TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Sunday, October 18, 2015

Crossroads Cincinnati

CrossroadsI learned this week that Crossroads, our former church in Cincinnati, is now the fastest growing church and the ninth largest church in America. This is a special weekend at Crossroads, as they cast their vision for the future:

Continue reading

October 18, 2015 in Legal Education, Miscellaneous, Tax | Permalink | Comments (1)

The IRS Scandal, Day 892

IRS Logo 2Media Tracker, GAB Official’s Relationship with IRS’s Lerner Spanned Personal to Professional:

E-mails obtained by a Republican lawmaker and a conservative organization, along with travel records and expense reports portray a wide-ranging relationship between Wisconsin’s controversial top elections official and the disgraced former head of the federal Internal Revenue Service’s tax-exempt division. The relationship between Kevin Kennedy, head of the Government Accountability Board, and Lois Lerner, the Obama Administration IRS official who used her perch to harass and threaten conservative non-profit groups, was first revealed by the Wall Street Journal and further explained by the MacIver Institute.

But the entire story found in the numerous e-mails – and verified by state travel records – has never been fully told.

Kennedy has been extremely defensive about his interaction with Lerner, accusing a state senator of being like U.S. Sen. Joe McCarthy, the Wisconsin senator who fear-mongered about communists in government in the 1950s, when that senator asked Kennedy this week about the nature of the relationship.

State Rep. Dave Craig, a Republican who is leading the fight to reform Wisconsin’s John Doe investigation process, first obtained e-mails between Kennedy and Lerner in an open records request. Under Kennedy’s leadership, the GAB worked in tandem with the Milwaukee County District Attorney’s office to use the state’s current John Doe law to harass, investigate and bully conservatives. The e-mails were also obtained by True the Vote, a conservative Texas-based election watchdog that was targeted by Lerner and the IRS. True the Vote also obtained several years’ worth of Kennedy’s travel schedules.

The e-mails show that Kennedy and Lerner, in addition to sending each other a few e-mails about professional work, would share travel details – including hotel addresses – with each other and circulate random photographs and generic poems with a tight circle of acquaintances. ...

Although Kennedy may think his relationship with Lerner is off-limits to questioning, simply dismissing it as McCarthyism doesn’t explain why Wisconsin’s top elections official would work so closely with an IRS official who had to leave her job in the Obama Administration because of her targeting of conservative organizations. Kennedy’s own work targeting conservatives may offer more insight than his manufactured outrage in front of a legislative committee.

Continue reading

October 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, October 17, 2015

This Week's Ten Most Popular TaxProf Blog Posts

How Well Do Law Schools Teach Business And Financial Concepts?

Carole Silver (Northwestern) & Louis Rocconi (Indiana), Learning from and About the Numbers, 5 J. of Law (4 J. Legal Metrics) 53 (2015):

In this article, we enter the debate about the value of legal education, taking aim at the issue of the ways in which law schools prepare students for practice. But rather than focusing on skills training, our concern is with the approach of law schools to preparing students to understanding the context of the legal issues they will encounter, and specifically on their preparation for working with numbers, whether with regard to business, finance or information presented in statistical form generally.

Continue reading

October 17, 2015 | Permalink | Comments (4)

NY Times: Yes, Soda Taxes Cut Soda Drinking

Diet CokeNew York Times, Yes, Soda Taxes Seem to Cut Soda Drinking:

For about a decade now, policy makers and the soda industry have been fighting about the idea of a big soda tax. Proponents say it would fight obesity by reducing consumption of sugary drinks. A leading objection by the industry is that the tax simply would not work.

Those discussions were largely theoretical, because no big city, state or country had passed the kind of tax that advocates wanted.

That recently changed. In 2013, Mexico passed a tax right out of the public health literature. And now the theoretical debate is becoming more real. Preliminary data from the Mexican government and public health researchers in the United States finds that the tax prompted a substantial increase in prices and a resulting drop in the sales of drinks sweetened with sugar, particularly among the country’s poorest consumers. The long-term effects of the policy remain uncertain, but the tax is being heralded by advocates, who say it could translate to the United States.

“It’s exactly what we thought the tax would do,” said Barry Popkin, a professor of nutrition at the University of North Carolina, whose team conducted the research.

Continue reading

October 17, 2015 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 891

IRS Logo 2Washington Post op-ed:  Democrats Protect Each Other Better Than Republicans Do, by Ed Rogers:

The fix is in. No less then the leader of the Democratic Party — that is, the current president of the United States of America — has declared that the matter of Hillary Clinton’s home-brew server and e-mail escapades is political in nature and of no harm to national security. That is remarkable, given that any honest outside observer would not draw the same conclusion and that even many of the usual suspects in the media have been tempered in their efforts to vindicate Hillary Clinton. ‎Not to mention, just as President Obama essentially gave Clinton a get-out-of-jail-free card, it turns out that the FBI is actually expanding the scope of its probe to include possible violations of an Espionage Act provision that refers to gross negligence in handling classified information — a violation that could be punishable by up to 10 years in prison.

While the president’s definitive declaration on “60 Minutes” that he didn’t think Hillary Clinton’s e-mail situation “posed a national security problem” reportedly “angered FBI agents” working the case, it’s not like the president hasn’t done this before. Remember his assertion that there was “not even a smidgen of corruption” regarding the IRS targeting scandal? Well, that scandal is also still being investigated — but conveniently for the president, the person in charge of that investigation is a partisan Democratic donor, Justice Department lawyer Barbara Bosserman. ‎I guess as long as the president’s former employee Lois Lerner continues to take the Fifth and Barbara Bosserman continues to be in the lead, the smidgens will stay locked out of sight. If the FBI didn’t get the message yesterday with the president’s direct order that the conclusion on Hillary’s e-mails should be that it “is not a situation in which America’s national security was endangered” and they get too close to the truth, maybe the White House will put Bosserman in charge of the e-mail investigation as well, just to make sure everything comes out the way the president wants it to.

Continue reading

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

Friday, October 16, 2015

Number Of Law Schools Interviewing Faculty Candidates At Meat Market Is Up 10% Over Last Year (But Down 37% From 2012)

AALS (2017)Sarah Lawsky (UC-Irvine) reports that the number of schools interviewing faculty candidates at this week's AALS Faculty Recruitment Conference (89) is up 10% over last year, but down 37% from 2012 (142).

October 16, 2015 in Legal Education | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Big Red Is Really Big Blue: 96% Of Cornell Faculty Political Contributions Go To Democrats; Law Profs Give Most (26%) To Republicans

COrnell 2Cornell Daily Sun, Cornell Faculty Donations Flood Left, Filings Show:

Of the nearly $600,000 Cornell’s faculty donated to political candidates or parties in the past four years, over 96 percent has gone to fund Democratic campaigns, while only 15 of the 323 donors gave to conservative causes.

The Sun’s analysis of Federal Election Committee data reveals that from 2011 to 2014, Cornell’s faculty donated $573,659 to Democrats, $16,360 to Republicans and $2,950 to Independents. Each of Cornell’s 13 schools — both graduate and undergraduate — slanted heavily to the left. In the College of Arts and Sciences, 99 percent of the $183,644 donated went to liberal campaigns. The law school demonstrated the strongest conservative showing, with nearly 26 percent of its approximately $20,000 worth of donations going to Republicans.   

Almost one-third of donations made over the past four years went to 2012 presidential campaigns. More than 94 percent of the $200,000 Cornellians contributed to the presidential race went to the Obama Victory Fund, while the Romney Victory Fund received under four percent of these funds. ...

Continue reading

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

5th Annual NYU/UCLA Tax Policy Symposium: Tax And Entrepreneurship

UCLA NYUThe Fifth Annual NYU/UCLA Tax Policy Symposium on Tax and Entrepreneurship takes place beginning at 9:00 a.m. PST today at UCLA (live webcast):

Goals and Design Principles
Eric Allen (USC) & Susan C. Morse (Texas), How Should We Use the Tax System to Encourage Entrepreneurship?
Commentators:  Roger H. Gordon (UC-San Diego), Theodore Seto (Loyola-L.A.)
Moderator:  Steven Bank (UCLA)

Continue reading

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

Brooklyn Hosts Symposium On Reconsidering the Tax Treaty

Brooklyn (2015)The Dennis J. Block Center for the Study of International Business Law at Brooklyn Law School hosts a symposium next Friday, October 23, on Reconsidering the Tax Treaty:

In just a few years, the foreign tax credit will celebrate its 100th birthday. That legislative action paved the way toward our modern network of reciprocal tax measures. The international tax regime grew into a tall oak from that small acorn, but recently has begun to show its age. Will today’s efforts — from BEPS to FATCA — reinvigorate the tax treaty or help us move past it?

Panel #1:  Allocating Taxing Jurisdiction in a Stateless World

Continue reading

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

WSJ: Courts Toss Out Lawsuits By Jobless Law Grads Who Sued Law Schools Over Misleading Placement Data

Wall Street Journal, Jobless Graduates Who Sued Law Schools Find Little Success in Court: Suits Accusing Schools of Deception Over Job Prospects Have Been Knocked Out:

Disgruntled law-school graduates who filed suits accusing their alma maters of deceiving them about their chances of landing a well-paying job haven’t had much success in court.

More than a dozen class actions were filed in 2011 and 2012, but courts across the country have knocked out the lawsuits one by one, including a recent dismissal in Florida. Only a few remain.

Continue reading

October 16, 2015 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 890

IRS Logo 2Breitbart, Ben Carson’s Book Tour Threatens to End Civilization As We Know It:

Ben Carson is going to suspend his presidential campaign for two weeks to hawk his book! This is unprecedented! It shows he’s not serious about running for president! It proves he doesn’t understand anything about how politics works! It’s the end of the world as we know it, and nobody feels fine!

“Sen. John McCain suspended his presidential campaign for a financial crisis. Famed neurosurgeon Ben Carson is doing so for a book tour,” gasped the Huffington Post. The notion that Carson was “suspending” his campaign appeared in headlines and news stories across the Internet. ...

In the ABC report, Carson spokesman Doug Watts explained that leaving the campaign staff behind while Carson spends a few days focusing on his book tour alleviates concerns about “co-mingling from the corporate standpoint to the Federal Election Commission standpoint so it’s just better to avoid any bad appearance.”

Does anyone, post-IRS scandal, think it’s a bad idea for Republican candidates to be extra-careful about attracting the interest of Obama Administration regulatory agencies? Does everyone remember which agency IRS scandal kingpin Lois Lerner worked for, before she signed up with Internal Revenue?

Continue reading

October 16, 2015 in IRS News, IRS Scandal, Political News, Tax | Permalink | Comments (1)

Thursday, October 15, 2015

Oei Presents The Tax Lives Of Uber Drivers Today At Brooklyn

OeiShu-Yi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) at Brooklyn today as part of its Faculty Workshop Series:

In this paper, we investigate the tax issues and challenges faced by ridesharing drivers by examining their interactions in three internet discussion forums:,, and the Intuit TurboTax AnswerXchange Forum. We subjected the data to quantitative analysis using descriptive statistics and qualitative content analysis, in order to generate a comprehensive description of what tax issues and concerns forum participants face, how taxes factor into their driving decisions, and how tax compliance and advising culture operates in the forums.

Continue reading

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

NY 'Mansion Tax' Spurs Sales Of Condos For $999,000: 'Tax Policies Are Strong Motivators To Modify Human Behavior'

New York Times, This Apartment Is Not $1 Million. It’s Only $999,000.:

NY TimesThis month, the median price for an apartment in Manhattan reached nearly $1 million, with reports from the Corcoran Group and Douglas Elliman brokerage firms placing the price for a typical home at $999,000 and $998,000, respectively. That number may soon rise into the seven figures. Yet even if prices continue to soar, the number of apartments marketed at just under a million dollars is likely to persist.

As impressive as a million-dollar listing might sound, there are plenty of reasons to avoid one. After all, in New York real estate, a thousand dollars is never just a thousand dollars, especially where a million dollars is concerned.

“The first thing on anyone’s mind at this price is the mansion tax,” Matteo Rignanese, the founder of the 2NYC brokerage firm, said during a tour of a two-bedroom, two-bath railroad apartment on West 47th Street he recently listed for $999,000. “Not that a million dollars buys you a mansion anymore.”

Though in Manhattan these days it might better be called the Swanky Studio Tax, the mansion tax was introduced during the first Cuomo administration in 1989. The name was meant to make the tax palatable, since, at the time, $1 million was a lot of money for a home.

Continue reading

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

Cockfield: Big Data And Tax Haven Secrecy

Florida Tax Review  (2015)Arthur J. Cockfield (Queen's University), Big Data and Tax Haven Secrecy, 18 Fla. Tax Rev. ___ (2016):

While there is now a significant literature in law, politics, economics, and other disciplines that examines tax havens, there is little information on what tax haven intermediaries — so-called offshore service providers — actually do to facilitate offshore evasion, international money laundering and the financing of global terrorism. To provide insight into this secret world of tax havens, this Article relies on the author’s study of big data derived from the financial data leak obtained by the International Consortium for Investigative Journalists (ICIJ).

Continue reading

October 15, 2015 in Scholarship, Tax | Permalink | Comments (2)

Harrison: Oldsters, Charity, And Scholarly Innovation

Jeffrey Harrison (Florida), Oldsters, Charity, and Innovation:

Two things I have seen on blogs lately seem to me to be related. One is this great post in the tax prof blog about the inverse relationship between innovation and the pressure to publish. It is about scientists and how the pressure to get something into print discourages risky and innovative work because it may not produce anything publishable. I have to think this goes triple for law professors who have the same pressure and have to write on topics and on a level that second and third year students do not think is too risky (especially if you teach at a mid ranked or lower law school). It helps explain why the vast majority of law review articles are irrelevant.

The other thing that pops up from time to time is the call for older law professors to step aside and give the younger folks a chance. I guess this is based on some notion of charity or the "right thing"  to do.  Actually, many law profs would not know the right thing to do if it bit them in the ass. Yes, the same folks asking the old folks to do the right thing are likely teaching two days a week, minimizing their course loads, confercating ten times a year,  running scams on foreign programs, and bragging about their influential articles that no one reads. "Do what is best for the community is a great idea when someone else is doing it"  is the rule they live by. Of course, I do not mean you personally.

Continue reading

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

NY Times: A Tax On High-Frequency Trading: A Solution In Search Of A Problem

New York Times, Solution Without a Problem? A Tax on High-Frequency Trading:

If there’s one thing that the Democratic presidential candidates can agree on, it’s that high-frequency traders are a problem. Hillary Rodham Clinton has now followed Bernie Sanders and Martin O’Malley in calling for a tax on the traders who, they complain, use their high-speed computers and expensive data lines to pick the pockets of ordinary investors. 

The odd thing about all this concern is that most of the investors who are actually facing off against the high-frequency traders — often on behalf of retirement savers — don’t see this as anything like the most costly problem they are facing, even in the arcane realm of trading mechanics.

Continue reading

October 15, 2015 in Tax | Permalink | Comments (0)

Villanova Law School Is Still Paying A Steep U.S. News Rankings Price For Cooking Its Admissions Books

Villanova Logo (2015)Philadelphia Inquirer, Villanova Law School Paying a Price Despite Doing Right:

Honesty is the best policy, goes the childhood refrain.

But it can come with a price. Just ask Villanova University School of Law, which is finding that the truth still hurts years after it acknowledged a handful of administrators secretly manipulated admissions data of incoming first-year students.

Before disclosure in early 2011 of the admissions fraud, which was perpetrated to boost the school's ranking in the U.S. News & World Report annual survey, Villanova was comfortably positioned among the nation's top 100 law schools. ...

Villanova is still within the top 100, but its U.S. News ranking has plummeted 20 places since the disclosure to No. 87 in the newly released 2016 ranking. And it has had to spend lavishly to stay in the ratings game since it became known that the law school supplied falsified GPA and LSAT scores to both U.S. News and the American Bar Association for an unknown number of years before 2010.

Continue reading

October 15, 2015 in Law School Rankings, Legal Education | Permalink | Comments (4)

TIGTA: 1,300 IRS Computers, 50% Of IRS Servers Are Running Outdated Operating Systems, Putting Taxpayer Data At Risk

Windows FinalSlate, IRS Hasn’t Finished Doing Windows Upgrades Because It Can’t Find a Bunch of Its Computers:

It's hard to muster the strength to talk about Windows XP anymore. In March 2014 it still held 30 percent of operating system marketshare, and now it's down to 12 percent, which shows improvement but is still not zero. Don't forget, XP is 14 years old. Organizations have encountered challenges as they work to eliminate XP from their networks, and (suprising no one) a recent audit shows that the Internal Revenue Service is struggling.

Continue reading

October 15, 2015 in IRS News, Tax | Permalink | Comments (3)

Job Prospects, Student Debt Loads Continue To Worsen For Ohio Law School Grads

Jason M. Dolin, Law Schools: The Real Employment Numbers for the Law Class of 2014, Columbus Bar Lawyers Quarterly 12 (Fall 2015):

Although it took years too long during which tens of thousands of law students - encouraged by law schools to borrow, borrow, borrow - undertook suffocating law school debt, a new narrative has now taken hold with a vengeance: a law school education is overpriced and a risky return on investment, with employment opportunities for law grads limited into the foreseeable future. ...

Continue reading

October 15, 2015 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 889

IRS Logo 2Canada Free Press op-ed:  Priorities: Why Obama Coddles Iran But Sicks the IRS on You, by Herman Cain:

If you want to know someone’s priorities, pay attention to when they’re meticulous – and to when they act like they just can’t be bothered to put in half an effort.

Take, for example, the Obama Administration. The Wall Street Journal reported last week that nuclear inspectors acting under the nuclear deal President Obama and John Kerry negotiated with the ayatollahs have pronounced themselves pleased with self-inspected soil samples submitted by Iran from its Parchin nuclear facility. The idea of a terrorist-supporting regime being allowed to gather and send in its own soil samples has been compared to letting Alex Rodriguez send the commissioner’s office his urine sample via FedEx. Anyone who is serious about preventing a rogue regime from getting nuclear weapons would instantly recognize how insane this is.

So why didn’t the Obama Administration hold out for a more rigid inspection process? Are they too dumb? No. They didn’t insist on real inspections because it’s just not that important to them. What they cared about was getting a deal done – and if the deal wasn’t in the best interests of the U.S. or the cause of global security, they didn’t care.

And I’m confident of this because I see what they do when something is important to them. Consider their approach to tax-exemption applications from conservative nonprofit groups. Does the IRS simply ask these groups to send in an affirmation that what they’re doing is legal and consistent with the law governing nonprofit tax exemptions? Of course not. The IRS often drags out the process for months or even years, in some cases even demanding that these groups disclose their donor lists and who they’ve recently had as speakers. ...

If Obama viewed conservatives the same way he views Iran, he would instruct the IRS to let us self-submit our own audits, and then just smile and thank us for our trouble. If he viewed oil companies the way he views Cuba, he would not only let them build pipelines, he would ask them what else they need for their trouble.

Continue reading

October 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, October 14, 2015

Ireland Tio Lower Corporate Tax Rate From 12.5% To 6.25% For IP

New York Times, Ireland, Accused of Giving Tax Breaks to Multinationals, Plans an Even Lower Rate:

The Irish government, long criticized by other European countries and the United States for its friendly tax treatment of multinational giants like Apple and Google, on Tuesday announced a move that seemed likely to further incense its critics.

Continue reading

October 14, 2015 in Tax | Permalink | Comments (3)

Texas A&M Fires Back At Texas Wesleyan Alumni

Texas A&M Law Logo (2016)National Law Journal, Texas A&M Fires Back at Law Graduates' Suit:

Correction: A previous version of this story misattributed arguments made by Texas Wesleyan University and its president to Texas A&M School of Law.

Texas Wesleyan University, its president and Texas A&M University School of Law have asked a federal court to dismiss a proposed class action brought by Texas Wesleyan University School of Law graduates.

Continue reading

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

Higher Taxes On The Rich Won’t Lower Inequality: This Gini Is Not Going Back In the Bottle

Following up on my previous post, Gale, Kearney & Orszag: Increasing The Top Income Tax Rate Won't Reduce Income Inequality:  Washington Post, Higher Taxes on the Rich Actually Wouldn’t Lower Inequality That Much: This Gini Is Not Going Back in the Bottle, by Matt O'Brien:

Up isn't down, black isn't white, and higher taxes on the rich don't do nothing about inequality. The question, though, isn't whether they do anything — it's how much they actually do.

The answer might be less than you think. That, at least, is what William Gale, Melissa Kearney and Peter Orszag found when they simulated what raising the top tax rate would do to inequality as measured by the Gini coefficient. It turns out that increasing the top rate to 50 percent would only reduce the Gini, where 0 is perfect equality and 1 is perfect inequality, from 0.574 to 0.571. We would still be the 99 percent.

Continue reading

October 14, 2015 in Tax | Permalink | Comments (9)

Product Placement At Law Firms

MBAmerican Lawyer,  Amid IRS Case, Microsoft Touts Bartlit Beck in Surface Ad

Talk about product placement.

When Microsoft Corp. wanted to show off its Surface tablet computer in a new online marketing campaign, the company looked no further than one of its own outside lawyers. It chose Chicago-based litigator Brian Prestes, a young Bartlit Beck Herman Palenchar & Scott partner who just happens to be trial counsel for Microsoft in a bitter standoff with the Internal Revenue Service over a multibillion-dollar tax audit.

Microsoft unveiled the result on Oct. 2: A two-and-a-half-minute, sleekly produced advertisement that features Prestes as he travels around Chicago between his home and Bartlit Beck’s downtown offices. His real-life wife and daughters co-star in the video, as does his German shepherd.  

Continue reading

October 14, 2015 in IRS News, Legal Education, Tax | Permalink | Comments (1)

Dell's Use Of Tracking Stock In Acquisition Of EMC Will Save $10 Billion In Taxes

Dell EMCWall Street Journal, Dell May Avoid Tax Hit on Deal, but EMC Shareholders Will Pay:

Dell found a creative way to avoid a hefty tax bill for its proposed $67 billion acquisition of EMC by using a tracking stock as part of the deal. But EMC shareholders won’t be able to avoid the tax man. 

Dell announced on Monday that it made an offer for EMC valued at roughly $33.15 a share, for a total of $67 billion in cash and stock. As part of the deal, EMC shareholders would receive $24.05 a share in cash, and another 0.111 shares of a tracking stock tied to EMC’s 80% stake in VMware. That works out to roughly $9.10 a share, based on VMware’s $81.78 share price on Oct. 7, according to a Dell company statement.

The tracking stock would essentially comprise a new class of shares that track the assets held by VMware. The holders won’t actually own a stake in the company, however. The stock will simply reflect the performance of VMware. Dell won’t be distributing shares or spinning off VMware’s assets, both techniques which create taxable gains.

The tracking stock structure allows Dell to avoid a tax bill that could have topped $10 billion, said Robert Willens, a tax specialist. EMC’s cost basis in VMware is very low, and so Dell would have to pay tax on almost the entire $26.59 billion value of EMC’s 80% stake in a sale.

Continue reading

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

Prof Accuses Law School Of Censorship For Not Including Links To His Work On Website

Robert Steinbuch (Arkansas-Little Rock), When Law Schools Place Dollars Over Debate:

I recently published an article entitled Law Schools Should Stop Misleading Prospective Students in Pursuit of their Desperately Sought Tuition Dollars" in a journal at my law school. ... I discussed how law schools need to be brutally honest to potential students about their chances for success, even if doing so hurts the school's bottom line. In addition, I pointed out the obvious notion that schools should never affirmatively lie, as did the University of Illinois and Villanova Law School when they falsified admissions data to make themselves appear more selective — a quality metric used by law schools in recruiting.

Illinois and Villanova were transparently motivated to put above all other concerns, including the truth, soliciting students to attend their institutions. Even when not affirmatively lying, however, schools heavily engaged in marketing and advertising efforts in pursuit of tuition revenue, unfortunately, often are not fully candid. That creates problems. For example, schools might not adequately convey students' chances to graduate and pass the bar; or schools might try to prevent students from transferring, even when doing so is in the students' best interests.

Continue reading

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

More Fiction From Tax Prof Mike Livingston

I previously blogged Rutgers Tax Prof Michael Livingston's initial foray as a fiction writer.  He has published two new short stories:

  • Tree of LifeA short story of havurah (Jewish prayer group) that has to deal with the death of a member--and a rather difficult one--for the first time.
  • Visiting Day A short story about my first summer at a Jewish camp, when the camp was concerned about Israel's victory in the Six Day War and I was concerned about ... my mother.

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

The IRS Scandal, Day 888

IRS Logo, GAO: IRS Still Lacks Safeguards to Prevent Political Targeting:

In the wake of revelations Internal Revenue Service (IRS) agents unfairly targeted certain non-profit organizations for enhanced compliance scrutiny, the U.S. Government Accountability Office (GAO) has released a new report detailing IRS’ failure to enact safeguards preventing future instances of unequal scrutiny.

Beginning in 2010, employees of IRS’ Exempt Organizations division, under the supervision of division Director Lois Lerner, violated IRS policies by singling out organizations for special examination based on a group’s name or policy positions with the aim of slowing or preventing the ability of conservative organizations to receive tax-exempt donations in the run-up to the 2012 elections.

Despite prior GAO documentation of IRS internal policy violations, IRS policies still do little to prevent unfairness in the agency’s operations.

Rep. Peter Roskam (R-IL), chairman of the U.S. House Ways and Means Subcommittee on Oversight, says lawmakers must continue to pressure IRS to change its ways.

“It’s an old IRS ploy where they come in and say, ‘We agree with the findings, and we agree to make these changes,’ but then they never […] make the changes,” Roskam said. “So, we are going to continue to do the oversight necessary to keep this in the minds of the American public, and to make sure the IRS knows we are watching them.”

Roskam says Lerner, who resigned with a full federal pension after refusing to testify before Congress about her division’s actions, may yet be prosecuted for her role in the scandal. ...

Bruce Yandle, dean emeritus of Clemson University’s College of Business and Behavioral Science, says public choice theory explains IRS’ failure to correct its policies. “Basically, public choice theory states that elements of political behavior are predictable when viewed through the lens of economics,” Yandle said. “The old adage ‘Keep your eye on the money—where it comes from, and where it goes,’ will help you understand the different actions that take place politically.” ...

Weaponized Enforcement.  Yandle says government agencies can be expected to protect those it perceives as a friend and attack those it considers to be an enemy. ... In 1999, a study was done on political influences in the IRS by examining rates at which the IRS engages in audits. Examining the data during the [President Bill] Clinton period, the investigators found, systematically, that the IRS frequently had audits in those places where people did not behave well toward Bill Clinton.”

Continue reading

October 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, October 13, 2015

Rees-Jones Presents Loss Aversion Motivates Tax Sheltering Today At Columbia

Rees-Jones 1Alex Rees-Jones (Pennsylvania) presents Loss Aversion Motivates Tax Sheltering: Evidence from U.S. Tax Returns at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

This paper presents evidence that loss aversion affects taxpayers as they file their annual tax returns. I model the decisions of a loss-averse tax filer who may use tax shelters to manipulate the "balance due" exchanged with the IRS. I use this model to derive distinguishing predictions of loss aversion which facilitate its identification and quantification in the field.

Continue reading

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

The Economist: BEPS Plan Is 'Deeply Flawed'

The Economist, New Rules, Same Old Paradigm: A Plan to Curb Multinationals’ Tax Avoidance Is an Opportunity Missed:

EconomistIn 2013 investigators from America’s Senate shone a harsh light on a highly profitable unit of Apple that was registered in Ireland, controlled from America—and not paying tax in either country. That this “stateless-income” structure was perfectly legal highlighted a big loophole in the global system for taxing multinationals.

There are many such gaps, and the reason is that the patchwork of national rules and bilateral treaties governing how much tax companies owe, and to whom, is horribly dated. It was designed for the manufacturing age. Business today is increasingly digital, services-based and driven by intangible assets, including rights to exploit intellectual property (IP), from patents to logos. These are easier than physical assets to shuffle from subsidiaries in high-tax countries to those in low-tax ones. In short, they make the old rules easier to game.

Hence the relentless rise of tax planning as a core part of multinationals’ business plans. The OECD reckons that the resulting revenue losses to national exchequers have grown to as much as $240 billion a year, or 10% of global corporate income-tax receipts—an estimate it considers very conservative. The share of American firms’ profits that they book in low-tax havens has more than doubled since the 1980s; this has helped reduce the actual tax rates they pay, relative to their home country’s headline rate (see charts). America’s 500 largest firms hold more than $2 trillion in profits offshore. Its tax laws encourage this, because profits its companies make abroad are taxable in America only when repatriated.

Two years ago the Group of Twenty (G20), a forum for big economies, asked the OECD to produce reforms aimed at curbing these corporate-tax gymnastics and ensuring that multinationals were taxed “where economic activities take place and where value is created”. The request was motivated in part by growing public anger over firms not paying their “fair share”, and partly by hunger for more tax revenue in an era of austerity.

Continue reading

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

Tesla Model X Buyers Get $35,000 Tax Break

Model XLos Angeles Times, Tesla Model X Buyers Could Get $25,000 Tax Break:

Take heart, prospective Tesla buyers alarmed by the probable $100,000-plus price tag for the company's new Model X: You may qualify for a $25,000 tax break.

Tesla has confirmed reports that the falcon-winged all-electric SUV, because of its gross vehicular weight, may qualify for a federal tax break designed for heavy equipment. 

Continue reading

October 13, 2015 in Scholarship, Tax | Permalink | Comments (3)

L.A. Homeowners Hot Under The Collar As IRS Taxes 'Cash For Grass' Drought Rebates

CashLos Angeles Times, Turf Rebate Giveth, But IRS May Taketh Away:

California provides a state tax exemption for turf removal rebates, but the feds have not reckoned with our plight — meaning some folks may wind up putting some of what they save on their water bills toward tax checks to the IRS. ...

More than 65,000 homeowners have been approved for reimbursement. Last year the Metropolitan Water District raised the rebate amount for turf removal from 30 cents to $1 — and then to $2 — per square foot.

Most are only now finding out that they may be liable for taxes.

Continue reading

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

Using Publication Metrics To Evaluate Faculty Stifles Innovative Scholarship

MetricsInside Higher Ed, The Costs of Publish or Perish:

Shortly after being awarded the Nobel Prize in Physics in 2013, Peter Higgs, of Higgs boson fame, said he doubted he would have gotten a job, not to mention tenure, in today’s academic system. The professor emeritus at the University of Edinburgh said he simply wouldn’t have been “productive” enough, with academe’s premium on publication metrics. Conversely, said Higgs, working in today’s academic system probably wouldn’t have afforded him the opportunity to identify how subatomic material requires mass.

“It's difficult to imagine how I would ever have enough peace and quiet in the present sort of climate to do what I did in 1964,” he told The Guardian.

The statement resonated with many academic scientists running the funding-collaboration-publication treadmill. But while the negative consequences of the “publish or perish” paradigm, such as innovation costs and decreased attention to teaching and mentoring, are widely acknowledged, there’s been scant data to back them up. So a new study suggesting that publication pressures on scientists lead to more traditional, more likely to be published papers, at the expense of scientific breakthroughs, stands out [Tradition and Innovation in Scientists’ Research Strategies].

Continue reading

October 13, 2015 in Legal Education | Permalink | Comments (2)

Feminists Seek Sexism Reform In IRS Tax Code

Cisternyard, Feminists Seek Sexism Reform in IRS Tax Code:

Feminists across the nation are up in arms about the sexist language in the IRS tax code. “The patriarchal language found in the tax code is egregious and offensive,” says local tax accountant Brenda Polshik. “The consistent use of the word ‘he’ just shows how behind the field of taxation is in gender reform.”

“Women pay taxes too,” says College of Charleston Finance major Kat Smythe. “The code reads like household tips from a 1940s men’s magazine. Ridiculous.”

Continue reading

October 13, 2015 in Tax | Permalink | Comments (11)

UC-Berkeley's ‘Critical Mass’ Policy Results In Racial Divisions At Law School

UC Berkeley (2016)The Daily Californian, Berkeley Law’s ‘Critical Mass’ Policy Results in Racial Divisions:

In an effort to create a more positive experience for underrepresented-minority students, the UC Berkeley School of Law has implemented a new “critical mass” policy, which has resulted in some racial divisions in the first-year classes.

The policy was criticized earlier this month in an article published on the blog Above the Law Redline, which stated that students at the law school are being racially segregated.

Continue reading

October 13, 2015 in Legal Education | Permalink | Comments (19)

The IRS Scandal, Day 887

IRS Logo 2Washington Post:  ‘Dark Money’ is the IRS’s Real Problem, by Henry Geller:

n his Oct. 8 op-ed column, Impeach the IRS director, George F. Will criticized the Internal Revenue Service for its delay in processing applications for tax-exempt status and indeed urged that the IRS director be impeached.

However, these social welfare organizations under 501(c)(4) were never meant to be entities engaged only in political activities, so the IRS has sought to define how much political activity they can engage in. The IRS has been unsuccessful in this effort, and it is difficult to see how it can hope to succeed.

The result has been the emergence of entities such as Crossroads GPS and Americans for Prosperity on the Republican side, and Priorities USA and Organizing for Action on the Democratic side. Because IRS rules do not require disclosure of donors, the electorate has no notion of who is trying to sway their votes, contrary to the recent Supreme Court opinions in Citizens United and McCutcheon strongly urging transparency. This flood of “dark money” in the most recent election and the next one is the real mess at the IRS.

Continue reading

October 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, October 12, 2015

Simkovic Presents The Knowledge Tax Today At USC

Simkovic 2Michael Simkovic (Seton Hall) presents The Knowledge Tax, 82 U. Chi. L. Rev. ___ (2015), at USC today as part of its Faculty Workshop Series:

Labor economists struggle to explain why the rates of return to higher education have remained much higher than the rates of return to other investments. This article proposes a novel explanation: distortionary taxation.

Economic theory suggests that when investments that are substitutes for one another are taxed inconsistently, investors are less likely to choose the investment option that is taxed more heavily. Unfavorable tax treatment of higher education relative to other forms of investment could create an undersupply of educated labor. This distortion would reduce economic growth and social welfare.

Continue reading

October 12, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (3)

Schmalbeck Presents Subsidizing Big-Time College Sports Through The Income Tax Today At Loyola-L.A.

SchmalbeckRichard Schmalbeck (Duke) presents Subsidizing Big-Time College Sports through the Income Tax: The Ruling on the Field Should be Reviewed at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

The tax rules applying to the so-called “revenue sports”—football and men’s basketball—include two major unforced errors, one each by Congress and the IRS.

The IRS decided in 1980 that televised sports were no different than on-site events in terms of their relation to the exempt purposes of colleges and universities. As a consequence, the revenue generated by televised sports has never been regarded as derived from an unrelated trade or business, and hence not subject to the tax on such income.

Continue reading

October 12, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NPR: 60% Of Faculty Plan To Work Past Age 70; 100% Of Hofstra Law School Faculty Refuse Offer Of Two Years Salary To Retire

NPR LogoNPR, On Campus, Older Faculty Keep On Keepin' On:

Protected by tenure that prevents them from being dismissed without cause, and with no mandatory retirement age, a significant proportion of university faculty isn't going anywhere. A third are 55 and older, compared with 20 percent of the rest of the workforce, according to the University of Iowa Center on Aging.

And while 36 percent of all workers plan to put off their retirements beyond the age of 65, the proportion of university and college faculty who intend to delay stepping down is more than double that, the financial services company TIAA-CREF reports. Another study found that 60 percent of faculty planned to work past 70, and 15 percent to stay until they're 80.

Continue reading

October 12, 2015 in Legal Education | Permalink | Comments (2)

Korn Ferry Report: Women Faculty Face Bias At UCLA Business School

UCLA LogoLos Angeles Times, Women Faculty Face Bias at UCLA Business School, Study Says:

UCLA’s Anderson School of Management has a culture that hurts the hiring and promotion of women through both institutional and “unconscious bias,” according to a new report commissioned by the graduate business school.

The Korn Ferry consulting firm’s report ... urges changes in recruitment, promotion and leadership styles at the school, which is led by a woman, Dean Judy Olian, but has only 18 women on the 82-person faculty. Among other things, the study calls for more forceful action by Olian for “gender equity.”

Continue reading

October 12, 2015 in Legal Education | Permalink | Comments (0)

Albany Seeks To Hire A Tax Clinician

Albany logoAlbany  Law School is seeking to fill an entry level position teaching in its Clinic and Justice Center:

We are especially interested in candidates with experience and expertise in tax, business transactions, or not-for-profit corporations, who could establish a pedagogically appropriate Tax or Transactions Clinic.

Continue reading

October 12, 2015 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Tax: One Of The Five Hottest LL.M.s

National JuristNational Jurist, 5 Hottest LL.M. Specializations:

Tax law has been the cornerstone of the LL.M. degree from the get-go. In 1995, it was the most widely offered degree. In 2015, it still is.

As Paul Caron, a tax law professor at Pepperdine University School of Law has written, "Tax LL.M. classes are rigorous and demanding. For many employers, both J.D. grades and tax LL.M. grades are extremely important. A prospective tax LL.M. student who is not genuinely interested in tax is not likely to do well in tax LL.M. classes. In addition, the potential resume boost from successful completion of a tax LL.M. degree is greatest when applying for tax-specific positions."

Continue reading

October 12, 2015 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 886

IRS Logo 2Forbes:  IRS Scandal Narrative Still Inspires Passion, by Peter J. Reilly:

As something of an amateur historian, my biggest question about the IRS Scandal, which I sometimes refer to as Teapartygate, is how prominent it will be in our historical memory in a few decades. There are certain controversies about particular incidents that become vehicles for ideological freight and achieve a long life at least among the culturally literate. Think of the Dreyfus affair (l’affaire Dreyfus) or the trial of Sacco and Vanzetti . The IRS Scandal certainly has an ideological dimension as it can be portrayed as Washington insiders using the most feared federal agency to intimidate people advocating a return to constitutional values. ...

If there is one place where it is clear that the IRS Scandal is still a thing, it is in Paul Caron’s series which I call the day by day IRS Scandal as since May 13, 2013, the title to the posts have been in the form of The IRS, Scandal  Day X (May 13 was Day 5). The initial post (presumably Day 1) was titled IRS Admits Targeting Conservative Groups in 2012 Election.

Earlier this week I wrote that Professor Caron’s series may have “jumped the shark”.  Although in my first piece, I suggested that it was time to convert it to an archive, after having gone through the whole series, I concluded that what really needed to happen was to have some days, perhaps quite a few, where the entry is nothing to report. ...

Professor Caron’s response to my critique was very classy. My posts were featured as The IRS Scandal, Day 883.  He also included a polling question “Should I Continue My Daily Posts On The IRS Scandal?”.  The results of the poll are The IRS Scandal, Day 884.  Given where the question was asked, it is not at all surprising that the majority was “Yes”.  Arguably it was overwhelming 792 to 86.  The passion of some of the comments was what I found most interesting. ...

Interestingly, the TaxProf, himself, is not exactly an IRS Scandal true believer. On Day 369, Professor Caron wrote:

Step one should be to give Lois Lerner full immunity from prosecution in exchange for her testimony . And then let the chips fall where they may.

Scandal skeptics take Issa’s refusal to grant Lois Lerner immunity as an indication that his committee was not really interested in finding out the truth.

The other passionate comment that I took note of was by Joe Kristan on his own blog.

 I worry that the administration will succeed in running out the clock on the outrageous IRS misconduct.

Although it appears that Joe and I have similar interests and attitudes and professional experience, I sometimes get hints that he might be just a tad more to the right than I am.  He and I are working on having some sort of IRS Scandal debate, after October 15 (That’s the extended due date for individuals).  Stay tuned.

There have been fairly extensive House and Senate investigations into the core scandal.  The agreed facts that came out of both reports can support narratives of either bureaucratic bumbling or politically biased harassment.  Someone on the left would likely argue that the scandal machine has actually won in that the IRS is neutered, at least for the next election cycle, in enforcing rules that provide some level of transparency in political spending.  On the right, there is still a call for more revelations and somebody being punished.  It looks like you will be able to follow it all on the TaxProf series for the foreseeable future.

Continue reading

October 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

TaxProf Blog Weekend Roundup

Sunday, October 11, 2015

NY Times: Computer Scientists Wield Artificial Intelligence To Battle Tax Evasion

New York Times:  Computer Scientists Wield Artificial Intelligence to Battle Tax Evasion, by Lynnley Browning:

When federal authorities want to ferret out abusive tax shelters, they send an army of forensic accountants, auditors and lawyers to burrow into suspicious tax returns.

Analyzing mountains of filings and tracing money flows through far-flung subsidiaries is notoriously difficult; even if the IRS manages to unravel a major scheme, it typically does so only years after its emergence, by which point a fresh dodge has often already replaced it.

But what if that needle-in-a-haystack quest could be done routinely, and quickly, by a computer? Could the federal tax laws — 74,608 pages of legal gray areas and welters of credits, deductions and exemptions — be accurately rendered in an algorithm?

New academic research [Tax Non-Compliance Detection Using Co-Evolution of Tax Evasion Risk and Audit Likelihood] seeks to use artificial intelligence to combat tax evasion by corporate entities, from publicly traded multinationals to private partnerships. The goal is to give the IRS a better way to investigate sophisticated tax shelters that strip tens of billions of dollars from federal coffers each year.

Continue reading

October 11, 2015 in Scholarship, Tax | Permalink | Comments (2)

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 paper returning to the list at #5:

  1. [314 Downloads]  An Introduction to Conservation Easements in the United States: A Simple Concept and a Complicated Mosaic of Law, by Federico Cheever (Denver) & Nancy A. McLaughlin (Utah)
  2. [268 Downloads]  2014 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  3. [219 Downloads]  The One Hundredth Anniversary of the Federal Estate Tax: It's Time to Renew Our Vows, by Paul L. Caron (Pepperdine)
  4. [194 Downloads]  Breaking BEPS: The New International Tax Diplomacy, by Itai Grinberg (Georgetown)
  5. [158 Downloads]  Are We Trapped By Our Capital Gains?, by Reuven Avi-Yonah (Michigan) & Dima Zelik (Michigan)

October 11, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)