TaxProf Blog

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

Friday, May 18, 2018

Ring: The Stages Of International Tax Reform

Diane Ring (Boston College), The Stages of International Tax Reform:

Since December 2017, tax conferences in the United States have focused substantially on the H.R. 1 tax reform legislation. No surprise there — the 2017 changes are among the most significant in the past thirty years. But over the past five months, through attending numerous tax conferences featuring international tax practitioners, I’ve observed some interesting developments in the nature of the discussions and debates at these conferences. These changes are pretty revealing about the process of absorbing the true impact of the new tax law, particularly in international tax. This weekend’s ABA May Tax Section Meeting in Washington, D.C. highlighted some of these trends.

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May 18, 2018 in ABA Tax Section, Conferences, News, Shuyi Oei, Tax | Permalink | Comments (0)

Friday, May 4, 2018

Field: Tax Implications Of The Dynamex Worker Classification Ruling

Following up on Paul Caron's previous post: California Supreme Court Deals Major Blow to Gig Economy Business Model, Treats Workers as Employees Rather than Independent Contractors: Heather Field (UC-Hastings) at Surly Subgroup: Tax Implications of the Recent Dynamex Worker Classification Ruling 

Greetings from San Francisco, the epicenter of the gig economy, where workers-rights advocates are celebrating Monday’s California Supreme Court decision in the Dynamex case. The ruling, which cites an article by my colleague Veena Dubal, is expected to make it harder for businesses in California to classify gig economy workers (and others) as independent contractors rather than employees. As a result, these workers are more likely to be protected by rules about minimum wage, overtime, rest breaks, and other working conditions, although there are open questions about exactly how these rules will apply to gig workers.

But what is good for workers for employment/labor law purposes may not be so good for workers for federal income tax purposes. As readers of this blog know, independent contractors can generally deduct their business expenses above-the-line and may be able to take the new Section 199A deduction equal to up to 20% of qualified business income (significantly reducing the effective tax rate). Employees, on the other hand, can do neither. Thus, the employment/labor law win for workers in the Dynamex case may come with some unexpected and unwanted tax losses for these same workers. This is especially true for workers with non-trivial amounts of unreimbursed business expenses (although the amount of a worker’s unreimbursed expenses may decline if the worker is classified as an employee because California Labor Code 2802 generally requires employers to reimburse significant business expenses of employees).

So, taking tax into account, is independent contractor status or employee status better for workers? This question involves complicated employment/labor law and tax law tradeoffs. For example, despite the tax disadvantages of employee classification mentioned above, employee status can benefit workers for employment tax and tax compliance purposes. Others (including Shuyi Oei here, Shuyi Oei and Diane Ring here, here and here, and Kathleen DeLaney Thomas here) have written extensively on worker classification/taxation topics, and at least some of them have additional articles forthcoming on these topics. I will defer to them for more details as I am not an expert (at least right now) on worker classification or its tax implications. But even I know that, when analyzing the implications of the Dynamex case, it will be important for commentators to consider the tax, not just employment/labor, consequences.

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May 4, 2018 in New Cases, Shuyi Oei, Tax, Tax Policy in the Trump Administration, Tax Profs | Permalink | Comments (0)

Thursday, May 3, 2018

Call for Papers: New Voices In Tax Policy And Public Finance (2019 AALS Annual Meeting)

The AALS Tax Section committee is pleased to announce the following Call for Papers:

CALL FOR PAPERS:
AALS SECTION ON TAXATION WORKS-IN-PROGRESS SESSION
2019 ANNUAL MEETING, JANUARY 2-6, 2019, NEW ORLEANS, LA
NEW VOICES IN TAX POLICY AND PUBLIC FINANCE
(co-sponsored by the Section on Nonprofit and Philanthropy Law and Section on Employee Benefits and Executive Compensation)

The AALS Section on Taxation is pleased to announce the following Call for Papers. Selected papers will be presented at a works-in-progress session at the 2019 AALS Annual Meeting in New Orleans, LA from January 2-6, 2019. The works-in-progress session is tentatively scheduled for Saturday, January 5.

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May 3, 2018 in Conferences, Legal Education, Scholarship, Shuyi Oei, Tax, Tax Profs, Teaching | Permalink | Comments (0)

Saturday, March 31, 2018

NHL Stunner: 36-Year-Old Accountant Who Has Never Played Pro Stars In Blackhawks Win

Washington Post: NHL Stunner: A 36-year-old Accountant Who has Never Played Pro Stars in Blackhawks Win:

On Thursday night in the middle of a National Hockey League game between the Chicago Blackhawks and the Winnipeg Jets, an unfamiliar figure in a No. 90 Blackhawks jersey stepped onto the ice at the United Center.

“Hey who’s this guy?” an announcer joked.

That guy was Scott Foster, the team’s emergency goalie, a 36-year-old accountant who hadn’t played in a high stakes hockey game in more than 10 years. He played hockey for Western Michigan University from 2002 to 2005 and plays in an amateur league, albeit a high-level one composed of former college and professional players. His venue most of the time is not the Blackhawk’s United Center, with a capacity of 23,000, but Johnny’s Ice House in Chicago’s elite league.

But Foster has never played in the NHL.

Less than 15 minutes after he took the ice, the Blackhawks came away with a 6-2 victory and Foster emerged a hockey legend, delivering a performance that left everyone who watched it in awe....

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March 31, 2018 in News, Shuyi Oei, Tax | Permalink | Comments (3)

Wednesday, November 22, 2017

Oei & Ring: Will Proposed Tax Legislation Tilt The Worker Classification Debate?

Shu-Yi Oei & Diane Ring (On Labor), Will Proposed Tax Legislation Tilt the Worker Classification Debate? 

Tax reform is in the air. On Thursday, November 9, Senate Republicans released a Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation (JCT)), which contains in substance the Senate version of proposed tax reform legislation. Among other things, that JCT description stated that the bill would clarify the treatment of many workers as independent contractors by providing a safe harbor that, if satisfied, would guarantee such treatment. But in the modification to the Chairman’s Mark released on November 14, that safe harbor provision was stricken from the Senate bill.

In a blog post on TaxProf Blog, we expressed concern about this worker classification clarification provision. In brief, our worry was that even though the legislation “clarifies” the treatment of workers as independent contractors and arguably simplifies some aspects of their tax compliance burdens, it also carries potentially important ramifications for broader fights over worker classification that are occurring in the labor and employment law area.

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November 22, 2017 in Congressional News, Gov't Reports, News, Shuyi Oei, Tax | Permalink | Comments (0)

Friday, November 17, 2017

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

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)

Saturday, November 11, 2017

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)

Tuesday, November 7, 2017

New 'Paradise Papers' Data Leak

Paradise PapersA new investigative report from the International Consortium of Investigative Journalists (ICIJ) and its media partners broke on Sunday. (ICIJ is the investigative journalist consortium that brought us last year's Panama Papers investigation, for which they won a Pulitzer for Explanatory Reporting.)

ICIJ: Offshore Trove Exposes Trump-Russia Links And Piggy Banks Of The Wealthiest 1 Percent:

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November 7, 2017 in Political News, Shuyi Oei, Tax, Think Tank Reports | Permalink | Comments (1)