TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, October 18, 2016

The IRS Scandal, Day 1258: Judge Orders IRS to Clear Tea Party Application Backlog Within Month

IRS Logo 2American Center for Law and Justice, Major Victory: IRS Ordered to Issue Outstanding Determinations & Answer for Political Targeting of Citizens:

Three years after we filed a lawsuit on their behalf, and for some, nearly seven years after they submitted their applications for tax-exempt status, the grassroots conservative groups that were targeted by the IRS for their political views are finally receiving some of the relief to which they have long been entitled—determinations on those applications.

In early August, the federal appellate court for the District of Columbia Circuit held that the plaintiffs who filed suit in Linchpins of Liberty, et al. v. United States, et al. in 2013 had set forth allegations sufficient to obtain actual evidence about the IRS’s targeting of conservative tax-exempt applicants based on their names and political positions. The D.C. Circuit thus reversed the decision of the district court (which had previously dismissed the claims on the grounds that the IRS had apparently ceased the targeting conduct) and sent the case back to the lower court, explaining that the IRS had failed to demonstrate that either the targeting scheme, or its effects on plaintiffs, had actually ended.

Last week, District Judge Reggie B. Walton held a status conference to resume the lower court proceedings in the case. While the IRS’s attorney once again took the position that most of the claims are moot because most of the plaintiff organizations have received determinations, the court picked up where the D.C. Circuit left off, and ordered that the IRS cease delaying determinations on any outstanding tax-exempt applications of Tea Party groups and other grassroots organizations. He gave the IRS thirty days to comply.

It will be seven years this December since one of our clients awaiting a final determination – Albuquerque Tea Party – submitted its tax-exempt application. Another client – Unite in Action – has been waiting six and a half years since filing its application in May 2010. As a result of Judge Walton’s order, these years-long application processes are finally concluding, and the organizations are receiving the review and determinations they deserve. This is a major victory.

Judge Walton also agreed with our position, affirmed by the appellate court, that the IRS cannot obtain dismissal of the case simply by issuing the remaining determinations but must also produce evidence showing that any negative effects of the targeting on plaintiffs have been completely and irrevocably eradicated. Specifically, we urged, and the court agreed, the IRS must answer such questions as: What was the determination process prior to the targeting? How and why did the targeting begin? What treatment did plaintiffs’ applications receive during the targeting? What assurances are currently in place that plaintiffs will not suffer further retaliation or discriminatory treatment at the hands of the IRS?

As a result of this order, the IRS will, at long last, be required to disclose the details of the lawless and unconstitutional Tea Party targeting scheme. The court’s requirement that the IRS give account for its conduct is a tacit acknowledgment that plaintiffs—as well as the American public—deserve honesty and transparency from their government.

We are pleased that the court has taken this first step and look forward to a resolution of this case that will hopefully include the first judicial acknowledgment of the unmistakably unconstitutional nature of the IRS’s egregious political targeting of U.S. citizens.

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October 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (9)

Monday, October 17, 2016

Crane Presents Integrating A Fragmented Corporate Tax Today At Boston College

Crane (2016)Charlotte Crane (Northwestern) presents Integrating a Fragmented Corporate Tax at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti and Diane Ring:

Calls for corporate tax reform are made with increasing intensity. From some perspectives, there appear to be two separate reform efforts, one focused on “integration” of the tax on the corporation itself with the tax its shareholders pay on distributions to eliminate “double taxation,” and the other focused on reform of the taxation of US-based corporations on their offshore earnings.

The problems to be addressed in these two efforts have in the past been largely treated as distinct policy problems. Solutions that integrate the corporate and individual income taxes in order to eliminate “double taxation” have ordinarily assumed that the current system of cross-border taxation remained in place, and solutions that address cross-border taxation have for the most part assumed the existing approach to taxing distributions from corporations to shareholders remains in place.

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October 17, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Hoffer Presents Will Treasury's Final Regulations Fix The ABLE Act? Today At Loyola-L.A.

Hoffer (2016)Stephanie Hoffer (Ohio State) presents Will Treasury's Final Regulations Fix the ABLE Act?, 153 Tax Notes 265 (Oct. 10, 2016), at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

Passed as part of the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014 (ABLE Act), section 529A allows states to build tax-preferred savings programs for individuals with qualifying disabilities. The law is similar to section 529, which governs college savings programs, and it is a game-changer for the disability community. Account principal and investment earnings can be withdrawn from the account tax free for qualified disability-related expenditures, and if used appropriately, withdrawals will not affect the beneficiary’s eligibility for Medicaid, Supplemental Security Income (SSI), and other federal supports for people with serious disabilities. But Treasury will determine how truly able the law is to achieve its dual goals of allowing individuals with disabilities to cover their own expenses and save for the future. The law contains both annual and aggregate contribution limits, and interpretation is up for grabs. Under one reading of the law, an account could accept no more than the annual limit, regardless of withdrawals from the account. Under an alternative reading that is more in keeping with the spirit of the law, dollars contributed and then withdrawn in the same year would not count against the annual contribution limit. 

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October 17, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tips For Placing Your First Law Review Article

Robert Luther III (Senate Judiciary Committee), Practical Tips for Placing and Publishing Your First Law Review Article, 50 U. Rich. L. Rev. Online 63 (2016):

Many law reviews are only open to the top 10% of the class or to students who excel in a writing competition. While a high percentage of law schools now have at least one journal in addition to the law review, the reality is that well over half of the students enrolled in law school today do not have the opportunity to serve as a law review or journal staff member. Without that experience, those students-turned-lawyers who wish to publish legal scholarship after graduation are left in the dark about where to begin the process. I was one of those individuals, but over the last eight years, I have regularly published legal scholarship. Recently, my former students and other young attorneys have started asking me for advice.

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October 17, 2016 in Legal Education, Scholarship | Permalink | Comments (0)

The Tax Lawyer Publishes New Issue

A Nobel Prize In Law Would Go To ... Calabresi, Posner, Or Sunstein?

Nobel PrizeStephen L. Carter (Yale), Titans of Law Are Nobel-Worthy, Too:

Now that this year’s Nobel Prizes have all been awarded, we can play the annual game of wondering what other fields should be included. ... This time around, the philosopher and legal scholar Brian Leiter has excited no small conversation among his colleagues by proposing a Nobel Prize for law. He posted a list of 51 legal scholars in the U.S., all but one over the age of 60, whom he thought others might rank among their top 10, and asked his colleagues to vote.

Leiter’s poll isn’t formal or systematic, and there is no way to test who cast a ballot. Still the results are interesting. The three top vote-getters, dominating the rest of the field, were Richard Posner, Cass Sunstein and Guido Calabresi. 

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October 17, 2016 in Legal Education | Permalink | Comments (10)

Polsky & Rosenzweig:  The Up-C Revolution

Gregg D. Polsky (Georgia) & Adam H. Rosenzweig (Washington University), The Up-C Revolution:

Over the past few years, a revolutionary new tax structure, known as the Up-C, has become increasingly popular, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the legacy owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange rights that allow them to swap their LLC interests for equivalent-value shares of the C corporation. In addition, the legacy owners often receive the benefit of tax receivables agreements (TRAs), which provide that the owners will receive a specified percentage (usually 85 percent) of the tax benefits to the C corporation resulting from future exchanges. In combination, these features seem to provide a near-nirvana of tax efficiency. It is therefore unsurprising that the popularity of Up-Cs is growing at an exponential rate.

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October 17, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1257

IRS Logo 2Lima News editorial: Jim Jordan Is the Conscience of Conservatives:

U.S. Rep. Jim Jordan’s growing stature on Capitol Hill makes him an easy choice for re-election in the 4th Congressional District over Democrat Janet Garrett. ...

Another hearing saw him push for impeachment proceedings against IRS Commissioner John Koskinen, saying the IRS leader lied to Congress.

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October 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, October 16, 2016

NY Times:  The Wheaton College Professor Wore A Hijab in Solidarity — Then Lost Her Job

HawkinsFollowing up on my previous posts:

New York Times Sunday Magazine, The Professor Wore a Hijab in Solidarity — Then Lost Her Job, by Ruth Graham:

When Larycia Hawkins, the first black woman to receive tenure at Wheaton College, made a symbolic gesture of support for Muslims, the evangelical college became divided over what intellectual freedom on its campus really meant. 

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October 16, 2016 in Legal Education | Permalink | Comments (1)

Filing Taxes Should Be As Easy As Ordering Pizza, Obama Says

PizzaWired, Filing Taxes Should Be as Easy as Ordering Pizza, Obama Says:

The Situation Room is not as gee-whiz as you think it is. Take it from someone who knows: President Obama.

“I always imagined the Situation Room would be this super cool thing, it’d be like Tom Cruise in The Minority Report,” Obama, the guest editor of WIRED’s November issue, said during a lengthy interview with Joi Ito of MIT’s Media Lab and Editor-in-Chief Scott Dadich. “It’s not like that at all.”

In a wide-ranging conversation, the president described the tech gap between the public and private sectors. (Guess which side has better gear?) ...

“There’s a whole bunch of work we need to do around getting government to be more customer-friendly,” Obama said, adding that filing taxes should be “at least as easy as ordering a pizza or an airline ticket.”

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October 16, 2016 in Tax | Permalink | Comments (5)

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. The #1 papers is now #24 in all-time downloads among 12,265 tax papers):

  1. [3,532 Downloads]  Families Facing Tax Increases Under Trump's Latest Tax Plan, by Lily L. Batchelder (NYU)
  2. [268 Downloads]  Transfer Pricing Money: The Chevron Case, by Richard J. Vann (Sydney) & Graeme S. Cooper (Sydney)
  3. [185 Downloads]  Law and Macroeconomics: The Law and Economics of Recessions, by Yair Listokin (Yale)
  4. [168 Downloads]  Taxation and Human Rights: A Delicate Balance, by Reuven Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. 2017, Michigan)
  5. [146 Downloads]  Capital Taxation in an Age of Inequality, by Edward Kleinbard (USC)

October 16, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

39% Fewer Law Schools Participate In AALS Faculty Recruitment Conference (Compared To 2012)

AALS (2017)The AALS Faculty Recruitment Conference concluded yesterday, with 86 law schools participating in the hiring interviews, down 3.3% from last year (89) and 39.4% from 2012 (142).

October 16, 2016 | Permalink | Comments (12)

The IRS Scandal, Day 1256: The IRS Spent $12 Million For Microsoft Cloud-Based Email Archive That Was Incompatible With Its On-Premises Email System And Never Used

IRS Logo 2Treasury Inspector General for Tax Administration, Review of the Enterprise E-Mail System Acquisition (2016-20-080):

The IRS currently maintains an on-premises e‑mail environment that does not have archive capability. The existing system hardware is approaching manufacturer end-of-support and is experiencing numerous failures resulting in a significantly increased workload on enterprise e‑mail support staff. If the IRS does not efficiently upgrade its e-mail environment, it could adversely affect the IRS’s ability to effectively perform tax administration.

The IRS purchased subscriptions for an enterprise e-mail system that, as it turned out, it could not use. The purchase was made without first determining project infrastructure needs, integration requirements, business requirements, security and portal bandwidth, and whether the subscriptions were technologically feasible on the IRS enterprise.

IRS Information Technology organization executives made a management decision to consider the enterprise e-mail project an upgrade to existing software and not a new development project or program. Therefore, the Information Technology organization did not follow the Internal Revenue Manual Enterprise Life Cycle guidance. The IRS authorized the $12 million purchase of subscriptions over a two-year period between June 2014 and June 2016. However, the software to be used via the purchased subscriptions was never deployed.

Figure 1

The IRS may have violated the bona fide needs rule when it purchased the subscriptions using Fiscal Years 2014 and 2015 appropriations and did not deploy the software subscriptions in those years. In addition, the IRS violated Federal Acquisition Regulation requirements by not using full and open competition to purchase these subscriptions.

Bloomberg BNA, IRS Wasted $12 Million on Failing E-Mail System, IG Reports:

Lacking the ability to archive all e-mails on site is especially troubling considering the blowback the agency has faced for the last several years, Douglas Mancino, a partner at Seyfarth Shaw LLP told Bloomberg BNA today. Members of the House Freedom Caucus are vying to impeach the IRS commissioner, saying he misled Congress and alleging the agency destroyed e-mails showing evidence of its scrutinizing of conservative groups. The agency’s records retention was also at the heart of a recent lawsuit (Judicial Watch, Inc. v. IRS, D.D.C., No. 1:13-cv-01559).

The IRS strongly disagrees with the notion that it wasted taxpayer dollars or didn’t follow appropriate practices, Gina Garza, the chief information officer, said in a response letter included in the report. “The IRS takes seriously our obligation to manage taxpayer dollars in the most efficient and effective manner possible,” she said. “The IRS remains committed to continuously improve our IT systems and processes.”

But Mancino differed. “The IRS expects taxpayers to have record-retention policies that extend for years, particularly for major corporate records, including when they’re maintained in electronic format. One would think the IRS itself would think along the same lines and have the same policies, especially in the environment of the last five or six years,” he said. The findings show mismanagement and spending that would be considered “a career-limiting move” in the corporate world, he said.

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October 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, October 15, 2016

This Week's Ten Most Popular TaxProf Blog Posts

University Of Houston Obtains Injunction Barring South Texas From Rebranding Itself 'Houston College Of Law'

Houston South TexasFollowing up on my previous posts (links below): Houston Chronicle, UH Wins Temporary Injunction in Legal Battle Against Rival Law College:

A federal judge ruled Friday that South Texas College of Law must stop using its new name - displayed on prominent billboards around town - until it resolves a bitter legal dispute with the University of Houston regents.

U.S. District Judge Keith Ellison granted a temporary injunction in a 42-page ruling that found South Texas's new name, Houston College of Law, had created confusion among consumers and caused a "substantial threat of irreparable injury" to the University of Houston Law Center.

The facts "weigh heavily in favor" of UH prevailing in the case, Ellison said.

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October 15, 2016 in Legal Education | Permalink | Comments (2)

Presidential Campaign Tax News

Update On Dan Markel Murder Investigation

Adelson FamilyJonathan Turley (George Washington), The Murder of Professor Dan Markel: Confession of Contract Killer Raises Questions Over Role of Wendi Adelson:

The clear effort of the police is now to build a case against the Adelsons. While previously the effort seemed focused on Charlie Adelson, it now appears to be also focusing on Wendi Adelson. Clearly, someone hired these hit men and they did not spontaneously decide to kill a law professor. The obvious suspects are the Adelsons and they remain prominent references in the warrants and this confession. With Rivera’s confession and deal, the pressure will be even greater on Magbanua to cut a deal. Her cooperation may be the ultimate goal of this building investigation and the final straw before the arrest of one of the Adelsons, who are clearly the ultimate targets for the investigators.

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October 15, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1255

IRS Logo 2Government Executive, White House Accused of Bypassing Rules on Access to Taxpayer Information:

In the latest in a long effort to prove White House interference with the Internal Revenue Service, the right-leaning legal group Cause of Action Institute released a 67-page investigative report saying President Obama has “circumvented the congressionally created and authorized procedures for accessing confidential taxpayer information.”

Writing in the context of the three-year-old political controversy over alleged political “targeting” by the IRS’s Exempt Organizations division, Cause of Action explored “recent IRS misuse and unauthorized release of confidential taxpayer information and the possible role of a detailee program in the Office of the White House Counsel that may have provided access to the protected information.”

The report cites two examples of alleged political abuse of private taxpayer information. One involved a 2010 charge that then-Obama Council of Economic Advisers Chairman Austan Goolsbee in a call with reporters questioned the sufficiency of taxes paid by Koch Industries, news of which launched an inspectors general probe (never released) into whether the Kansas businessmen’s tax returns were reviewed at the White House.

A second example the legal group cited was a November 2012 instance in which the IRS allegedly gave the journalism group ProPublica “confidential application files of certain conservative groups seeking tax exempt status.”

The Obama team allegedly accomplished the interference by “relying on individual consent forms that were never intended for use by the president,” Cause of Action wrote. “The practice has allowed the president to avoid the reporting requirements and limitations placed on presidential access to taxpayer information by the Tax Reform Act of 1976.”

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October 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, October 14, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new paper by Louis Kaplow (Harvard), A Distribution-Neutral Perspective on Tax Expenditure Limitations, 31 Tax Policy and the Economy (Robert Moffitt, ed., forthcoming 2017).

Glogower (2016)Louis Kaplow’s new article extends his distribution-neutral framework for analyzing tax reforms, as developed in prior works, to the context of reforms limiting tax expenditures. Kaplow argues that this framework allows for more rigorous analysis of tax expenditure policy, and yields substantive insights challenging common assumptions about the benefits of limiting expenditures.

In the distribution-neutral framework, a reform is evaluated alongside an offsetting adjustment to the income tax schedule that washes out distributive effects in two steps: The schedule is first adjusted to leave taxpayers at same level of disposable income (Step 1), and then adjusted further to hold their utility constant (Step 2). In other words, if a reform increases utility by eliminating a consumption distortion, Step 2 will raise the tax rate to restore utility to the pre-reform level. 

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October 14, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Law Profs At Chicago, Harvard And Michigan Turn To 'Hamilton' As A Teaching Tool

Hamilton 3Continuing my obsession with interest in Hamilton (links below):  National Law Journal, Law Profs Turn to Hamilton (Yes, the Musical) as Teaching Tool:

What can law students learn from the hit musical “Hamilton”?  Quite a bit, according to University of Chicago Law School Professor Will Baude, who made the musical’s recent arrival in the Windy City the centerpiece of his welcome address to new law students last month.

No, dueling is not a great idea. But the Tony Award-winning show, which follows the life of Founding Father and real-life lawyer Alexander Hamilton, offers three life lessons for aspiring attorneys, Baude said last month. It illustrates the value of challenging conventional wisdom; the importance of friendships and personal connections in one’s career; and the utility of viewing the law as a separate world—not just as a tool to achieve certain outcomes.

Baude is one of a growing number of legal academics bringing “Hamilton” into the classroom, questioning the accuracy of Hamilton’s pop-culture portrayal, and mining the show for context on modern-day politics. ... Here is a sampling of how other law professors [Annette Gordon-Reed (Hatvard) (Hamilton: The Musical: Blacks and the Founding Fathers), Richard Primus (Michigan) (Will Lin-Manuel Miranda Transform the Supreme Court?), Laurence Tribe (Harvard) (Hamilton Takes Harvard)] are bringing “Hamilton” into their teaching and writing.

The New York Times has a gripping piece on the influence of the play on the artistic director of the theater: ‘Hamilton’ and Heartache: Living the Unimaginable:

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October 14, 2016 in Legal Education | Permalink | Comments (1)

Trump's Estate Tax Plan Would Raise GDP, Incomes By 1%; Clinton's Would Shrink GDP, Incomes By 1%

Clinton TrumpWall Street Journal op-ed: Killing the Death Tax Would Resurrect Growth, by Stephen J. Entin (Tax Foundation):

The death tax is an inevitable point of disagreement in a presidential campaign. Donald Trump would eliminate it to promote growth. Hillary Clinton would raise it—up to 65%, while lowering the exemption for estates to $3.5 million—to promote equality. The outcomes would be as different as their intentions. ...

Analysts at the Tax Foundation, where I work, have run the numbers using two models: one of the estate tax, based on historical filings, and another to estimate the economic effects on capital formation, GDP, profits, wages and federal revenue from those sources.

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October 14, 2016 in Political News, Tax | Permalink | Comments (16)

Weekly Legal Education Roundup

Dan Markel's Parents Discuss With Prosecutors Emergency Placement Of Their Grandchildren Upon Forthcoming Arrests Of Adelsons

Wendi With ChildrenWCTV, Email in Markel Case Suggests Additional Arrests Forthcoming:

An email has surfaced in the murder case of Florida State University professor Dan Markel.

The email was sent by Dan Markel's mother Ruth to lead prosecutor Georgia Cappleman on September 30th. The email was included with court documents recently released in the case. It is not clear if the email was intentionally included in the documents or released by mistake.

In the email, Ruth Markel discusses a "tight plan for emergency placement due to arrests" with Cappleman, appearing to refer to a plan for Dan Markel's children in the event that Markel's in-laws, the Adelsons, are arrested in the case.

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October 14, 2016 in Legal Education | Permalink | Comments (12)

Treasury Issues Final Section 385 Debt-Equity Earnings-Stripping Regs

Treasury Department Logo (2017)After the Treasury Department submitted the proposed final section 385 debt-equity regulations on earnings-stripping to the White House Office of Management and Budget on September 30 for its 90-day review, Republicans on the House Ways & Means Committee (on October 5) and Senate Finance Committee (on October 11) requested that the regulations not be issued in haste without addressing their concerns.  Yesterday, the Treasury Department and IRS issued the final regulations:

Press and blogosphere coverage:

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October 14, 2016 in IRS News, Tax | Permalink | Comments (0)

Merritt:  Law Schools Should Attack The Diversity Problem By Freezing Faculty Salaries, Eliminating Summer Research Grants To Lower Tuition For Minority Students

Bloomberg Law op-ed:  How to Attack the Legal Profession’s Diversity Problem, by Deborah Jones Merritt (Ohio State):

This month the ABA’s Council, which bears responsibility for accrediting law schools, will consider a proposal to tighten the accreditation standard governing bar passage. The proposed standard is a modest one: It requires simply that three-quarters of a school’s graduates who choose to take the bar exam pass that exam within two years of their first try.

Opponents of the proposal argue that it will diminish diversity in the legal profession. They draw upon data showing that minority applicants pass the bar at lower rates than their white peers. Requiring law schools to meet this modest bar passage standard, they suggest, will close down schools that enroll a substantial number of minority students.

Some of these claims are well intentioned, but they are misguided. They endorse a system of legal education in which minority students disproportionately enroll at low-ranked law schools, pay top tuition to attend those schools, and fail the bar exam at distressingly high rates. This is not a recipe for diversifying the legal profession.

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October 14, 2016 in Legal Education | Permalink | Comments (32)

The IRS Scandal, Day 1254

IRS Logo 2The Daily Caller, Obama’s Tax Lawyers Had Conservative Groups’ Confidential Information:

President Barack Obama’s White House hired at least two Department of Justice (DOJ) attorneys who accessed conservative groups’ confidential taxpayer information while defending the Internal Revenue Service (IRS) during the targeting scandal.

The two were among 10 Justice Department Tax Division lawyers Obama has kept on the White House staff without taxpayer privacy training since April 2009, nonprofit government watchdog Cause of Action Institute (CofA) said in a report made public Wednesday [Presidential Access to Taxpayer Information].

Obama “is the first president to have recruited litigation specialists from the DOJ Tax Division, some of whom had knowledge of confidential taxpayer information concerning his political opponents,” the report said. “The DOJ has supplied a regular stream of Tax Division lawyers to the Obama White House for more than seven years, all without any apparent guidance or safeguards to ensure against the unauthorized disclosure of taxpayer information.”

Using Department of Justice tax lawyers may be unique to the current White House, but for “nearly as long as the IRS has existed, presidents have weaponized it against their foes,” the report said. “The Obama administration has made frequent and damaging use of the IRS as a political weapon.”

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October 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, October 13, 2016

David Gamage Leaves UC-Berkeley For Indiana

Gamage (2017)David Gamage (UC-Berkeley) has accepted a lateral offer to join the Indiana law faculty in the fall (announcement). After graduating from Stanford in 2000 (B.A. Economics, M.A. Economic and Organizational Sociology), he worked for Bain Capital before earning his J.D. in 2005 from Yale. He was an Emerging Scholars Program Fellow at Texas in 2005-07 and joined the UC-Berkeley law faculty in 2007. He served as Special Counsel and Senior Stanley S. Surrey Fellow in the Treasury Department's Office of Tax Policy in 2010-12. His publications include:

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October 13, 2016 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Facebook Pledges To Comply With 'Extraordinarily Broad' IRS Summons, Fight $5 Billion Tax Deficiency From 'Double Irish' Maneuver

Facebook (2016)Bloomberg, Facebook Continues Fight Over U.S. Taxes After Ireland Move:

Facebook Inc. is carrying on its fight with the U.S. Internal Revenue Service over taxes relating to its transfer of global operations to Ireland in 2010 even as the social media giant pledged cooperation with the government’s investigation.

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October 13, 2016 in Tax | Permalink | Comments (1)

Male Law Firm Partners Make 44% More Than Female Partners (949k v. 659k)

Gordon, Joulfaian & Poterba:  Choosing Between An Estate Tax And A Basis Carryover Regime — Evidence From 2010

Robert Gordon (NYU), David Joulfaian (U.S. Treasury Department) & James M. Poterba (MIT), Choosing Between an Estate Tax and a Basis Carryover Regime: Evidence from 2010:

Executors of estates for decedents in 2010 could choose between an estate tax regime and a basis carry-over regime. For most executors, this created a tradeoff between a current estate tax payment and a future capital gains tax liability for beneficiaries who inherited assets with carryover-basis. Various features of a decedent’s estate, including the gross value of assets, outstanding debts, whether the decedent resided in a state with an estate tax, and the basis of assets held at the time of death, affected the relative tax burden under the two regimes. Some executors chose to file estate tax returns for decedents from 2010, but these estate tax filings resulted in very little estate tax revenue. Estate tax filers had more leverage, were more likely to be from a state with an estate tax or from married decedents, were less likely to have made lifetime gifts, and had larger charitable bequests — all factors that are associated with reduced estate tax liability.

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October 13, 2016 in Scholarship, Tax | Permalink | Comments (0)

Wendi Adelson's Attorney Questions Credibility Of Hit Man's Statement Implicating Ex-Wife In Dan Markel's Murder

Rivera WendiTallahassee Democrat, Wendi Adelson's Attorney Questions Rivera's Credibility:

Wendi Adelson’s attorney is questioning the credibility of a statement prosecutors say could implicate her in the murder-for-hire plot of her ex-husband Dan Markel.

In a statement to police, Luis Rivera – one of two men charged in Markel’s July 2014 shooting – said he and Sigfredo Garcia drove by Adelson near Markel’s Trescott Drive home the day before the murder.

On Tuesday, Assistant State Attorney Georgia Cappleman said the chance sighting could implicate Adelson as a player in the plot.

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October 13, 2016 | Permalink | Comments (1)

Field:  Aggressive Tax Planning And The Ethical Tax Lawyer

Heather M. Field (UC-Hastings), Aggressive Tax Planning & the Ethical Tax Lawyer, 36 Va. Tax L. Rev. ___ (2017):

Can a tax planner be both ethical and aggressive? When a client wants help with a transaction in which the lawyer thinks the tax benefits will probably not be sustained on the merits if challenged, what is the ethical response? How low should the tax adviser go?

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October 13, 2016 in Scholarship, Tax | Permalink | Comments (0)

The University Of California’s Extraordinary Legal Battle With Ex-Berkeley Law School Dean

ChoudryFollowing up on my previous posts (links below): San Francisco Chronicle, UC’s Extraordinary Legal Battle With Ex-Berkeley Law School Dean:

A lawsuit filed against the University of California raises the extraordinary question of whether UC’s efforts to hold the former dean of one of the nation’s top-ranked law schools accountable for violating its sexual harassment policy are, in fact, illegal.

The claim comes from Sujit Choudhry, a tenured law professor who resigned as dean of the UC Berkeley School of Law on March 10, two days after his former assistant claimed in her own lawsuit that he hugged, kissed and touched her repeatedly against her wishes in 2014 and 2015 and that campus officials did nothing to stop it.

Campus investigators had already determined in July 2015 that Choudhry violated UC’s sexual harassment policy. As punishment, UC Berkeley officials temporarily reduced his pay by 10 percent — from $415,000 to $373,500 — and ordered him to apologize and seek counseling.

That punishment was too light, UC President Janet Napolitano decided in March when she learned of the case — the latest in a string of high-profile sexual harassment incidents at UC Berkeley. Anger had reached a boiling point among students, faculty and the public over what critics saw as the school’s long tolerance of offensive behavior. Similar cases had made news across the country, creating a public perception that campuses willing to strongly discipline sexual harassers were good institutions, while those that did too little were not.

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October 13, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1253

IRS Logo 2Tax Notes, Koskinen Impeachment Paused but Not Forgotten as Elections Near:

The House's extended recess appears to signal a respite from, if not an end to, the 114th Congress's months-long push to impeach IRS Commissioner John Koskinen.

The effort has been directed by conservatives outraged over claims that the IRS targeted Tea Party and other conservative groups for extra scrutiny when they applied for tax-exempt status. The drive sputtered to a halt in late September after pro-impeachment congressmen traded their privileged motion on the House floor for an impeachment hearing in the House Judiciary Committee.

That three-and-a-half-hour hearing on September 21 rehashed accusations that Koskinen had deliberately misled and lied to congressional investigators looking into the targeting controversy. However, the hearing didn't uncover anything substantially new, it didn't seem to change any minds on the committee, and it offered no resolution to the impeachment inquiry, such as a vote by the Judiciary Committee asking the full House to impeach.

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October 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, October 12, 2016

Laura Rosenbury Stakes Her Deanship On Raising Florida's Ranking To #35; Amidst Claims Of Sexism, Her Regime Comes Under Fire, With The Graduate Tax Program Its Flashpoint

Rosenberry (2016)Following up on my previous posts (links below) on the turmoil at the University of Florida College of Law:  Chronicle of Higher Education, As U. of Florida Law Dean Calls Out Sexism, Her Rankings-Driven Regime Comes Under Fire:

An alumnus in Orlando told her he didn’t remember a dean with "legs like that."

The star editor of the law review described her as "young and vivacious," parroting a phrase he’d picked up from his mentor.

Faculty members and graduates have called her a careerist, whose singular focus on national rankings has come at the expense of collegial consultation and respect for beloved professors.

This is the turbulent and lately tortured world of Laura A. Rosenbury, the first woman to lead the University of Florida’s Fredric G. Levin College of Law. Ms. Rosenbury has sought to shake up a 107-year-old school with a reputation that is more often described as good than great. She has staked her deanship on a promise to move the school up 13 spots in the U.S. News & World Report rankings, which would bring Florida to No. 35. It could all happen, Ms. Rosenbury says, as soon as 2019. That is, if the dean and the Gator faithful don’t devour each other first.

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October 12, 2016 in Legal Education, Tax | Permalink | Comments (14)

Mason Presents Citizenship Taxation Today At Pennsylvania

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation, 89 S. Cal. L. Rev. 169 (2016), at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

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 migrant.

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October 12, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

What Would An Efficient Market For Law Schools Look Like?

Bales 2TaxProf Blog op-ed: What Would an Efficient Market for Law Schools Look Like?, by Rick Bales (Former Dean, Ohio Northern):

As the U.S.’s 200-odd ABA-accredited law schools endure a sixth year of admissions and enrollment pain, their response to the market downturn has not been what one would expect in an efficient market. In an efficient market, one would expect to see some combination of the following from oversupply, weak demand, and a plethora of suppliers:

  • Innovation and Differentiation. Considerable market differentiation should result as schools try to find a niche in which they can command a premium price, because chasing a declining demand is, in the long term, a losing proposition. However, except for some tinkering at the LL.M. and Master’s-level margins, law schools still look remarkably the same.
  • Budget Cuts. Most affected law schools have cut their budgets, but not necessarily in ways that efficient markets would predict. Companies experiencing a sustained downturn in demand tend to make the first cuts to high-cost areas that are unlikely to affect future survival. In higher education, personnel costs are the biggest expense, but instead of focusing on efficiency or cutting across the board, most law schools have cut staff first, then non-tenure-track faculty, then tenure-track-but-not-yet-tenured faculty. Staff cuts (especially to admissions, placement, and academic support) and the elimination of junior faculty through hiring freezes and layoffs may have been politically palatable, but amount to eating the seed corn.
  • Closures and Consolidation. An industry with 200+ market participants experiencing a 50% sustained decline in demand should expect some – probably many – of the weakest firms to close, but that hasn’t happened with law schools. Likewise, one would expect industry consolidation, as the strongest schools jostle for market share and the middling schools seek efficiency through growth. Again, that hasn’t happened.
  • Realignment of Supply with Demand. In a world where Blackberry has gone from market leader to obsolescence in a few years, six years is more than enough time for law schools to have adjusted to the new normal. Instead, many if not most schools are still operating at half capacity and a significant financial loss, and are nominally charging (but also discounting) twice the tuition that the market is willing to pay.

What gives?

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October 12, 2016 in Legal Education | Permalink | Comments (5)

Johnston:  Who Else Doesn't Pay Taxes?

David Cay Johnston, Who Else Doesn't Pay Taxes?:

A big and important story about America’s failing tax system lurks in the revelation (which Donald Trump seemed to confirm in Sunday’s debate) that he had tax losses that could allow him to spend almost $4 million a month for nearly two decades while paying no federal income taxes.

Trump is part of a growing wave of people who enjoy lavish lifestyles, but pay little or no federal income taxes, my analysis of the official tax data going back two decades shows. There are enough of them that they even have their own IRS nickname.

The taxes paid by most Americans subsidize those who do not pay — including a strikingly high number of affluent, not poverty stricken, Americans. Let’s take a look at the latest IRS data, which I have analyzed annually for more than two decades.

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October 12, 2016 in IRS News, Tax | Permalink | Comments (21)

Update: Hit Man Implicates Wendi Adelson In Dan Markel's Murder

Sen. Hatch Demands Treasury Clarify Use Of Secret Memo In Section 385 Debt-Equity Regs

Senate LogoFollowing up on my previous post, Sen. Hatch Demands Release Of Secret Reagan-Era DOJ Tax Memo Supporting Obama's Expansive Use Of Presidential Power:  Press Release, Hatch Demands Treasury Clarify Use of Secret Memo Regarding Section 385 Debt-Equity Regulations:

Now Public Memo of Agreement Used to Justify Absence of Economic Impact Analysis for Proposed Regulations

Senate Finance Committee Chairman Orrin Hatch (R-Utah) today wrote to Treasury Secretary Jack Lew with a series of questions regarding a long-secret Memorandum of Agreement (MOA) with the Office of Management and Budget (OMB) concerning the economic and regulatory effects of tax regulations.  The Treasury Department uses the memo, recently made public at Chairman Hatch’s urging, to justify forgoing a cost-benefit analysis required by federal law and executive order when issuing tax regulations, including proposed regulations relating to the Internal Revenue Code’s section 385 debt-equity rules.  

“Today, I write to 1) set forth the details of that MOA and request information on its use, and 2) raise additional questions concerning the proposed regulation and the Treasury Department’s unusual process in moving toward a final rule,” Hatch wrote. “These issues matter a great deal to me because federal regulations have grown in quantity and scope to unprecedented levels in recent decades, and tax regulations are no exception.”

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October 12, 2016 in IRS News, Tax | Permalink | Comments (1)

Online Law School Rankings

Online35 Best Online Law Schools:

  1. Villanova:  Villanova University offers an LL.M. in Taxation fully online. ... This degree is available 100 percent online and is taught in an interesting manner. Although most of the courses are asynchronous, there are debates, discussions, and class activities that are done in real-time on an almost weekly basis. This allows students to study on their own time and bring their knowledge and perspective to share with their class at appointed intervals. ... Students will also have the opportunity to partake in study and tutoring groups, do research with the help of the school’s online law library, speak with online advisors, and more. It is the best tax program for any lawyer in the country, and the overall experience of attending Villanova makes it the top pick for this ranking.
  2. Washington University
  3. USC
  4. NYU
  5. Florida
  6. Boston University
  7. George Washington
  8. Illinois
  9. Pittsburgh
  10. Tulsa

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October 12, 2016 in Law School Rankings, Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 1252

IRS Logo 2USA Today editorial, Impeachment Won't Reform IRS:

You have to give a band of conservative Republicans known as the House Freedom Caucus credit for one thing: No matter how bad one of their ideas is, they never quit.

Right now, they’re battling the Obama administration, House Democrats, their own leadership and Republican moderates to push a futile and absurd effort to impeach IRS Commissioner John Koskinen. ...

While the allegations against Koskinen are serious, wiser Republicans know they are not the stuff of impeachment. In fact, the underlying issue that has driven impeachment goes back years: the agency’s misuse of its immense powers to target conservative groups. It occurred before Koskinen was even at the agency.

He was brought in to clean up the mess after revelations in 2013 that the agency’s tax-exempt division had singled out conservative organizations, including Tea Party groups, because of their political beliefs. The IRS sent the groups burdensome inquiries and delayed their applications for tax exemption, actions that President Obama acknowledged were “intolerable and inexcusable.”

Congress investigated, and high-level officials were forced out. The FBI also investigated but found no criminal wrongdoing, a finding Republicans have found hard to swallow.

Certainly, the public deserves to know exactly what happened, see the relevant records, and be convinced that it won't happen again. Instead, Koskinen’s “cleanup” has raised more suspicions. It has been marred by disappearing emails and bungled searches for backups. Federal court rulings excoriated the agency for secrecy.

A few months ago, the agency was still stonewalling. In March, the 6th U.S. Circuit Court of Appeals  blasted the IRS for resisting “at every turn” a judge’s orders to disclose a list  of the groups targeted. And just last month, a federal appeals court in the nation’s capital revived a lawsuit against the IRS by conservative groups that had been targeted. A three-judge panel cited the agency’s own admission that two groups still had not gotten their tax exemption, years  after seeking it. The IRS’ excuse? Because the groups had sued the agency.

Republicans have good reason to want the IRS to come clean and release any documents that shed light on what happened. But impeachment of a man who wasn't even there when the scandal occurred? No. ...

There are plenty of things the IRS needs — more money to provide better customer service and combat ID fraud, a simpler tax code to administer, and reforms to ensure it will never again target anybody for political beliefs. Republicans would do better to turn to the serious work of governing than to press a frivolous impeachment vote.

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October 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, October 11, 2016

Zelenak Presents Tax-Free Basis Step-Up At Death And The Charitable Deduction Of Unrealized Appreciation Today At Columbia

Zelenak (2016)Lawrence Zelenak (Duke) presents The Tax-Free Basis Step-Up at Death, the Charitable Deduction for Unrealized Appreciation, and the Persistence of Error at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

This essay recounts, as a study in the remarkable persistence of some early errors even when the errors were promptly recognized and addressed, the legislative and administrative histories of the tax-free basis step-up at death and the charitable deduction for unrealized appreciation.

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October 11, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Presidential Campaign Tax News

WSJ:  Law Firms Demote Partners as Pressure Mounts Over Profits

WSJ 2Wall Street Journal, Law Firms Demote Partners as Pressure Mounts Over Profits:

Faced with client pressure to keep down costs and industry competition to achieve the highest profits, law firms now frequently assess which lawyers are worthy enough for the top rungs of partnership. Those who don’t bill enough hours or bring in enough business are quietly asked to leave or demoted from the so-called equity tier.

In a survey of law firm leaders from late last year by legal trade publication the American Lawyer, 56% said they planned to take away equity from partners in the coming year, and 67% said they planned to ask partners to leave. ...

Law firms have been demoting and cutting partners since even before the recession, say consultants and others close to the industry. Initial rounds focused on the truly dead weight—partners who enjoyed the title and prestige but didn’t pull in enough revenue.

Demand for legal services never fully bounced back after the downturn, causing firms to trim even further. These days, even partners with strong legal skills and a few clients aren’t making the grade. ... The past year and a half has seen “pervasive” trimming of partners at the nation’s top 100 law firms, said legal consultant Peter Zeughauser.

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October 11, 2016 in Legal Education | Permalink | Comments (3)

Kahn & Kahn:  The Fallacious Objections To The Tax Treatment Of Carried Interest

Florida Tax Review  (2015)Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), The Fallacious Objections to the Tax Treatment of Carried Interest, 18 Fla. Tax Rev. ___ (2016):

Carried interest is the term used to describe a profits interest in a partnership that invests in entities. A managing partner typically will receive a 20% profits interest in exchange for managing the investments of the partnership. The complaint against the treatment of carried interest is aimed at the characterization of the managing partner's share of the partnership's subsequent capital gains. The contention is that since the managing partner receives her share of the partnership's income for services performed, she should be taxed at ordinary income tax rates rather than the preferentially lower capital gains rate.

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October 11, 2016 in Scholarship, Tax | Permalink | Comments (1)

Hit Man Implicates Wendi Adelson In Dan Markel's Murder

Rivera WendiFollowing up on my previous post, Prosecutors Zero In On Adelson Family After Plea Deal With Hit Man, Arrest Of Accomplice In Markel Murder:  the Tallahassee Democrat has published an explosive 99-minute video of the prosecutors' interview of hit man Luis Rivera.  Rivera states (beginning at 11:06:17 of the video) that he and hit man Sigfredo Garcia saw Wendi Adelson walking the children in front of Dan Markel's home the day before the murder and that Wendi was making sure that the hit men were there to kill Dan before he left on a flight the following day:

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October 11, 2016 in Legal Education | Permalink | Comments (46)

The Practical Tax Lawyer Issues Call For Articles

Practical Tax LawyerThe Practical Tax Lawyer, published by ALI-CLE and supported by the ABA Tax Section, has issued a call for "how-to" or “intro to” sorts of articles that are oriented towards the general practitioner:

We especially welcome articles that help practitioners think about how to deal with any recent changes in the law, regulations, or IRS litigating position that might affect a tax practice. PTL articles tend to be very short (3,000-5,000 words).

Here are the submission deadlines for each issue:

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October 11, 2016 in Scholarship, Tax | Permalink | Comments (0)

Being A Scholar In The Digital Era

ScholarJessie Daniels (CUNY) & Polly Thistlethwaite (CUNY, Being a Scholar in the Digital Era: Transforming Scholarly Practice for the Public Good (University of Chicago Press 2016):

What opportunities, rather than disruptions, do digital technologies present? How do developments in digital media not only support scholarship and teaching but also further social justice? Written by two experts in the field, this accessible book offers practical guidance, examples, and reflection on this changing foundation of scholarly practice. It is the first to consider how new technologies can connect academics, journalists, and activists in ways that foster transformation on issues of social justice. Discussing digital innovations in higher education as well as what these changes mean in an age of austerity, this book provides both a vision of what scholars can be in the digital era and a road map to how they can enliven the public good.

Inside Higher Ed, The Tech-Enabled Scholar:

Q: On the topic of metrics: as you point out, few (if any) academic departments use altmetrics in tenure and promotion cases. We’ve seen the same sort of hesitancy when it comes to evaluating digital scholarship more broadly. Do you feel that colleges have been right to wait it out while these evaluation methods mature, or should they have taken a more active role?

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October 11, 2016 in Book Club, Legal Education, Scholarship | Permalink | Comments (0)