TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, November 17, 2017

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Geier: Principled Tax Reform

GeierTaxProf Blog op-ed: Principled Tax Reform, by Deborah A. Geier (Cleveland-Marshall)

Republicans often say that their proposed tax reform is the first in 30 years, implicitly invoking the Tax Reform Act of 1986, but the efforts could not be more different in overarching philosophy and context.

First the context. In 1986, President Reagan said that he would not sign a tax bill that was not revenue neutral, at a time when the national debt was $2.1 trillion, the debt-to-GDP ratio was 46%, and the baby boomers were not near retirement. The effort was truly bipartisan with public hearings and significant changes made by both sides of the aisle so that the House passed its bill by voice vote and the Senate passed its bill by 97-3. The final bill reconciling the two versions passed by 292-136 in the House and 74-23 in the Senate.

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November 17, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

After 86% Enrollment Decline, Valparaiso Law School Stops Admitting Students And Will Likely Close

Valpo (2018)Wall Street Journal,  Valparaiso Law School Suspends Admissions:

The tough climate for legal education has claimed another victim.

Valparaiso University, a private university in Northwest Indiana, said Thursday its board of directors voted to stop enrolling new law school students, meaning the law school will likely be wound down over the next few years.

Enrollment has plummeted at Valparaiso University Law School, once a well-respected regional school. This year’s incoming class had just 29 full-time students, down from 206 in 2013.

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November 17, 2017 in Legal Education | Permalink | Comments (3)

ATPI Hosts Conference Today On Tax Incentives For State, Local, And International Economic Development

ATPI Logo (2015)The American Tax Policy Institute hosts its Annual Fall Conference today on Tax Incentives for State, Local, and International Economic Development at Skadden in Washington, D.C.:

US states and localities spend $45 billion annually on tax incentives and other programs intended to spur economic development. Countries around the world similarly offer tax holidays, investment credits, and other preferential tax treatments in a bid to promote investment and create jobs. Do these policies work? At what cost? Are there better and worse ways to spur local economic growth and productivity gains? What might international practitioners learn from their state and local counterparts and vice versa? This one-day conference co-sponsored by the American Tax Policy Institute and the Murphy Institute at Tulane University will explore these questions from a variety of perspectives in international and state and local taxation as well as regional and economic growth. Researchers in law, economics, and accounting will join practitioners at all government levels to identify best practices and how to encourage policies that benefit all taxpayers.

Panel #1:  State & Local Tax Incentives in the United States: Overview and Assessment
Steven Sheffrin (Tulane) (moderator)
Timothy Bartik (W.E. Upjohn Institute)
Patrick Button (Tulane)
Carlianne Patrick (Georgia State)

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November 17, 2017 in Conferences, Tax | Permalink | Comments (0)

Avi-Yonah: Altera, The Arm’s Length Standard, And Customary International Tax Law

Reuven S. Avi-Yonah (Michigan), Altera, the Arm’s Length Standard, and Customary International Tax Law, 38 Mich. J. Int'l L. Opinio Juris 1 (2017):

The recent Altera case in the US Tax Court (on appeal to the Ninth Circuit) raises interesting issues in regard to the much-debated topic of whether customary international tax law (CITL) exists. Altera involved the question whether the cost of employee stock options should be included in the pool of costs that must be shared under a cost sharing agreement. In Xilinx, the Ninth Circuit held under a previous version of the regulations that these costs should not be included because unrelated parties operating at arm’s length would not have agreed to include them. Treasury then amended the regulation to state specifically that “all” costs includes the cost of stock options but did not carve out an exception from the arm’s length standard. In Altera, the Tax Court sitting en banc invalidated the new regulation on the ground that it was inconsistent with the arm’s length standard (ALS).

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November 17, 2017 in Scholarship, Tax | Permalink | Comments (0)

National Taxpayer Advocate Blog: Caring About “Sharing” — The IRS Should Do More For Participants In The Gig Economy

Taxpayer Advocate (2016)NTA Blog, Caring about “Sharing” – The IRS Should Do More for Participants in the Gig Economy:

In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.

Nearly a quarter of the U.S. population earns money from the sharing economy. Although it may be growing at a healthy rate, I want to make clear that not all sharing economy participants are finding it to be a very lucrative endeavor. On the contrary, data show that the vast majority – 85 percent – earn less than $500 per month from their gigs.

Furthermore, many of the service providers are simply unfamiliar with the tax filing and recordkeeping requirements. Service providers in the sharing economy may not fit the mold of the traditional employee who works “9 to 5” and receives a Form W-2 from one employer. Rather, a service provider in the sharing economy may have to take on multiple gigs to help make ends meet, making it difficult to track and allocate expenses among the various gigs. The majority of them do not receive any tax information from the sharing economy platform they use to earn their income. This demonstrates both the need for guidance from the IRS and the opportunity to create a culture of tax compliance among participants in the sharing economy from the outset. Establishing the tax compliance norms for this emerging industry in its infancy will assist the IRS as this segment of taxpayers grows. 

This leads us to the question, “What can the IRS do to help sharing economy participants comply with their tax obligations?” First, when looking at noncompliance, it is important to distinguish between the various types of noncompliance the IRS encounters. Not all noncompliant taxpayers are willfully noncompliant; many of them are tripped up by “unknowing” or “lazy” noncompliance. That is, some taxpayers are simply unaware of their tax compliance obligations. Many sharing-economy entrepreneurs and merchants have never operated a small business and need to understand certain basic tax obligations (i.e., making required quarterly estimated payments throughout the year to avoid penalties).

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November 17, 2017 in Gov't Reports, IRS News, News, Shuyi Oei, Tax | Permalink | Comments (0)

Thursday, November 16, 2017

Goldin Presents Complexity and Take-up of the Earned Income Tax Credit At Northwestern

Goldin (2017)Jacob Goldin (Stanford) presented Complexity and Take-up of the Earned Income Tax Credit at Northwestern yesterday as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Tax benefits like the Earned Income Tax Credit (EITC) represent an important source of income to their recipients, but millions of those who are eligible to claim tax benefits fail to do so. One possible explanation is that the rules governing most tax benefits are extraordinarily complex. I consider efforts to increase tax benefit take-up in light of this complexity. A key fact in thinking about this issue is that the vast majority of tax filers today prepare their taxes with assisted preparation methods (APMs) like software or professional assistance. Because APMs eliminate most of the barriers to claiming tax benefits for which one is eligible, I ague that efforts to increase benefit take-up should focus on inducing benefit-eligible individuals to file a tax return using an APM. In contrast, efforts aimed at increasing awareness of a benefit (of the type widely employed by governments and nonprofits) are less likely to be successful, except to the extent they themselves induce an increase in tax filing.

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November 16, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Calls For Tougher Oversight Of Florida Coastal Law School

Florida Coastal (2017)Following up on my previous post, Florida Coastal Responds To ABA's Finding Of Noncompliance With Accreditation Standards: 'Our 1L Entering Credentials Exceed 23 Other Law Schools':  Inside Higher Ed, Calls for Tougher Oversight of For-Profit Law School:

Observers say the apparent issues at Florida Coastal are reason for regulators, including the ABA and the Department of Education, to take a more comprehensive look at the law school's parent company, InfiLaw. The company saw one of its law programs, Arizona Summit, placed on probation by the ABA in March over similar issues, and another, Charlotte School of Law, shut down in August after being placed on probation and losing access to Title IV funds last year. And Florida Coastal was one of only two law programs to fail the Department of Education's gainful-employment test in January with a debt-to-discretionary-income ratio of more than 34 percent (the department has since delayed accountability provisions of the gainful-employment rule that would affect an institution's access to Title IV funds).

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November 16, 2017 in Legal Education | Permalink | Comments (0)

Knoll: The Disparate Federal Income Tax Treatment Of Business And Non-Business State And Local Taxes

Michael S. Knoll (Pennsylvania), Not Too SALT-y: The Disparate Federal Income Tax Treatment of Business and Non-Business State and Local Taxes:

The Tax Cuts and Jobs Act, H.R. 1, would eliminate the federal income tax deduction for nonbusiness state and local taxes while maintaining the deduction for business state and local taxes. That disparate treatment has generated a storm of negative commentary. In this short essay, I consider whether the federal tax law should allow a deduction for business state and local taxes assuming that there is no deduction for nonbusiness state and local taxes. I argue that investors and businesses, including pass-through businesses, should be allowed to deduct state and local property and sales taxes, but not general income taxes. 

November 16, 2017 in Scholarship, Tax | Permalink | Comments (0)

NY Times: She Took On Colombia’s Soda Industry. Then She Was Silenced.

New York Times, She Took On Colombia’s Soda Industry. Then She Was Silenced.

BOGOTÁ, Colombia — It began with menacing phone calls, strange malfunctions of the office computers, and men in parked cars photographing the entrance to the small consumer advocacy group’s offices.

Then at dusk one day last December, Dr. Esperanza Cerón, the head of the organization, said she noticed two strange men on motorcycles trailing her Chevy sedan as she headed home from work. She tried to lose them in Bogotá’s rush-hour traffic, but they edged up to her car and pounded on the windows.

“If you don’t keep your mouth shut,” one man shouted, she recalled in a recent interview, “you know what the consequences will be.”

The episode, which Dr. Cerón reported to federal investigators, was reminiscent of the intimidation often used against those who challenged the drug cartels that once dominated Colombia. But the narcotics trade was not the target of Dr. Cerón and her colleagues. Their work had upset a different multibillion-dollar industry: the makers of soda and other sugar-sweetened beverages.

Their organization, Educar Consumidores, was the most visible proponent of a proposed 20 percent tax on sugary drinks that was heading for a vote that month in Colombia’s Legislature. The group had raised money, rallied allies to the cause and produced a provocative television ad that warned consumers how sugar-laden beverages can lead to obesity and diet-related illnesses like diabetes.

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November 16, 2017 in News, Shuyi Oei, Tax | Permalink | Comments (0)

Senate GOP Tax Bill Includes A 'Harvey Weinstein Tax'

WeinsteinUSA Today, Beer, Booze and a Harvey Weinstein Tax Make It Into the Latest Senate Tax Overhaul Plan:

Sex and booze made it into the congressional battle over taxes in a late-night revision.

The latest changes to a Senate Republican tax plan, released at 10:30 p.m. on Tuesday, include tax cuts for producers of beer, wine and liquor, and a new provision that might be called the Harvey Weinstein tax: An end to corporations' ability to deduct attorney fees and settlement payments in sexual harassment or abuse cases if there is a nondisclosure agreement. ...

The change dealing with lawsuit settlements was proposed by Sen. Bob Menendez, D-N.J., and spokesman Juan Pachon said it was motivated by publicity about settlements over harassment by Hollywood producer Weinstein and former Fox News commentator Bill O'Reilly.

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November 16, 2017 in Congressional News, Tax | Permalink | Comments (3)

Herzfeld: A History Of The ABA Tax Section

ABA Tax Section (2017)Mindy Herzfeld (Florida), How Lawyers Dominate: A History of the ABA Tax Section:

The story of how tax attorneys came to dominate the fields of tax policy and sophisticated tax practice is the success story of an organized professional association. The prominence of the role of attorneys in the development and practice of the tax law was not a foregone prerequisite of the U.S. federal income tax system. Rather, the professional organization of attorneys into a specialized group within bar associations has played a significant role in making lawyers the central players in tax policy and tax practice in the U.S.

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November 16, 2017 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Wake Forest Is Tenth Law School To Accept GRE For Admissions

Wake Forest Law School (2016)Following up on my previous posts (links below): Wake Forest is the tenth law school to accept the GRE as an alternative to the LSAT, joining (in chronological order) Arizona, Harvard, Northwestern, Georgetown, Hawaii, Washington University, ColumbiaSt. John's, and Texas A&M:

As the college of Wake Forest University attracts more and more students with STEM backgrounds and interests, the law school should be prepared … for an increasingly educationally diverse student body, with students who want to pursue a law degree, perhaps in combination with another graduate degree.

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November 16, 2017 in Legal Education | Permalink | Comments (0)

Texas A&M Is Ninth Law School To Accept GRE For Admissions

Texas A&M 2Following up on my previous posts (links below): Texas A&M is the ninth law school to accept the GRE as an alternative to the LSAT, joining (in chronological order) Arizona, Harvard, Northwestern, Georgetown, Hawaii, Washington University, Columbia, and St. John's

“Our decision to accept the GRE will make it easier and cheaper for Texans to gain access to law school,” said Interim Dean Thomas W. Mitchell. “It will also make law school more attractive to highly qualified students who have diverse educational backgrounds and interests, including students from fields such as engineering and science.”

To comply with American Bar Association standards, the Law School participated in a validity study involving current and past Texas A&M students. The study found that the GRE is a strong predictor of success in the first year at Texas A&M.

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November 16, 2017 in Legal Education | Permalink | Comments (0)

Wednesday, November 15, 2017

Western Michigan-Cooley Law School Seeks TRO To Prevent ABA From Releasing A Letter About Its Accreditation Status

Thomas Cooley Logo (2014)Following up on my previous post, ABA Notices To Law Schools About Potential Non-Compliance With Accreditation Standards:  Western Michigan University Cooley Law School has filed a  Motion for Temporary Restraining Order and Preliminary Injunction seeking to prevent the ABA from publishing a letter concerning Cooley's accreditation status during "the most critical time for students selecting their law school":

Pursuant to Federal Rule of Civil Procedure 65 and Local Civil Rule 7.2, Plaintiff Thomas M. Cooley Law School moves for a temporary restraining order against the Defendant, the American Bar Association (“ABA”). The ABA’s Section of Legal Education and Admissions to the Bar, through its Council of the Section of Legal Education and Admissions to the Bar, has informed Cooley that it intends to publish and disseminate a letter on November 14, 2017 pertaining to proceedings related to Cooley’s accreditation as an accredited law school. ABA purports to publish the letter “in accordance with U.S. Department of Education regulation 34 C.F.R. § 602.26.” However, that section provides authorization for disclosing “final decisions” to take “adverse actions” against an institution. Nothing of the sort is present in the ABA’s letter and permitting the ABA’s letter to be published now, in the middle of the most critical time for students selecting their law school, poses an unreasonable high risk of immediate and irreparable harm to Cooley going forward. 

Brief in Support of Motion For Temporary Restraining Order and Preliminary Injunction:

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November 15, 2017 in Legal Education | Permalink | Comments (0)

Lockwood Presents Regressive Sin Taxes Today At Penn

LockwoodBenjamin B. Lockwood (Pennsylvania) presents Regressive Sin Taxes (with Dmitry Taubinsky (UC-Berkeley)) at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

A common objection to “sin taxes” — corrective taxes on goods like cigarettes, alcohol, and sugary drinks, which are believed to be over-consumed — is that they fall disproportionately on low-income consumers. This paper studies the interaction between corrective and redistributive motives in a general optimal taxation framework. On the one hand, redistributive concerns amplify the corrective benefits of a sin tax when sin good consumption is concentrated on the poor, even when bias and demand elasticities are constant across incomes. On the other hand, a sin tax can generate regressivity costs, raising more revenue from the poor than from the rich.

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November 15, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

ABA Places Thomas Jefferson Law School On Probation

Thomas Jefferson Logo (2015)Following up on my previous post, ABA Notices To Law Schools About Potential Non-Compliance With Accreditation Standards:  ABA Section of Legal Education and Admission to the Bar, Council Decision: Notice of Probation and Specific Remedial Action — Thomas Jefferson School of Law:

At its November 3-4, 2017 meeting, the Council of the Section of Legal Education and Admissions to the Bar (the “Council”) conducted a hearing pursuant to Rules 2, 3, 16, 22, 24, and 25 of the Rules of Procedure to with respect to the recommendation of the Accreditation Committee (the “Committee”) that the Thomas Jefferson School of Law (the “Law School”) be placed on probation and be directed to take specific remedial action with regard to its non-compliance with Standards 202(a) and (d), 301(a), 501(a) and (b), and Interpretations 501-1 and 501-2

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November 15, 2017 in Legal Education | Permalink | Comments (0)

Ed Larson Receives 2017 Friend Of Darwin Award

It was my great honor to present the 2017 Friend of Darwin Award to my dear friend and colleague Ed Larson at our faculty meeting yesterday.  The Friend of Darwin Award is given annually by the National Center for Science Education:

NCSE is pleased to announce the winners of the Friend of Darwin award for 2017:  Edward J. Larson, the Pepperdine University historian and legal scholar who won a Pulitzer Prize for his 1997 book about the Scopes trial, Summer for the Gods. ... "The legal history of the creationism/evolution controversy is important to NCSE, and nobody has studied it more thoroughly and insightfully than Ed Larson," commented NCSE's executive director Ann Reid.

Ed Larson Award

Here is the text that the National Center for Science Education asked me to read in presenting the award to Ed:

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November 15, 2017 in Legal Education | Permalink | Comments (2)

ABA Removes Public Censure Of Valparaiso Law School

Ring Reviews Hatfield's Cybersecurity And Tax Reform

Jotwell (Tax) (2016)Diane Ring (Boston College), Cybersecurity and Tax Information: A Vicious Cycle? (JOTWELL) (reviewing Michael Hatfield (University of Washington), Cybersecurity and Tax Reform, 93 Ind. L.J. ___ (2018)):

The international tax arena is awash with calls for tax transparency, and a variety of reforms are underway at the national, regional and global level to bring such transparency to fruition. See, e.g., Joshua Blank’s recent article The Timing of Tax Transparency [90 S. Cal. L. Rev. 449 (2017)], reviewed by Omri Marian earlier this year. Of course, with great caches of information comes great potential for security breaches of all types. Michael Hatfield, in his forthcoming article, Cybersecurity and Tax Reform, draws attention to the immensely important cybersecurity risks and challenges of a tax system founded on government collection and use of significant quantities of information. Quoting a former FBI Assistant Director, Hatfield describes IRS taxpayer information as “the gold standard” for being a “treasure trove of information” from the perspective of cyber criminals—large quantities of very valuable data housed in one agency. Is the IRS ready? Maybe not.

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November 15, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Most Interesting LL.M. Students in the U.S.: Priyanka Sharma (Pepperdine)

The Most Interesting LL.M. Students in the U.S., Nat'l Jurist, Fall 2017, p.26

Foreign attorneys flock to the U.S. to earn LL.M.s, and many return home to help improve their countries' legal systems. We talk with some of the most interesting foreign students at American law schools this year. 

Sharma 2Priyanka Sharma's reason for coming to the U.S. for an LL.M. is ... that she sees a need in the world. Sharma says her home country of India has a dire need for lawyers who can use alternative dispute resolution (ADR) techniques. She hopes to make the ADR process work more effectively and also build a name for herself. Her path to Pepperdine University School of Law hasn't been easy. Sharma said her family thought an LL.M. for a woman was a waste of money.

But she's always been rebellious and wanted the freedom to do more than get married and raise a family.

Sharma compares her journey to the freedom that dispute resolution provides: "Freedom from long court procedures , free­dom from biases, freedom from costs and freedom from traditional litigation. l have new life, new opportunities with more confidence. This new journey will hopefully bring more confidence in me and help me to build an individual identity so that I can set an example for other girls in my family who, like me, want to achieve their dreans."

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November 15, 2017 in Legal Education | Permalink | Comments (0)

Harvard: A Tax-Free Hedge Fund That Happens To Have A University

Harvard 1Wall Street Journal op-ed:  A Hedge Fund That Has a University, by Thomas Gilbert (University of Washington) & Christopher Hrdlicka (University of Washington):

Whatever you may hear, the Republican tax-reform proposal isn’t an assault on higher education. The House and Senate plans include a new 1.4% excise tax on the net investment income of university endowments, but the levy applies only to private colleges with at least 500 students and endowments of more than $250,000 a student. Schools like Harvard, Yale, Stanford and Princeton—which together hold over $100 billion—are predicting doom. Yet this long-overdue tax will benefit higher education in the end.

Over the past 30 years universities have chased higher returns on their endowments, leading them to take greater risks. Our research shows that more than 75% of the assets in university endowments are now in risky investments: equities, hedge funds and private equity. Think of Harvard as a tax-free hedge fund that happens to have a university.

The proposed levy on investment income—dividends, interest and capital gains—is fundamentally a tax on this risk-taking, not on the endowments themselves. By taxing risk-driven income, the GOP plan doesn’t target higher education. It goes after hedge funds masquerading as university endowments. ...

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November 15, 2017 in Legal Education, Tax | Permalink | Comments (7)

Tuesday, November 14, 2017

Listokin Presents The Law And Economics Of Recessions Today At Columbia

Listokin (2015)Yair Listokin (Yale) presents Law and Macroeconomics: The Law and Economics of Recessions at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

In this Article, I offer a macroeconomic perspective on law that reshapes the microeconomic perspective that currently dominates law and economics. I argue that 1. The economy works one way in ordinary economic conditions, in which supply capacity determines output, and a different way in deep recessions, in which demand for spending determines output. 2. Because the economy functions differently in deep recessions than in ordinary times, a law causes one set of effects in deep recessions and a different set of effects at other times. 3. Because the same law has different effects at different times, law should be different in deep recessions than in other times. Specifically, law should do more to promote spending in deep recessions than in ordinary economic conditions. Because the stakes of deep recessions are so high (tens of trillions of dollars in lost output, countless lives impaired, and political upheaval), I argue that the (significant) costs associated with introducing macroeconomics into law are worth bearing.

November 14, 2017 in Colloquia | Permalink | Comments (0)

Will Florida State's Alcohol Ban Cause Law School's Ranking To Fall?

Florida State logoTallahassee Democrat op-ed:  Open Letter to President Thrasher About Unintended Consequences, by Lex Lorenzo (J.D. 2018, Florida State):

I am a law student and president of a registered student organization at FSU Law, one of the around 700 RSOs that have been affected by your broadly worded blanket alcohol ban.

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November 14, 2017 in Law School Rankings, Legal Education | Permalink | Comments (3)

Ohio State Accuses 83 Students Of Cheating Through GroupMe Messaging App

GroupMeInside Higher Ed, Cheating Without Intent:

News dropped this month that Ohio State University charged scores of students with cheating in a business course taken in the spring, saying that 83 students used the messaging app GroupMe for “unauthorized collaboration on graded assignments.”

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November 14, 2017 in Legal Education | Permalink | Comments (0)

Call For Papers: International Tax Law And Policy

Call For Papers: International Tax Law And Policy:

Media reports of tax avoidance scandals have drawn unprecedented attention to the importance of robust international tax law and policy. Although without the same level of media fanfare, the OECD’s base erosion and profit shifting (BEPS) program has similarly commanded substantial attention over the last five years.

For many tax scholars, the draw of these twin pillars — tax avoidance scandals and BEPS — has been irresistible and much international tax scholarship has focused on engaging with the details of those issues. However, the pervasive and critical challenges of appropriate international tax system design remain.

This Special Issue asks scholars to look beyond the dominant conversations and to survey the changing landscape of international tax law and policy.

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November 14, 2017 in Scholarship, Tax | Permalink | Comments (0)

Caron: Pepperdine's Place In The New World Of Legal Education

Dean Caron PhotoPaul L. Caron (Dean, Pepperdine), Pepperdine's Place in the New World of Legal Education, Pepperdine Magazine, Vol. 9, Issue 3, Fall 2017, p. 4:

This is an epochal moment in legal education. The legal profession has yet to fully recover from the 2007–08 financial crisis as technology disrupts law firm business models. Law schools, in turn, facing a declining applicant pool, have responded by reducing the size of their entering classes to maintain the academic credentials of their students and equip them to pass the bar exam and obtain meaningful professional employment after graduation

In the midst of these challenges, the University has asked the School of Law to recommit to becoming what we have long aspired to be: the nation’s premier Christian law school, combining academic and research excellence with an ever-deepening Christian faith while being welcoming to all.

With the University’s assistance, we reduced the size of our entering class by 25 percent this fall and increased our median LSAT (to 160) and UGPA (to 3.62). This reduced class size will enable us, over time, to continue to increase our students’ academic credentials and fuel our efforts to continue to increase the rates of our students’ bar passage and job placement.

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November 14, 2017 in Legal Education | Permalink | Comments (2)

19 Tax Profs Weigh In On The House And Senate Tax Bills

Judge Kozinski On The 'Timeless And Tiresome' Debt/Equity Distinction

Hewlett-Packard v. Commissioner, Nos. 14-73047 &  14-73048 (9th Cir. Nov. 14, 2017) (Kozinski, J.):

Summary:  The panel affirmed the Tax Court’s decision on a petition for redetermination of federal income tax deficiencies that turned on whether an investment by taxpayer Hewlett-Packard (HP) could be treated as equity for which HP could claim foreign tax credits.

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November 14, 2017 in New Cases, Tax | Permalink | Comments (0)

Chorvat: Anti-Inversion Regulation Invalidated In Federal Court

Elizabeth Chorvat (Illinois), Anti-Inversion Regulation Invalidated in Federal Court, 157 Tax Notes 401 (Oct. 16, 2017):

Under the Supreme Court’s Mayo decision, legislative and interpretive regulations are accorded Chevron deference if they comply with the Administrative Procedure Act (APA) notice and comment requirements. In Chamber of Commerce v. IRS on September 29, the U.S. District Court for the Western District of Texas extended the rule to temporary regulations, invalidating reg. section 1.7874-8T, the so-called multiple acquisition rule, for failure to comply with the notice and comment procedures under the APA. Reg. section 1.7874-8T was issued as part of the 2016 temporary regulations designed to limit the U.S. tax benefits following an inversion.

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November 14, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, November 13, 2017

Herzig Presents Structural Inequities Of Exchange Traded Funds Today At Loyola-L.A.

Herzig (2018)David Herzig (Valparaiso) presents Structural Inequities of Exchange Traded Funds at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Exchange Trade Funds (ETFs) have almost as many assets under management as Mutual Funds. ETFs are often compared to Mutual Funds as a more efficient version of the same structure. The popular narrative espouses that these tax efficiencies account for the growth of the sector. This narrative is incomplete and misleading. These two structures have key differences other than tax efficiency. These structural differences have created an environment where aggressive bets against their performance, e.g. shorts, and high levels of internal leverage of the fund take place. Because of the vulnerabilities caused by the structural differences between ETFs and Mutual Funds, ETFs may not be the better structure but, rather, be the canary in the coal mine for the next market crash. This article proposes both tax and regulatory rules to rein in ETFs.


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November 13, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Applications To Attend 2018 Tax Court Judicial Conference At Northwestern Are Due Nov. 17

Northwestern Tax Court
The 2018 Tax Court Judicial Conference will be held at Northwestern Law School on March 26-28, 2018 (press release; FAQ):

The purpose of the judicial conference is to provide attendees with the opportunity to (1) review and discuss issues of material interest regarding the tax litigation process, (2) discuss ways in which the tax litigation process in the Court may be improved, and (3) network with fellow Tax Court practitioners. In addition to the Judges of the United States Tax Court, the Court intends to invite representatives from the Internal Revenue Service, the Department of Justice, private practice, low-income taxpayer clinics, academia, Capitol Hill, and other courts. A variety of plenary and breakout sessions will address issues relevant to practice before the Court.

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November 13, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Percentage Of Women Making BigLaw Partner Continues To Rise, But Still Lags Men

Diversity & Flexibility Alliance, New Partner Report:

The Alliance’s New Partner Report is a yearly compilation and examination of data from over 100 of the nation’s largest and top-grossing law firms about the attorneys promoted to partnership in U.S. offices. ...


Based upon this data, roughly 38 percent (38.1) of attorneys promoted to partnership in 2017 in the U.S. offices of many of the nation’s largest law firms were women, while 61.9 percent were men. Among the 133 firms for which data was collected, 43 firms (32.3%) reported a 50/50 split or greater in favor of women, marking a significant increase over previous years. ...

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November 13, 2017 in Legal Education | Permalink | Comments (0)

An Expressive Theory of Tax

Kitty Richards, An Expressive Theory of Tax, 26 Cornell J.L. & Pub. Pol'y ___ (2017):

The tax code is full of ineffective, inefficient, inequitable, or otherwise problematic provisions that make little sense when evaluated through the lens of traditional tax policy analysis, yet remain popular with citizens and legislators alike. The tax literature is equally full of carefully-researched, technically precise, and theoretically sound proposals for reform that nonetheless fail to get traction in the public debate. Why?

What tax scholarship is missing is the importance of social meaning: what do our tax laws say about our society’s values, and how is taxation being used to construct cultural ideals in contested spaces?

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November 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Why Are LSAT-Takers Trending Up Following 5-Year Plunge?

Following up on last week's post, LSAT Test-Takers Continue To Surge, With 10.7% Increase In Sept/Oct Following June's 19.8%:, LSAT-Takers Trending Up Following 5-Year Plunge. Why?:

A continuing surge in the number of people taking the Law School Admission Test this year provides another glimmer of hope to law schools that a drought in the applicant pool might be ending.

LSAT numbers have seen modest single-digit gains in the last two testing years, following a five-year decline in which the number of LSAT test-takers dropped by nearly 41 percent.

LSAT Graph

The trend upward is seen as welcome news for law schools — and the profession — since a bigger pool gives schools better odds for admitting more qualified applicants.

In September, 37,100 people took the LSAT, a 10.7 percent increase over September 2016. And in June, 27,600 people took the LSAT, a 19.8 jump compared with June 2016. The number of people registering for the December LSAT is also up nearly 20 percent compared with last year, said Kellye Testy, president and CEO of the Law School Admission Council Inc., which develops the LSAT.

Law school enrollment has followed the same path as the LSAT numbers, with steady declines for years that have recently stabilized and seen a minor uptick, noted Paul Caron, dean of Pepperdine University School of Law in California and author of the TaxProf Blog. And with the increase comes more selectivity from law schools.

“If the total numbers go up, there will be more of those higher-performing students in the applicant pool, so that’s what law schools are hoping to reach,” Caron said. “I would suspect a smaller increase in enrollments than there are in test-takers. Law schools will return to being more selective.”

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November 13, 2017 | Permalink | Comments (2)

Lesson From The Tax Court: The Power Of Fact-Finding

Tax Court (2017)In the old Dragnet series, Jack Webb’s character was famous for declaring that “all we want are the facts, ma’am.”  As if “the facts” are pristine jigsaw pieces that, if you find enough, give you an objective truth.  Lawyers know better.  Every “fact” comes from a point of view.  Even police body cams are viewpoint-dependent, as seen this this nifty experiment.  The lawyer’s job is to assemble together facts which, if believed, tell the story from the point of view most favorable to the client’s interest.  They promote “a” truth.  The fact-finder has to decide on “the” truth.

Most courses in law school are not structured to teach this lesson.  We tend to focus our students on appellate opinions where the facts are a given, not a mystery.  Still, in both my Civil Procedure course and my Tax course I take what opportunities I can find to show how the finders of fact have huge power in deciding how a case resolves. 

In Tax Court, most facts are usually stipulated by the parties.  But sometimes the Tax Court judge is called upon to decide the “facts” from witness testimony.  A pair of opinions issued last week illustrate the power of fact-finding.  One came out well for the taxpayer.  The other did not.  More below the fold.

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November 13, 2017 in Bryan Camp, New Cases, Tax | Permalink | Comments (12)

Frances Regan Receives Award For Her Work In Leadership Training In IRS Office Of Chief Counsel

ReganFederal News Radio, Would-be Pharmacist Turned IRS Lawyer Honored For Her Leadership Skills:

Growing up in a family of pharmacists, there was no question Frances Regan would end up working in healthcare, but as fate would have it, law school was the right prescription for Regan.

Three decades after graduating from St. John’s University School of Law, Regan works as the area counsel for the IRS’ Small Business Self Employed Division for Office of Chief Counsel, and her work hasn’t gone unnoticed.

Regan was one of two federal employees honored with the Roger W. Jones Award from the American University School of Public Affairs, for her leadership and “commitment to effective continuity of government.”

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November 13, 2017 in IRS News, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, November 12, 2017

Facebook Sues IRS Seeking Access To Internal Agency Appeal

Facebook (2016), Facebook Sues IRS Seeking Access to Internal Agency Appeal:

Facebook Inc. has sued the Internal Revenue Service seeking access to an internal IRS appeal process regarding a decision related to the social media giant’s tax bill.

In a 12-page complaint filed in U.S. District Court for the Northern District of California on Wednesday, Facebook claims that IRS counsel have stymied the company’s request to pursue an internal IRS appeal by citing a new and so far seldom-used rule that allows IRS exam teams to deny access to internal appeals when they determine such an appeal would not be in the interest of “sound tax administration.”

Facebook wants a finding that the IRS violated the Administrative Procedure Act by issuing the new rule — Revenue Procedure 2016-22, 2016-15 I.R.B. 1 — and by denying Facebook’s request for an internal appeal.

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November 12, 2017 in IRS News, Tax | Permalink | Comments (4)

Increases In Federal Student Loan Limits Do Not Induce Private Law Schools To Raise Tuition

Robert Kelchen (Seton Hall), An Empirical Examination of the Bennett Hypothesis in Law School Prices:

Whether colleges increase tuition in response to increased federal student loan limits (the Bennett Hypothesis) has been a topic of debate in the higher education community for decades, yet most studies have been based on small increases to Pell Grant or undergraduate student loan limits. In this paper, I leverage a large increase in Grad PLUS loan limits that took place in 2006 to examine whether law schools responded by raising tuition or other living expenses and whether student debt levels also increased. Using data from 2001 to 2015 across public and private law schools and both interrupted time series and difference-in-differences analytical techniques, I found rather modest relationships across both public and private law schools. I conclude with some possible explanations for the lack of strong empirical support for the Bennett Hypothesis.


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November 12, 2017 in Legal Education, Scholarship | Permalink | Comments (1)

Johnson Posts Tax Papers On SSRN

SSRN LogoCalvin H. Johnson (Texas) has posted several tax papers on SSRN:

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November 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #5:

  1. [370 Downloads]  Background and Current Status of FATCA and CRS, by William Byrnes (Texas A&M)
  2. [292 Downloads]  Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, by Terri Lynn Helge (Texas A&M)
  3. [285 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard)
  4. [186 Downloads]  Slicing and Dicing: The Structural Problems of the Tax Reform Framework, by Reuven Avi-Yonah (Michigan)
  5. [163 Downloads]  Exploiting the Medicare Tax Loophole (review here), by Karen C. Burke (Florida)

November 12, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 11, 2017

This Week's Ten Most Popular TaxProf Blog Posts

NTA 110th Annual Conference On Taxation

National Tax Association (2016)The three-day National Tax Association 110th Annual Conference on Taxation concludes today in Philadelphia.  Today's highlights include:

Session #70: Capital Gains and Wealth Taxation

Session Organizer:  David Kamin (NYU)
Session Chair:  Jon Bakija (Williams College)

Tim Dowd (Joint Committee on Taxation), Robert McClelland (Urban Institute) & Jacob Mortenson (Joint Committee on Taxation), Do Tax Elasticities Change Over the Business Cycle? Evidence From the Sale of Capital Assets
Discussant:  Jon Bakija (Williams College)

Ari Glogower (Ohio State), Taxing Income and Wealth
Discussant:  William Gentry (Williams College)

David Kamin (NYU) & Jason Oh (UCLA), The Effects of Capital Gains Rate Uncertainty on Realization
Discussant:  Jon Bakija (Williams College)

David Miller (Proskauer Rose, New York), A Comprehensive Mark-to-Market Tax
Discussant:  William Gentry (Williams College)

Session #78:  Tax Law and Finance

Session Organizer:  David Kamin (NYU) 
Session Chair & Discussant:  Brian Galle (Georgetown)

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November 11, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Oei & Ring: The Senate Tax Bill And The Battles Over Worker Classification

Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), The Senate Tax Bill and the Battles over Worker Classification:

Senate Republicans released their version of tax reform legislation on Thursday, November 9. The legislative language is not available yet, but the Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation) suggests that one of the key provisions in the bill will clarify the treatment of workers as independent contractors by providing a safe harbor that guarantees such treatment. The JCT-prepared description tracks the contents of the so-called “NEW GIG Act” proposed legislations introduced by Congressman Tom Rice (R-S.C.) in the House and Senator John Thune (R-S.D.) in the Senate in October and July 2017, respectively. “NEW GIG” is short for the “New Economy Works to Guarantee Independence and Growth (NEW GIG) Act.” But notably, and as we further discuss below, the legislation is not limited in its application to gig or sharing economy workers.

Assuming the Senate Bill adopts the basic parameters of the NEW GIG proposed legislation — which looks to be the case based on the JCT-prepared description — we have some concerns. In brief, this legislation purports to simply “clarify” the treatment of workers as independent contractors and to make life easier for workers by introducing a new 1099 reporting threshold and a new withholding obligation. But the legislation carries potentially important ramifications for broader fights over worker classification that are raging in the labor and employment law area. Despite possibly alleviating tax-related confusion and reducing the likelihood of under-withholding, we worry that there are quite a few underappreciated non-tax hazards for workers if these provisions go through.

Summary of the Legislation

The legislation (assuming the Senate Bill more or less tracks the NEW GIG Act language) purports to achieve such “clarification” of worker classification status by doing the following:

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November 11, 2017 in Congressional News, News, Political News, Shuyi Oei, Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Veterans Day At Pepperdine

My wife and I were delighted to host a dinner for law school veterans last night:

Vets 1A

Vets 2

November 11, 2017 | Permalink | Comments (2)

Friday, November 10, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Orly Mazur (SMU) reviews a new work by Anthony Polito (Suffolk), Mandatory Passthrough Taxation for Non-Publicly Traded Businesses?, 36 Va. Tax Rev. 449 (2017).

Mazur (2017-2)Anthony Polito’s timely new work considers whether passthrough taxation should be made available to all non-publicly traded businesses, without regard to form of business entity, and whether such tax treatment should be mandatory. 

Currently, most closely held businesses (except for those organized in the corporate form) may elect to benefit from a single level of taxation, whereas corporate business entities and most publicly traded entities are taxed as C corporations and subject to double taxation. As a result, newly-formed, non-publicly traded entities are only subject to subchapter C by choice. So when would an entity voluntarily subject itself to the double taxation regime? As the Article explains, a business would elect corporate taxation over passthrough taxation when an “insider shelter” tax strategy is available: namely, when the tax burden on a taxable corporate entity is less than on a passthrough entity. 

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November 10, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration