TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, March 30, 2016

Minnesota Seeks To Hire A Part-Time Tax Clinician

Minnesota LogoPosition Description:

University of Minnesota Law Clinics, the clinical program of the University of Minnesota Law School, welcomes applicants for the Adjunct Clinical Supervising Attorney-Qualified Tax Expert position in its Ronald M. Mankoff Tax Clinic. The Tax Clinic is an in-house clinic partially subsidized with a grant from the I.R.S. Low Income Taxpayer Clinic (LITC) program. The position is a 12-month, part-time (40% time) position. The Tax Clinic is a 7-credit course that runs Fall through Spring.

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March 30, 2016 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (1)

Will Yale Move To Florida To Avoid Proposed Connecticut Tax On Its Endowment?

Yale FloridaFollowing up on last week's post, Connecticut Bill Would Tax Yale's $25.6 Billion Endowment:

Press Release, Gov. Scott Renews Call for Connecticut Business to Move to Florida – Including Yale University:

Today, Governor Rick Scott called on Yale University to consider moving operations to Florida following news that the Connecticut state legislature is proposing to levy a 7 percent tax on the net investment profits of Yale University’s $25.6 billion endowment.

Governor Rick Scott said, “With news that the Connecticut Legislature wants to unfairly tax one of the nation’s most renowned universities to deal with the state’s budget shortfall, it is clear that all businesses in Connecticut, including Yale, should look to move to Florida.  Since I took office in 2011, we have not raised any taxes or fees in Florida.  In fact, we have cut taxes 55 times, including $1 billion in tax cuts over the last two years, which saved Floridians $5.5 billion. This has not only resulted in a million new jobs in five years, but our state has a budget surplus of more than $1 billion.

“If Connecticut lawmakers are seriously considering another tax on Yale, businesses and families should be concerned about the other tax increases their Legislature will consider. We would welcome a world-renowned university like Yale to our state and I can commit that we will not raise taxes on their endowment. This would add yet another great university to our state.”

Tom Conroy (Press Secretary, Yale):

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March 30, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1056

Microsoft IRSFollowing up on my previous posts on the IRS's claim that it had erased the hard drive of its director of transfer pricing operations despite a court order to preserve all documents concerning the IRS's hiring of an elite law firm to assist its audit of Microsoft (The IRS Scandal, Days 987, 989, 994, 1002):

Statement of U.S. Department of Justice Trial Attorneys, Microsoft v. IRS, Nos. 2:15-cv-00369, 00850 (D.C. W.D. Wa. Mar. 25, 2016) (record citations omitted):

On January 15, 2016, the Department of Justice, Tax Division, notified the Court that the Internal Revenue Service (“IRS”) had reported that it inadvertently had not captured a computer hard drive used by one agreed-upon custodian, Samuel Maruca, and that the hard drive had been sanitized. Since then, there have been two developments regarding Mr. Maruca’s hard drive. First, the IRS continued to look for responsive records, and in doing so 19 it located potentially responsive user-generated content that had been previously on Mr. Maruca’s hard drive and saved elsewhere in July, 2014, only several weeks before Mr. Maruca separated from the IRS. The Department of Justice disclosed this source of potentially responsive  documents to Microsoft’s counsel on February 11, 2016.

Second, during discussions on and from March 14 through March 23, 2016, IRS Chief Counsel attorneys notified the undersigned Department of Justice counsel that the IRS located a hard drive that appears to be Mr. Maruca’s hard drive. The IRS Chief Counsel attorneys believe that the hard drive has not been sanitized, the hard drive is in working condition, and the hard drive contains user-generated content. The IRS Chief Counsel attorneys informed Department of Justice counsel that they are presently processing the content for review and then will review the content for potentially responsive records. Non-exempt responsive records not already produced 10 to plaintiff will be produced as part of the on-going production by the IRS.

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March 30, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, March 29, 2016

Stewart Presents Transnational Tax Law: Fiction Or Reality, Future Or Now? Today At NYU

StewartMiranda Stewart (Australian National University) presents Transnational Tax Law: Fiction or Reality, Future or Now? at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

There is an increasing contemporary literature on transnational law. In the tax law context, there is a substantial literature on international tax law. Recently, Genschel and Rixen (2015) have analysed what they term a “transnational legal order” of international tax. Yet tax law has historically been seen as a bastion and expression of national sovereignty, funding public goods in the nation state and legitimated by legislative authority. What does it mean to identify a transnational legal order for taxation? Does transnational tax law really exist? If so, what is its authority and legitimacy? Who are its subjects and its agents? How is it enacted, interpreted and enforced in national or international spheres and how is it embedded in practice?

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Faulhaber Presents The Long Reach Of European Union Law: Patent Boxes And The Limits Of International Cooperation Today At Georgetown

Faulhaber (2016)Lily Faulhaber (Georgetown) presents The Long Reach of European Union Law: Patent Boxes and the Limits of International Cooperation at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

From 2013 to 2015, the forty-four member countries of the Organisation for Economic Co-operation and Development (OECD) and the G-20 worked together on the Base Erosion and Profit Shifting (BEPS) Project, which was focused on curbing corporate tax avoidance. This article argues that the outcomes from that project show that European Union law is no longer just a concern of EU Member States. Instead, EU law and the jurisprudence of the European Court of Justice (ECJ) place constraints on non-EU countries by creating downward pressure on international standards.

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Rosenbloom Presents The Implications Of BEPS For A Rational United States Today At Case Western

RosenbloomH. David Rosenbloom (James S. Eustice Visiting Professor of Practice and Taxation and Director, International Tax Program, NYU; Partner, Caplin & Drysdale, Washington, D.C.) delivers the Norman A. Sugarman Memorial Lecture on The BEPS Project of the OECD: Implications for a Rational United States at Case Western today:

The project of the Organization for Economic Co-Operation and Development on "Base Erosion and Profit Shifting" has launched a revolution in the field of international taxation. This lecture begins with the genesis of that project, proceeds to its core themes and recommendations, and identifies its foreseeable impacts. It concludes with an examination of both how the United States is likely to be affected and how, as a (perhaps counter-factually) rational country, it might appropriately respond.

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oei Presents The Tax Lives Of Uber Drivers Today At Southwestern

OeiShuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) at Southwestern today as part of its Faculty Speaker Series:

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their online interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine (1) the substantive tax concerns facing forum participants, (2) how taxes affect their driving and profitability decisions, and (3) the degree of user sophistication, accuracy of legal advising, and other cultural features of the forums.

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Rise Of The ‘Gentleman’s A’ And The GPA Arms Race

Washington Post:  The Rise of the ‘Gentleman’s A’ and the GPA Arms Race, by Catherine Rampell:

The waters of Lake Wobegon have flooded U.S. college campuses. A’s — once reserved for recognizing excellence and distinction — are today the most commonly awarded grades in America.

That’s true at both Ivy League institutions and community colleges, at huge flagship publics and tiny liberal arts schools, and in English, ethnic studies and engineering departments alike. Across the country, wherever and whatever they study, mediocre students are increasingly likely to receive supposedly superlative grades.

WaPo 3

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March 29, 2016 in Legal Education | Permalink | Comments (6)

Blinder & Watson:  The U.S. Economy Grows Faster Under Democratic Presidents

Alan S. Blinder (Princeton) & Mark W. Watson (Princeton), Presidents and the U.S. Economy: An Econometric Exploration, 106 Am. Econ. Rev. 1015 (2016):

The U.S. economy has grown faster--and scored higher on many other macroeconomic metrics--when the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.

1A

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March 29, 2016 in Scholarship, Tax | Permalink | Comments (7)

NY Times:  Federal Judge In Puerto Rico Calls 100% Tax On Walmart Unlawful

WalmertFollowing up on my previous post, Walmart Sues Puerto Rico Over 91.5% Tax Rate Applicable Only To Walmart:  New York Times, Federal Judge in Puerto Rico Calls Walmart Tax Unlawful:

A federal judge in San Juan on Monday threw out a new tax that Puerto Rico had tried to impose on the American retailing giant Walmart, calling it unlawful [Wal-Mart Puerto Rico v. Zaragoza-Gomez, No. 3:15-CV-03018 (D.P.R. Mar. 28, 2016)].

Walmart had argued that the new tax would confiscate more than 100 percent of its profit from operations in Puerto Rico, making it one of the most onerous taxes on earth.

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March 29, 2016 in Tax | Permalink | Comments (1)

GAO:  IRS Refusal To Address Previously Identified IT Deficiencies Leaves Confidential Taxpayer Data 'Unnecessarily Vulnerable'

GAO (2016)Government Accountability Office, IRS Needs to Further Improve Controls over Financial and Taxpayer Data (GAO-16-398) (Mar. 28, 2016):

The Internal Revenue Service (IRS) made progress in implementing information security controls; however, weaknesses in the controls limited their effectiveness in protecting the confidentiality, integrity, and availability of financial and sensitive taxpayer data. During fiscal year 2015, IRS continued to devote attention to securing its information systems that process sensitive taxpayer and financial information. Key among its actions were further restricting access privileges on key financial applications and continuing its migration to multifactor authentication across the agency. However, significant control deficiencies remained. For example, the agency had not always (1) implemented controls for identifying and authenticating users, such as applying proper password settings; (2) appropriately restricted access to servers; (3) ensured that sensitive user authentication data were encrypted; (4) audited and monitored systems to ensure compliance with agency policies; and (5) ensured access to restricted areas was appropriate. In addition, unpatched and outdated software exposed IRS to known vulnerabilities.

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March 29, 2016 in Gov't Reports, Tax | Permalink | Comments (0)

Law Firms Try 'Hoteling' For Some Partners

National Law Journal, The Law Offices of the Future Are Here, and Your Name Might Not Be On the Door:

Reed Smith may be among the first Am Law 100 firms to try "hoteling" for some of its partners.

When Reed Smith moved 35 lawyers from a Falls Church office building into the new Tysons Tower on Monday, two partners gave up the very thing they had worked years for: Their names on office doors.

Those Northern Virginia-based lawyers and others in the San Francisco office are part of a pilot program Reed Smith has started to try “hoteling,” or the practice of lawyers sitting at changeable temporary desk spaces when they work out of their home office buildings.

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March 29, 2016 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 1055

IRS Logo 2National Review, Consequences Are for Schmucks:

People like Hillary Rodham Clinton do not go to jail without first becoming governor of Illinois or mayor of Detroit, and Herself always has her sights set on a higher office than those. But even relatively lowly players in her world escape jail time. Lois Lerner turned the Internal Revenue Service into a branch of the Obama campaign, using the agency’s fearsome investigatory powers to harass tea-party groups and conservative organizations. She’s enjoying a fat pension right now rather than the federal hospitality she so richly deserves. Kamala Harris, who is trying to do much the same thing with the office of the attorney general in California, probably is headed to the Senate. The Texas prosecutors who harassed Kay Bailey Hutchison, Tom DeLay, and Rick Perry for wholly imaginary crimes are in no danger of facing real recriminations.

(Hat Tip: Mark Fitzgibbons.)

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March 29, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, March 28, 2016

Oei Presents The Tax Lives Of Uber Drivers Today At Pepperdine, UC-Irvine

OeiShuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) today at Pepperdine (as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine) and UC-Irvine (as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian):

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their online interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine (1) the substantive tax concerns facing forum participants, (2) how taxes affect their driving and profitability decisions, and (3) the degree of user sophistication, accuracy of legal advising, and other cultural features of the forums.

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March 28, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Map Of The Top 50 Law Schools:  1/3 Are West Of The Mississippi River

U.S. News & World Report, Map: See the Top 50 Law Schools in the U.S.:

The law schools on the map below placed in the top 50 of the 2017 Best Graduate Schools rankings. The map includes data on each school's acceptance rate, tuition costs and more. Due to ties, there are 54 law schools represented on the map.

USN

March 28, 2016 in Law School Rankings, Legal Education | Permalink | Comments (3)

Crawford:  Widening The Critical Tax Lens

JotwellBridget Crawford (Pace), Widening the Critical Tax Lens (Jotwell) (reviewing Lily Kahng, The Not-So-Merry Wives of Windsor: The Taxation of Women in Same-Sex Marriages, 101 Cornell L. Rev. 325 (2015)):

In the wake of the Windsor and Obergefell decisions, some tax scholars have drawn important attention to legal issues created in the period between Windsor and Obergefell for same-sex couples whose states did not recognize their marriages, as well as challenges faced by those who choose civil unions over marriage. Other tax scholars are wary of Obergefell’s glorification of marriage as the highest form of human fulfillment, and are skeptical that marriage is the correct foundation for a variety of procedural and substantive rules.

Enter into this conversation Lily Kahng’s thoughtful examination at how women in same-sex couples might fare from a tax perspective in a post-Windsor, post-Obergefell world.

For almost twenty years, Kahng has been a leading and consistent voice in critiquing the fiction of marital unity in the tax law. In The Not-So-Merry Wives of Windsor: The Taxation of Women in Same-Sex Marriages, Kahng turns on its head the assumption that same-sex marriage is a salutary shift in the legal landscape for same-sex couples. Kahng argues that under federal law, women in same-sex couples will be taxed unfavorably compared to women in different-sex couples. ...

For anyone interested in understanding the tax implications of the Supreme Court’s recognition of same-sex marriage, Kahng’s article is a must-read. Writing squarely within the critical tax tradition, Kahng looks at the tax system to ask important questions about advantage and disadvantage. For years, critical tax theorists have taken up the challenge of identifying ways in which the tax system privileged different-sex couples over same-sex couples. With this article, Kahng widens the critical tax lens further, inviting readers to consider the ways that women in same-sex couples might experience the tax law differently than men in same-sex couples or men and women in different-sex couples. The quest for fairness in taxation must be a nuanced one, as Lily Kahng’s careful work demonstrates.

March 28, 2016 in Scholarship, Tax | Permalink | Comments (0)

Denver Aims To 'Leapfrog' Colorado, Become The Stanford Of 'Silicon Mountain'; Law School Offers 'Experiential Advantage Curriculum' (Students Work One Year In Legal Practice)

DSDenver Post, Building the Stanford of Denver at the Speed of an Entrepreneur:

Within eight months of becoming the dean of the University of Denver's computer school, entrepreneur J.B. Holston started something that could change the institution forever. Together with the deans of the law and business schools, Holston created a program infused with entrepreneurship. But this isn't just about curriculum. It's about connecting to local businesses and the community and creating an ecosystem that becomes so sustainable, it merits its own nickname.

"This is all part of my sneaky vision to turn DU into the Stanford of Denver," Holston said after hiring Erik Mitisek, CEO of the Colorado Technology Association, this month to lead the effort called Project X-ITE. "Just as Silicon Valley needed a Stanford, Denver needs DU to make this happen."

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March 28, 2016 in Legal Education | Permalink | Comments (3)

The Odds Of An IRS Tax Audit

The Motley Fool, Here Are the Odds of an IRS Tax Audit:

The IRS publishes an annual Data Book that shows how many returns were filed, and how many returns received additional scrutiny. With this information, we can roughly quantify your odds that the IRS audits your 2015 tax returns. ...

IRS Audit Index

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March 28, 2016 in IRS News, Tax | Permalink | Comments (0)

Academia Is Not (And Cannot Be) A Meritocracy:  Positive Feedback Loops, Matthew Effect Citation Bursts, And Social Networks Can Predict Success, Not Stars

Scott Weingart (Carnegie Mellon), Who Sits in the 41st Chair?:

This post is about why academia isn’t a meritocracy, at no intentional fault of those in power who try to make it one. None of presented ideas are novel on their own, but I do intend this as a novel conceptual contribution in its connection of disparate threads. Especially, I suggest the predictability of research success in a scarce academic economy as a theoretical framework for exploring successes and failures in the history of science. But mostly I just beat a “musical chairs” metaphor to death.

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March 28, 2016 in Legal Education | Permalink | Comments (2)

Death Of Ira Shepard

ShepardFrom Marty McMahon (Florida):

I am deeply saddened to let you know that my dear friend Ira Shepard, Professor Emeritus at the University of Houston Law Center, passed away earlier today.  Ira and I have been friends for over thirty years and have worked closely together.  Over the past twenty-five years, Ira and I made some seventy-five odd CLE current development presentations all over the country, including over 20 consecutive years at the ABA Tax Section Mid-Winter Meeting and the University of Texas Tax Conference and seventeen years at Southern Federal Tax Institute and North Carolina Tax Institute, as well as many others.  We published our current developments outline in the Florida Tax Review every year since 2000.

Ira was smart, erudide, witty, and had a keen sense of humor.  He always provided great insights as to the history of tax law and practice, made me laugh, and was a wonderful companion at the many speaking engagements we did together.  I doubtless ate more meals with Ira than anyone who is not a member of my own family.

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March 28, 2016 in Legal Education, Obituaries, Tax | Permalink | Comments (7)

Joint Tax Committee Releases Estimated Revenue Effects Of Tax Provisions In President Obama’s FY2017 Budget

NYU B-School Did Not Provide GMAT Scores To U.S. News, Falls From #11 To #20 In Rankings

NYUUSNRobert Morse (Director of Data Research, U.S. News & World Report), Why New York University Fell in the Best Business Schools Rankings:

When U.S. News calculates our annual rankings of the Best Graduate Schools, we get all the statistical data we use from the schools themselves. This means U.S. News depends on those schools to provide accurate and complete data in response to our statistical surveys.

When a school does not provide data that are used in the rankings methodologies, that can have a significant effect on its position in the rankings.

During the statistical data collection process for the newly released 2017 edition of Best Business Schools, New York University's Stern School of Business did not submit its data for the number of new entrants to both its full-time and part-time MBA programs who provided GMAT scores. These data were for the fall 2015 entering class. ...

The data are used as part of the calculation to compute a value for a school's average GMAT and GRE scores. This measure is included in the rankings to determine the strength of a school's entering class relative to other full-time and part-time MBA programs. The average GMAT and GRE scores have a weight of 16.25 percent in the full-time MBA rankings and 15 percent in the part-time MBA rankings.

The Stern School of Business' position in both the full-time and part-time MBA rankings for the 2017 edition were negatively affected as a result of the data omission. The school is ranked at No. 20 in the full-time rankings and No. 10 in the part-time rankings. In the 2016 edition of the rankings, the school tied for No. 11 among full-time programs and ranked fourth among part-time programs.

Stern later provided U.S. News with the omitted data points, which are noted on its profile page on usnews.com. These data points are only visible to U.S. News Grad School Compass users, as is the case for all business schools.

U.S. News will not recalculate NYU’s rankings – or any other school’s rankings – because of nonreporting.

NYU Press Release, Why Stern’s Ranking Fell to 20, and Why You Shouldn’t Take it at Face Value:

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March 28, 2016 in Law School Rankings, Legal Education | Permalink | Comments (9)

The IRS Scandal, Day 1054

IRS Logo 2Investor's Business Daily editorial, It’s Past Time To End The IRS’ Reign Of Terror:

Corruption: A federal court has harshly judged the IRS for harassing conservative groups seeking tax-exempt status. We hope this brings far more trouble for the agency than it gave those groups.

Don’t think we’re downplaying what happened to these organizations. The IRS committed a serious offense. Its conduct was beyond outrageous. It held up nonprofit-status applications from Tea Party and conservative groups for political reasons, singled out the groups for unforgiving scrutiny and was actively looking for right-of-center organizations to grind in its 21st century inquisition.

On Tuesday, the 6th U.S. Circuit Court of Appeals censured the IRS, ordering it to turn over the list of groups it had targeted so that a class-action lawsuit filed by the NorCal Tea Party Patriots against the tax collector can move forward with those groups as plaintiffs. An agency that has long acted above the law has now been told it is accountable. This is significant.

The three-judge panel was not sparing in its judgment. It noted that “among the most serious allegations a federal court can address are that an executive agency has targeted citizens for mistreatment based on their political views.” It also told the IRS lawyers that they had conducted themselves in a manner unworthy of the government’s tradition of impartiality and decency as they fought the lawsuit. ...

How can such an agency exist in a free society? But then, we’re not truly free if the IRS or any other agent of the government has the latitude to carry on as the IRS has for decades. Free people don’t live in constant fear of a government inquiry and are not perpetually afraid that the tax collector’s boot will suddenly land on their neck. Nor are they ever anxious that an innocent slip-up will wreck their lives.

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March 28, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, March 27, 2016

Is Income, Wealth Inequality In The United States Less Than We Think?

CNNCNN, The Top 1% Haven't Recovered Yet, Either:

The income of the Top 1% is also below where it was before the Great Recession, largely because America's richest took a massive hit during the economic downturn. They have yet to recover, despite the fact that they've captured the majority of the income gains since then.

The Top 1% had an average income of $1.26 million in 2014, down from $1.56 million in 2007. That's a 19.1% drop, according to an analysis of tax data by Emmanuel Saez, University of California, Berkeley, and Thomas Piketty, Paris School of Economics. ... The Bottom 90%, meanwhile, saw their average incomes fall 10.7% to $33,068 in 2014, from $37,017 in 2007. ... The tippy top of the ladder — the Top 0.01% — actually have the farthest to go in order to return to pre-2007 levels. Their incomes are down 27.4% to $29 million in 2014.

Slate:  Maybe Wealth Inequality Isn’t Surging After All, by Jordan Weismann:

Economists Emmanuel Saez and Gabriel Zucman appeared to upend much of the old wisdom about America's wealth distribution in 2014, when they released an innovative study that gave readers a peek into the exploding fortunes of the top 0.1 percent. ... The top 1 percent's portion of the nation's pie had climbed to 42 percent. The top 0.1 percent's share had more than tripled, from 7 percent in 1978 to 22 percent in 2012. ...

The findings seemed like a blockbuster sequel to Saez's work with Thomas Piketty, with whom he popularized the idea of using tax information to trace income inequality. They also seemed to dispel the idea that the wealth gap wasn't growing in line with the income gap. Piketty himself endorsed the new numbers, saying they were more reliable than the statistics he had used in his best-selling book Capital in the Twenty-First Century.

But now they seem to be facing some stiff criticism. In a working paper presented during a recent Brookings conference, a group of economists from the Federal Reserve Board and the University of Pennsylvania argue that while wealth inequality is indeed growing, its rise has been much slower and less dramatic than the surge depicted by Saez and Zucman.

[Jesse Bricker, Alice Henriques & John Sabelhaus (Federal Reserve Board) & Jacob Krimmel (Wharton), Measuring Income and Wealth at the Top Using Administrative and Survey Data:

Abstract:  Most available estimates of US wealth and income concentration indicate that top shares are high and rising in recent decades, but there is some disagreement about specific levels and trends. Household surveys are the traditional data source used to measure top shares, but recent studies using administrative tax records suggest that those survey-based top share estimates may not be capturing all of the increasing concentration. In this paper we reconcile the divergent top share estimates, showing how the choice of data sets and methodological decisions affect the levels and trends. Relative to the new and most widely-cited top share estimates based on administrative tax data alone, our preferred estimates for both wealth and income concentration are lower and rising less rapidly in recent years.]

The disagreement between the two sides starts with their data sources. ...  For many years, the Federal Reserve's triennial Survey of Consumer Finances was considered the most important trove of information on American wealth. But Saez and Zucman chose to rely on tax data instead, arguing that it was more likely to capture the wealth of the extremely rich, who respond to government surveys less frequently than other Americans. Because the IRS doesn't actually track anybody's net worth, however, the duo had to reverse-engineer their estimates using what's known as the "capitalization" method: First they looked at IRS records to find the distribution of income from things like stocks and bonds, then they calculated how much wealth would be required to generate that money based on likely rates of return.

In their new paper, the Fed-Penn team contends that the Survey of Consumer Finances in fact does a fine job tracking down the superaffluent. There is one major omission, however: The survey purposely doesn't include any members of the Forbes 400, the decades-old ranking of America's richest (so no Warren Buffett or Donald Trump). To fix that flaw, the authors construct a new wealth measure that uses the Survey of Consumer Finances as a base, then adds the Forbes data (which makes the rich look richer), along with the total value of all defined-benefit pensions (which makes the middle class look richer). The final outcome: A relatively gentle but sustained rise in inequality since the 1980s, such that the top 1 percent now claim about 33 percent of household wealth (9 percentages points below Saez and Zucman's estimate), while the top 0.1 percent claimed less than 15 percent (about 7 percentage points below Saez's and Zucman's estimate). ...

5A

5B

Why does their approach find such lower levels of wealth concentration? The authors offer three main reasons.

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March 27, 2016 in Scholarship, Tax | Permalink | Comments (1)

The Top 5 Tax Paper Downloads

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

  1. [423 Downloads]  What Now? A Boomer's Baedeker for the Distribution Phase of Defined Contribution Retirement Plans, by Richard Kaplan (Illinois)
  2. [307 Downloads]  Lexisnexis® Guide to FATCA Compliance: Chapter 1, by Willliam Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  3. [258 Downloads]  The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums, by Shu-Yi Oei (Tulane) & Diane M. Ring (Boston College)
  4. [205 Downloads]  Taxing Wealth Seriously, by Edward J. McCaffery (USC)
  5. [201 Downloads]  Ownership of the Means of Production, by E. Glen Weyl (Chicago) & Anthony Lee Zhang (Stanford)

March 27, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The Next Big Thing In Employee Benefits:  401(k)s For Student Loan Repayment

401kNew York Times, Medical, Dental, 401(k)? Now Add School Loan Aid to Job Benefits:

Fidelity will apply up to $2,000 annually to the principal of its employees’ student debts. ... Fidelity is one of the more prominent employers to announce the student loan repayment benefit in recent months, a policy that seems likely to gain traction. The benefit helps address what some employers describe as a challenge attracting and retaining younger workers, many of whom can’t see beyond the burden of their student debt. Most employers that are offering the new perk also cap their costs at, say, $10,000 total per employee.

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March 27, 2016 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1053

IRS Logo 2News Busters, It’s Been 513 Days Since Any Big 3 Network Has Touched the IRS Scandal:

The latest stunning development in the IRS targeting scandal, that a federal appeals court on Tuesday scolded the IRS for failing to turn over its full list of groups it targeted, has yet to be reported on any of the Big Three (ABC, CBS, NBC) network evening or morning shows.

However, as NewsBusters’ Scott Whitlock reported, all three networks on Thursday found time to gush over Barack Obama’s “fancy footwork” and “dancing diplomacy” in Argentina.

In fact, it’s been 513 days since any network has touched the IRS scandal. The last mention arrived on the October 28, 2014 edition of CBS This Morning when John Dickerson noted voters in states that would decide control of the Senate in the 2014 midterms were skeptical of the government due to a “series of different things from the Secret Service to Ebola to the IRS scandal.”

The last time NBC noted the IRS scandal was 540 days ago on the October 5, 2014 Today show, when NBC’s Meet the Press host Chuck Todd briefly noted that public skepticism about the government’s handling of the Ebola crisis was well-earned due to “Secret Service blunders, IRS losing e-mails, the Veteran Affairs Administration botching all these wait times.” 

But that’s nothing compared to the IRS scandal news drought on ABC. The last time the IRS targeting imbroglio got any airtime on ABC was 686 days ago in a 16 second brief by Amy Robach on the May 8, 2014 edition of Good Morning America, when Robach reported that “six Democrats have joined Republicans in the House” to hold Lerner in contempt of Congress. ...

Since then there have been multiple revelations gone unreported by the networks ...

Of course, Fox News did the reporting the networks refuse to do on the latest IRS scandal development.

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March 27, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, March 26, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Court Allows Pace Law Grad Working As Secretary After Failing Bar To Discharge $15,000 Bar Loan; $300,000 Student Loan Debt Remains

Pace (2016)Wall Street Journal, Judge Says Bankrupt Law Grads Can Cancel Bar Loans:

A federal judge ruled law-school graduates who file for bankruptcy protection can cancel the debt they racked up while studying for the bar exam, finding such loans are different from traditional federal student loans that are rarely canceled by bankruptcy.

In an opinion filed Thursday [Campbell v. Citibank, No. 14-45990 (Bankr. E.D.N.Y. Mar. 24, 2016)], Judge Carla Craig of the U.S. Bankruptcy Court in Brooklyn, N.Y., said bar-exam loan debt is “a product of an arm’s-length agreement on commercial terms” and doesn’t fall into the category of student loans that stick with a borrower who files for bankruptcy.

The decision, which is the most thorough recent ruling on the matter, contradicts the widely accepted notion that student loan-related debt can be canceled in bankruptcy only under rare cases of extreme financial hardship.

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March 26, 2016 in Legal Education | Permalink | Comments (3)

Why The IRS's Technology Nightmare Is Far From Over

FortuneFortune, Why the IRS's Technology Nightmare Is Far From Over:

This is a story about the Internal Revenue Service, an 84,000-employee government agency with a job that’s as vital as it is hard to love—securing the trillions of dollars in taxes that make the government run. And these days, it’s an agency down on its luck: plagued by angry politicians, frustrated taxpayers, hordes of identity thieves, and—more recently—hackers.

The IRS’s latest and perhaps most spectacular foray into disaster was an online feature called Get Transcript. The tool, which for the first time allowed taxpayers to download their records directly from IRS.gov, was supposed to be the happy ending to the decades-long struggle to bring the IRS’s J.F.K.-era legacy technology into the Internet age. But in February the bureau announced that hackers had used Get Transcript to steal the personal information of 724,000 people. The hack, it turned out, was six times as damaging as the IRS initially thought when it detected the breach and shut down the tool last May.

Also in February, another attack used 101,000 stolen Social Security numbers to fraudulently generate PINs for electronic filing of tax returns. No IRS data were exposed, but in the wake of that scare the agency disabled another online tool with which certain taxpayers could retrieve a separate PIN they had been assigned for identity protection purposes.

The episodes illustrate the immense technological challenges facing the agency, which—even as annual tax receipts have risen to more than $3 trillion—still uses half-century-old magnetic tape to store and process tax return records, as well as versions of Windows so old that Microsoft abandoned upkeep for them years ago....

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March 26, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1052

IRS Logo 2Peter J. Reilly (Forbes), Sixth Circuit Looking To Protect Taxpayers From IRS Not IRS From Taxpayers:

Day 1049 of the IRS Scandal is the first day in a while with a real development. In the NorCal Tea Party Patriots litigation the IRS has really gotten slapped around by the Sixth Circuit for its dilatory conduct in long running litigation. The decision starts out by reiterating the preferred right wing narrative of the interminable never ending scandal. ...

At issue in this particular decision are lists of organizations flagged of special attention using “Be On the Lookout” criteria and two spreadsheets that the IRS provided to the Inspector General.  The reason the plaintiffs want the lists is to identify the members of their “class” in the putative class action suit.  The IRS has been refusing to turn over the lists arguing that they are “return information.” ...

As with any decision against the IRS in the interminable scandal, there is a good bit of coverage of the decision. I won’t try to duplicate the TaxProf and instead will refer you to Day 1049, Day 1050 and Day 1051.

The best discussion I have seen is on Paul Streckfus’s EO Tax Journal, which is not free. There are two main narratives of the scandal.  The one embraced by those who continue to pay attention is that there was a deliberately orchestrated conspiracy to impede the work of conservative groups.  The other is that the IRS has certain bureaucratic limitations in its ability to handle competing priorities and that the Tea Party applications created a perfect storm to bring out the worst in the Service .  Fundamentally the IRS can do some discreet things very well, but when you want it to walk and chew gum at the same time, things are less good.  Throw in people outside with political agendas pushing in opposite directions and the chance of paralysis is high.

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March 26, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, March 25, 2016

Thomas Jefferson Law School's Lawyer:  'This Is Not Trump University'

TJTFollowing up on yesterday's post, Jury Rejects Fraud Claim Against Thomas Jefferson Law School:

Above the Law, Thomas Jefferson Law’s Attorney Defends The School In An Interesting Way That’s Sure To Piss Off Donald Trump:

This is not, you know, Trump University. It is so not that. It is such a really excellent law school.

Michael Sullivan, an attorney for Thomas Jefferson School of Law, in comments made to reporters after a jury returned a verdict for the law school over plaintiff Anna Alaburda in her suit alleging the school published fraudulent job statistics in order to induce students to enroll. Trump University is currently embroiled in similar fraud suits.

Deborah Jones Merritt (Ohio State), Jury Verdict for Thomas Jefferson:

I would interpret Alaburda and its kin as a more cautionary tale. The widespread reporting practices provoking these lawsuits damaged the reputation of legal education. Most educators now agree that our prior practices were–at the very least–not as informative for prospective students as they should have been. Some of the practices, such as failing to report the number of students supplying salary data, bordered on deceitful.

After the jury verdict, Thomas Jefferson’s attorney told a reporter: “This is not, you know, Trump University. It is so not that.” In my opinion, law schools should have worked harder to avoid even the possibility of that comparison.

Quartz, A Law School Has Won a Court Case About Its Own Worth as a Law School:

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March 25, 2016 in Legal Education | Permalink | Comments (4)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Assistant Professor Sues Columbia For $20 Million, Says Senior Professor Sabotaged Her Work After She Rejected His Sexual Advances

Columbia 5New York Law Journal, Columbia Professor Accuses Colleague of Sabotaging Her:

An assistant professor in Columbia University's business school has filed a sexual harassment suit against the school, alleging that a senior professor sabotaged her work after she rejected his sexual advances and that Columbia refused to take steps to curb his behavior.

Enrichetta Ravina, an assistant finance professor, alleges in Ravina v. Columbia University, 16-cv-2137, that business professor Geert Bekaert used his authority to stall her research after she rebuffed him. Bekaert is not a party in the lawsuit.

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March 25, 2016 in Legal Education | Permalink | Comments (8)

Schizer:  Energy Subsidies — Worthy Goals, Competing Priorities, And Flawed Institutional Design

David Schizer (Columbia), Energy Subsidies: Worthy Goals, Competing Priorities, and Flawed Institutional Design:

The government often relies on targeted subsidies for both “green” energy and hydrocarbons. These subsidies pursue worthwhile goals. But unfortunately, many have design flaws that make them less effective or even counterproductive. The goal of this Article is to show how we can do better.

This Article focuses on three sets of issues. First, there often is tension between our environmental and national security goals. Unfortunately, the economics literature on energy largely ignores these tradeoffs by omitting national security from the analysis. This Article takes issue with this approach and suggests ways to manage these tradeoffs. Second, as a strategy to deal with these and other costs, this Article criticizes subsidies, and argues that Pigouvian taxes are a better alternative. Third, if we are stuck with subsidies for political reasons, this Article offers a number of ways to improve them.

The U.S. faces increased defense costs in securing access to oil, for instance, in deploying forces in the Middle East. Yet the economics literature on energy does not account for these national security costs, arguing that they are too difficult to quantify. Even so, difficulties in computing costs are not a reason to ignore them. This Article argues that national security costs need to be incorporated in the analysis, and considers ways to manage tradeoffs between these costs and environmental externalities.

The best way to manage these tradeoffs is with Pigouvian taxes.

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March 25, 2016 in Scholarship, Tax | Permalink | Comments (0)

Diana Leyden Named Special Trial Judge On U.S. Tax Court

LeydenDiana Leyden, Director of UConn's Low Income Taxpayer Clinic from 1999-2015 and currently Taxpayer Advocate in the New York City Department of Finance, has been named a Special Trial Judge of the United States Tax Court, effective June 2016:

Ms. Leyden is a magna cum laude graduate of Union College, received a Juris Doctor degree from the University of Connecticut School of Law, and holds a Masters in Tax Law (LLM) from Georgetown University Law Center.

Ms. Leyden formerly served as a Law Clerk to the Honorable Herbert Chabot, United States Tax Court. She practiced tax law with Steptoe & Johnson (Washington, DC), Powers & Hall (Boston, MA), and Day Pitney (Boston, MA.) In 1988 she worked as an Appeals officer and then an Appeals Bureau manager in the Massachusetts Department of Revenue, before working as a staff attorney in the Connecticut Department of Revenue Services handling business taxes and sales taxes. ...

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March 25, 2016 in Legal Education, Tax | Permalink | Comments (4)

Snakes On A Plane Or The IRS: Which Scares You More?

SnakesIRS2Washington Post, Snakes on a Plane or the IRS: Which Scares You More?:

I often talk to people who have been audited by the IRS and are now suffering the financial consequences. They owe tens of thousands of dollars and are digging their way out one monthly payment at a time.

So it was with great interest that I read a story by NerdWallet’s Liz Weston about how fewer people are scared of the IRS. Only 11 percent of survey participants in a NerdWallet poll are scared of being audited by the IRS. But one-third of those polled are afraid of reptiles, and 8.5 percent fear nonexistent zombies.

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March 25, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1051

IRS Logo 2Wall Street Journal, Appeals Court in Tea Party Case Puts Nick in Taxpayer Privacy Law:

Attempts to extract information out of the IRS usually run into a solid wall: Section 6103, the part of the tax code setting taxpayer privacy rules. It keeps Donald Trump’s tax returns—and everyone else’s—outside the scope of the federal Freedom of Information Act.

The Sixth U.S. Circuit Court of Appeals in Cincinnati just put a tiny but important dent in that wall, at least in the states covered by that appeals circuit. The IRS office that handles tax-exempt applications is in Cincinnati.

In an appeals court ruling noticed mostly for its rhetorical blasts at the Internal Revenue Service, Judge Raymond Kethledge, writing for a three-judge panel, said the privacy rules that protect “return information” don’t apply to the names and addresses of groups seeking tax-exempt status.

The law “does not entitle the IRS to keep secret (in the name of ‘taxpayer privacy,’ no less) every internal IRS document that reveals IRS mistreatment of a taxpayer or applicant organization—in this case or future ones,” Judge Kethledge wrote Tuesday. “Section 6103 was enacted to protect taxpayers from the IRS, not the IRS from taxpayers.”

Until the ruling, the government, Congress and tax lawyers all operated under the assumption that tax-exempt groups’ names only become public if approved by the IRS. The IRS releases redacted letters denying tax-exempt status, while the names of groups that apply and withdraw–often after questions from the IRS–never become public.

“6103 is usually interpreted pretty broadly by the courts, with a lot of deference from the courts to the IRS,” said Lloyd Hitoshi Mayer, a tax law professor at the University of Notre Dame. “This is a significant change.” ...

George Yin, former chief of staff of the congressional Joint Committee on Taxation, said he was sympathetic to the policy view encapsulated in the court’s ruling. But Mr. Yin, now a law professor at the University of Virginia, said internal IRS processing of applications is covered by the privacy law. “The other Circuits that have looked at this issue are correct,” Mr. Yin wrote in an e-mail, “but the 6th Circuit was not.”

The Hill, IRS Commissioner: Court Ruling Raises Privacy Concerns for Taxpayers:

IRS Commissioner John Koskinen is warning that an appeals court ruling in the agency’s political-targeting scandal could put taxpayers’ privacy at risk.

"If suddenly, your name on an application and your address is available to the public, I think it’s going to … raise a concern by a lot of taxpayers who may not want anyone else to know what they’re applying for,” Koskinen told reporters Thursday, after delivering a speech at the National Press Club.

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March 25, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Thursday, March 24, 2016

Jury Rejects Fraud Claim Against Thomas Jefferson Law School

Thomas Jefferson Logo (2015)San Diego Union-Tribune, Jury Rejects Fraud Claim Against Law School:

A San Diego Superior Court jury on Thursday disagreed with a former law student who claimed the Thomas Jefferson School of Law willfully misrepresented employment data to perspective students.

The jury was split, 9-3, in the school's favor.

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March 24, 2016 in Legal Education, New Cases | Permalink | Comments (12)

Polsky Presents The Up-C Tax Revolution Today At Duke

Polsky (2015)Gregg Polsky (North Carolina) presents The Up-C Revolution (with Adam Rosenzweig (Washington University)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Over the past few years, a revolutionary new tax structure, known as the Up-C, has been increasingly utilized, 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 original 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 original 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 use of Up-Cs is growing at an exponential rate.

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March 24, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Cauble Presents Reforming The Non-Disavowal Doctrine Today At Indiana

Cauble (2016)Emily Cauble (DePaul) presents Reforming the Non-Disavowal Doctrine, 36 Va. Tax Rev. ___  (2016), at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

One well established feature of tax law is that, oftentimes, substance prevails over form. In other words, the substance of a transaction will determine the transaction’s tax consequences. For instance, tax consequences will not depend solely on the label that a taxpayer assigns to a given transaction. Instead, the IRS can examine the transaction’s economic features to more accurately characterize it for tax purposes.

Also deeply entrenched in tax law is the notion that, frequently, the IRS experiences more success than taxpayers when invoking the notion that substance prevails over form. In other words, when substance matters, the IRS can freely assert that a transaction should be taxed based on its true substance rather than the form selected by the taxpayer. A taxpayer, by contrast, is less likely to succeed when making the same assertion. The resistance to taxpayers’ attempts to invoke the substance-over-form doctrine is known as the "Non-Disavowal Doctrine."

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March 24, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Life After Law School: Long Term Outcomes And The Value Of Legal Education

NYU Celebrates 70th Anniversary Of Graduate Tax Program (And 20th Anniversary Of International Tax Program)

NYU (2015)Today, NYU is celebrating the 70th anniversary of the Graduate Tax Program and the 20th anniversary of the International Tax Program. The speakers are:

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March 24, 2016 in Legal Education, Tax | Permalink | Comments (1)

Connecticut Bill Would Tax Yale's $25.6 Billion Endowment

Yale University LogoBloomberg, Cash-Strapped Connecticut Wants to Tax Yale Endowments:

Yale University’s endowment earned $2.6 billion in investment gains in fiscal 2015. A proposed bill in the Ivy League school’s home state of Connecticut is eyeing a share of the bounty as a source of revenue.

Schools with funds of $10 billion or more -- affecting Yale only -- could face a tax on endowment income, according to legislation introduced this month. Yale’s record $25.6 billion fund is the second largest in U.S. higher education, behind Harvard University’s $37.6 billion.

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March 24, 2016 in Legal Education | Permalink | Comments (2)

IRS Auditing Of Big Corporations Plummets

TRAC/IRS, IRS Auditing of Big Corporations Plummets: Potential Annual Revenue Loss $15 Billion:

Very timely enforcement information obtained from the Internal Revenue Service show that total revenue agent audit hours aimed at larger corporations — those with $250 million or more in assets — dropped by more than one third (34%) from FY 2010 to FY 2015.

Figure 1

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March 24, 2016 in IRS News, Tax | Permalink | Comments (2)

Henderson:  Solving The Legal Profession's Diversity Problem

William D. Henderson (Indiana), Solving the Legal Profession's Diversity Problem (blogged here):

Among both diverse and white lawyers, there is a widespread perception that the legal profession's lack of diversity is due to a lack of moral resolve. As a result, each successive generation of leadership pledges to deepen its level of commitment. This article argues that the lack of progress is attributable to a systems problem rather than a moral deficit.

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March 24, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

UMKC Law School Seeks To Hire Two Tax Clinicians

UMKCThe University of Missouri-Kansas City School of Law seeks two clinical faculty members who will serve as Director and Assistant Director of the Tax Clinic, in the role of Assistant/Associate Clinical Professors, beginning in summer 2016. These are non-tenure track appointments subject to continuing receipt of grant funding from the IRS:

The primary role of these position will be to serve as a clinical professors in the Low Income Taxpayer’s Clinic, providing legal assistance to clients and supervising student work. The successful applicants would also assist with the Law School’s Taxation LLM by teaching or co-teaching taxation coursework, and engaging in other tasks related to the law school tax curriculum as appropriate. Required qualifications include: A J.D. degree from an accredited Law School with a strong academic record; admission to the Missouri Bar (or eligibility for reciprocal admission); at least five years of experience in federal tax practice, including extensive experience in representation before the Internal Revenue Service; excellent interpersonal and communication skills; the ability to work in teams; and experience in teaching or advising students or junior lawyers.

Applicants must apply by submitting a resume, letter of interest and list of at least three references through UMKC’s Human Resources website.

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March 24, 2016 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)