to explain its actions to the committee.

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May 14, 2015 in IRS News, Tax | Permalink | Comments (0)

NTA 45th Annual Spring Symposium: The 20th Century Tax Code In A 21st Century World

The 45th Annual Spring Symposium on The 20th Century Tax Code in a 21st Century World: Where Are the Pressure Points? by the National Tax Association and American Tax Institute kicks off today in Washington, D.C.

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May 14, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 735

IRS Logo 2Forbes, California Attorney General Can Demand Full IRS Forms From Charity, by Peter J. Reilly:

The Ninth Circuit’s decision in the case of the Center For Competetive Politics v Kamal D. Haris (Attorney General of California) is almost two weeks old and has been covered in other places, so I almost invoked my “You snooze, you lose” rule against myself, but I think I may have something to add. It concerns a fairly obscure issue, but the case does have a loose connection to the interminable IRS scandal (On Day 733 by TaxProf count as I write this).

The Center For Competetive Politics according to its 2013 Form 990 is dedicated to the “Preservation of the First Amendment rights to free political speech, assembly, and petition”. The appointment of the Center’s Chairman, Bradley A. Smith, to the Federal Election Commission was controversial given his vigorous opposition to campaign finance regulation. I guess it kind of looked like putting Daniel Berrigan on the Joint Chiefs of Staff or having Irwin Schiff head up the IRS. The Center received over $1.7 million in contributions and grants in 2013. 

As a 501(c)(3) organization CCP has to tell the IRS who its major donors are. This is done with Schedule B which is attached to the Form 990. Schedule B is not subject to public inspection, so you don’t get to see it on guidestar.org. Many states require charities to attach Form 990 to state filings. The instruction to Form 990 caution charities about not including the schedule of contributors in filings with states that do not ask for it, since they might inadvertently make the donor information publically available. 

It appears that CCP relies very much on a few large donors. The 2013 Form 990 on guidestar.org does not even include a redacted Schedule B, but if you go to the California Attorney General site, there is a Form 990 including a redacted Schedule B for 2011 that shows that of the $1.8 million raised in 2011 over $500,000 came from a single donor. Over $800,000 came from just seven donors who gave between $85,000 and $211,250.

The IRS knows who those seven donors are, but they are not going to tell us. The California Attorney General would also like to know who those donors are, without making them public. So the AG is requiring that CCP provided an unredacted copy of Schedule B. CCP does not want to do that . The Ninth Circuit just told them that they have to.

There were two arguments that CCP made. The first was that the disclosure requirement is injurious to the Center and its supporters’ exercise of their First Amendment rights. They referred to a “chilling risk”. So you feel OK giving money to CCP even thought Lois Lerner’s minions know who you are, but you draw the line when it comes to the California AG. The Court indicated that that sort of concern was subject to “exacting scrutiny” under which the government’s interest in obtainging the information must be weighed against actual damage to First Amendment rights. ...

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May 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, May 13, 2015

Columbia Journal of Tax Law Publishes New Issue

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published  Vol. 6, No. 2:

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